10-K405

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-K

    (MARK ONE)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
	OR
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934  For the Transition period from              to

COMMISSION FILE NO.  000-19368

COMMUNITY FIRST BANKSHARES, INC.
(Exact name of registrant as specified in its charter)

DELAWARE	46-0391436
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

520 MAIN AVENUE
FARGO, ND   58124-0001
(Address of principal executive offices and zip code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (701) 298-5600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE
SECURITIES REGISTERED PURSUANT TO
SECTION 12(g) OF THE ACT:

COMMON STOCK, $.01 PAR VALUE
PREFERRED STOCK PURCHASE RIGHTS
8-7/8% CUMULATIVE CAPITAL SECURITIES,
$25 LIQUIDATION AMOUNT(1)
8.20% CUMULATIVE CAPITAL SECURITIES,
$25 LIQUIDATION AMOUNT(2)

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.
YES     X    NO ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

As of March 26, 2001, assuming as market value the price of $19.75 per share, the average between the bid and asked sale prices on the Nasdaq National Market, the aggregate market value of shares held by nonaffiliates was approximately $751 million.

As of March 26, 2001, the Company had outstanding 41,594,741 shares of Common Stock, $.01 par value, net of treasury shares.

(1)	The 8-7/8% Cumulative Capital Securities (the “CFB I Capital Securities”) were issued by CFB Capital I (“CFB Capital I”), a wholly owned Delaware business trust subsidiary of the Company.  The Company has also fully and unconditionally guaranteed all of CFB Capital I's obligations under the CFB I Capital Securities.
(2)	The 8.20% Cumulative Capital Securities (the “CFB II Capital Securities”) were issued by CFB Capital II (“CFB Capital II”), a wholly owned Delaware business trust subsidiary of the Company. The Company has also fully and unconditionally guaranteed all of CFB Capital II's obligations under the CFB II Capital Securities.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2000 Annual Report to Shareholders and the 2001 Proxy Statement for the Company's Annual Meeting of Shareholders to be held April 24, 2001, are incorporated by reference into Parts II and III, respectively, of this Form 10-K, to the extent described in such Parts.

TABLE OF CONTENTS

PART I
	ITEM 1.	BUSINESS
	ITEM 2.	PROPERTIES
	ITEM 3.	LEGAL PROCEEDINGS
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
	ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
	ITEM 6.	SELECTED FINANCIAL DATA
	ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
	ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	ITEM 11.	EXECUTIVE COMPENSATION
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	ITEM 14.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
SIGNATURES

PART I

ITEM 1.  BUSINESS

GENERAL

          Community First Bankshares, Inc. (the “Company”), is a bank holding company that as of December 31, 2000 operated banks and bank branches (the “Banks”) in 155 communities in Arizona, California, Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota, Utah, Wisconsin and Wyoming.  Total assets of the Company were approximately $6.1 billion as of December 31, 2000.  On March 22, 2001, the Company announced the sale or closure of 21 banking locations in Arizona, Nebraska, Minnesota, North Dakota and Wyoming as part of a focused strategy to realign its channels of service delivery to improve efficiency through expanded technology and enhanced customer service.

          The Banks are community banks that provide a full range of commercial and consumer banking services primarily to individuals and businesses in small and medium-sized communities and the surrounding market areas.  The Company encourages local autonomy by local Bank presidents, while providing to the Banks the benefits of holding company affiliation.

COMMUNITY FINANCIAL SERVICES STRATEGY

          The Company has built a network of banks and a solid customer base through acquisitions.  The Company's plan is to increase the revenues and profit derived from that customer base by profitably increasing the number of products and services per household and by expanding the channels through which customers can access those products and services.  An enhanced online banking Web site will supplement the current channels of in-person, mail, ATM, and telephone banking.  A computer-based customer intelligence system will enable the Banks to focus on the products and services most relevant to each customer. The Company has recently introduced a program of Company-wide sales campaigns focusing on individual products.

          The Company provides the Banks with the advantages of affiliation with a bank holding company, such as access to its lines of financial services including trust products and administration, insurance and investment services, data processing services, credit policy formulation and review, investment management and specialized staff support.  The Company grants substantial autonomy to managers of the Banks with respect to day-to-day operations, customer service decisions and marketing.  The Banks are encouraged to participate in community activities, support local charities and community development, and otherwise enhance their images in their communities.

          As opportunities present themselves, the Company will seek to acquire banks and bank branches in communities which generally have populations between 3,000 and 50,000 and located in the Company's key target acquisition states of Arizona, California, Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota, Utah, Wisconsin and Wyoming.  Such communities are believed to provide the Company with the opportunity for a stable deposit base.  The Company did not see a single opportunity during 2000 that met its acquisition parameters, and thus, did not complete any bank acquisitions in 2000.  The Company also became more internally sales-focused and concentrated on improving financial product and service delivery channels.  The Company is continuing to develop and enhance its online banking capability, an improved investment product network relationship and expanding opportunities in insurance product sales.  The Company acquired four insurance agencies in 2000, and expects to acquire additional insurance agencies as part of the strategy of expanding its product offerings.

          In order to bring investment product distribution focus to the Company’s extensive banking network, the Company has recently redefined each Bank’s office as either a Regional Financial Center or Community Financial Center.  Regional Financial Centers offer a full array of financial products and services for both the corporate and retail market including, banking, trust, and investment products. They are located in markets that have shown strong commercial banking potential.  Regional Financial Centers are typically aligned along a hub and spoke system, with one larger office directing and supporting smaller offices in close geographic proximity.   Regional Financial Centers are managed by bank presidents.  The Company has  fifty-two Regional Financial Centers.  Community Financial Centers are less geographically concentrated, but also offer a complete line of financial products and services.  Their emphasis is more focused on retail products, investments and insurance.  Community Financial Centers are managed by branch managers.  The Company has twenty-two Community Financial Centers.  The Company is also integrating its insurance and investment sales forces into the regional banking division of the Company to move the Company towards a one-stop financial services supermarket.

          The Company believes that this structure allows the Company to staff its offices with financial service professionals that are sensitive to the financial needs of customers and better respond to those needs. In addition to improving staffing, a key part of the Company’s strategy is improving its product and service delivery channels through improved technology.  The Company is focusing on online banking, electronic bill paying, and increased opportunities to sell investment products online.  The Company is also implementing a data warehoused customer relationship management system to improve customer-focused sales initiatives.  To provide more products and services to its customers, the Company is re-orienting the goals of its employees towards greater sales-focus and building a complete financial management relationship with customers.

REVIEW OF ACQUISITION OPPORTUNITIES

          The Company routinely solicits and reviews acquisition opportunities and, at any given time, may have bids outstanding or may be involved in negotiations with the owners of financial institutions or other parties relative to a particular financial institution, its branches or its deposit accounts.  The Company currently has no agreements in place to acquire other banks.

THE BANKS

          The Banks provide a full range of commercial and consumer banking services primarily to individuals and businesses in small and medium-sized communities and the surrounding market areas.  The Banks draw most of their deposits from and make most of their loans within their respective market areas.  The Banks owned by the Company as of December 31, 2000, were located in Arizona, California, Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota, Utah, Wisconsin and Wyoming.

COMMUNITIES SERVED

          As of December 31, 2000, offices were located in communities with populations ranging from approximately 200 to 50,000, except for the larger communities of Fargo, North Dakota; Denver and Englewood (a Denver suburb), Colorado; Phoenix, Arizona; El Cajon (a San Diego suburb), California, and Salt Lake City, Utah.  The Company has operated profitably in these communities and has continued to acquire institutions in larger markets, reducing the percentage of revenues derived from smaller markets. Each of the Banks seeks to serve a market area with greater population.  As with other small, non-metropolitan communities, many of the smaller communities in which the Banks presently operate have experienced and are expected to experience no growth or a decline in population.  The economies of the some of the Banks' smaller communities, especially those in Nebraska, North Dakota and South Dakota, depend primarily on farming, farm service and agricultural supply businesses.  If  reductions in population or adverse economic trends in specific communities result in decreased profitability in the Banks or offices located in those communities, the Company may consider selling such Banks or offices or reducing the level of services provided in such communities.

          Management believes future growth in the business of the Company will largely depend on successful execution of the Company's strategies.  By offering our customers a full suite of financial products and services through a broader range of channels, the Company will endeavor to increase the number of products sold to each customer.  Sophisticated customer analysis tools will enable the Company to target the marketing of these products more effectively.  In addition, the Company will undertake Company-wide marketing initiatives to increase non-interest income through sales of investment products, trust services and insurance.

RECENTLY ANNOUNCED STRATEGY

          On March 22, 2001, the Company announced a series of strategic initiatives aimed at improving customer service and strengthening the Company’s position as a provider of a broad range of financial services.  The Company announced a realignment of its service delivery system through the sale or closure of 21 banking locations and centralizing the Company’s retail credit operations.  In conjunction with the restructuring of the banking network, 21 eligible management staff members have taken advantage of an early retirement program. In addition, the Company expects a reduction of 65 employees, representing 2.4% of the workforce.  The Company estimates the net result of this restructuring will be a one-time charge against earnings of approximately $5 million, or $.12 per share.  The charge is expected to be taken in the first quarter of 2001.

RECENT DIVESTITURES

          On March 22, 2001, the Company announced the sale of twelve banking locations.  Eight offices in Arizona are under contract to be sold to Stockmen’s Bank of Kingman, Arizona, three offices in Nebraska will be sold to Security First Bank and one office in North Dakota will be sold to Lincoln State Bank.  The Company also announced the closure of nine banking locations.  Four offices to be closed are in markets where the Company has multiple branches in the same location.

          On November 17, 2000, the Company completed the sale of its office in Fairplay, Colorado to Peoples Bank, Leadville, Colorado.  The Fairplay office was acquired by the Company on December 18, 1996 as part of the Company’s merger with Mountain Parks Financial Corporation.

          In 2000 and 1998, the Company divested several offices that were acquired on January 23, 1998, as part of the Company's purchase and assumption of 37 offices of three subsidiary banks of Banc One Corporation.  On February 11, 2000 the Company completed its sale of its office in Richfield, Utah.  On January 14, 2000, the Company completed the sale of its office in Nephi, Utah. On June 12, 1998, the Company completed the sale of its office in Ault, Colorado.

          In July, 1998, the Company sold the operating assets of its two sub-prime lending subsidiaries.  In a cash transaction on July 27, 1998, the Company sold seven loan production offices of Equity Lending, Inc. (“ELI”) to FIRSTPLUS Financial Group, Inc.  On July 31, 1998, the Company also sold servicing rights to the portfolio of automobile installment contracts originated by Mountain Parks Financial Services, Inc. (“MPFS”) to Cygnet Financial Services, Inc.  The Company retained approximately $50 million in loans originated by ELI and servicing rights on an additional $100 million in ELI loans sold to other parties.  The Company also retained approximately $50 million in auto installment contracts originated by MPFS.  ELI and MPFS were acquired in December 1996 as a result of the Company's merger with Mountain Parks Financial Corporation.  In six separate transactions in 1999, the Company sold a total of $11.4 million sub-prime mortgages and $31.4 million in automobile installment contracts to other organizations.  At December 31, 2000, the Company had approximately $6 million in sub-prime mortgages and $49,000 representing the net value of the buy-backs of automobile installments contracts.  The Company anticipates that after the sale or liquidation of remaining subprime assets, it will not pursue further sub-prime lending activities.

RECENT SIGNIFICANT ACQUISITIONS

          The Company made a number of significant acquisitions in 1999 and 1998, as outlined below.  The details of these acquisitions are described in the 2000 Annual Report to Shareholders in Management's Discussion and Analysis under “Merger and Acquisition Activity” and in the Notes to Consolidated Financial Statements under “Business Combinations and Divestitures,” which are incorporated herein by reference.

          On December 21, 1999, the Company acquired River Bancorp, Inc.,  the bank holding company for Northland Security Bank, headquartered in Ramsey, Minnesota.  On October 7, 1999, the Company acquired Valley National Corporation, a publicly-held corporation and the bank holding company for Valle de Oro Bank, National Association, headquartered in El Cajon, California, with 6 bank locations in Spring Valley, El Cajon, La Mesa and Santee, California.  On August 7, 1998, the Company acquired Guardian Bancorp, the bank holding company for Guardian State Bank, headquartered in Salt Lake City, Utah, with banking offices in Salt Lake City and Sandy, Utah.  On July 1, 1998, the Company acquired Western Bancshares of Las Cruces, Inc., the bank holding company for Western Bank, headquartered in Las Cruces, New Mexico with offices in Anthony, Hatch and Las Cruces, New Mexico.  On May 7, 1998, the Company acquired FNB, Inc., a two-bank holding company headquartered in Greeley, Colorado with offices in Greeley and Fort Collins, Colorado.  On April 30, 1998, the Company acquired Pioneer Bank of Longmont, Longmont, Colorado, with five banking offices in four Colorado communities.  On April 3, 1998, the Company acquired Community Bancorp, Inc., the parent company of Community First National Bank, Thornton, Colorado.  On January 23, 1998, the Company acquired 37 banking offices located in Arizona, Colorado and Utah from three subsidiary banks of Banc One Corporation.

FORWARD-LOOKING STATEMENTS

          This annual report on Form 10-K and other documents filed by the Company with the SEC contain forward–looking statements under the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings or results from those presently anticipated or projected.  The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.   Forward–looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."

          Forward-looking statements give the Company's expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward–looking statements are subject to risks and uncertainties. There are a number of factors, many of which are beyond the Company's control, that could cause actual conditions, events or results to differ significantly from those described in the forward–looking statements. Factors that could cause actual results to differ from the results discussed in forward-looking statements include, but are not limited to:

• Risks related to the Company’s acquisition strategy, including risks that of adversely changing results of operations and possible factors affecting the Company’s ability to consummate further acquisitions;

• Risks of loans and investments, including dependence on local economic conditions;

• Competition for the Company’s customers from other providers of financial services;

• Possible adverse effects of changes in interest rates;

• Balance sheet and critical ratio risks related to the Company’s share repurchase program; and

• Other risks detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company.

Some of these factors are described in greater detail below.

General Business and Economic Conditions.  The Company's business and financial results are affected by general business and economic conditions in the United States and abroad. These conditions include short–term and long–term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital markets, and the condition of the U.S. economy, in general, and the local economies in which the Company conducts business. Should economic conditions worsen in the United States or abroad, the Company's business and results could be adversely affected. For example, an economic downturn or higher interest rates could decrease the demand for loans and other products and services offered by the Company and/or increase the number of customers and counter parties who become delinquent or who default on loans or other obligations to the Company. An increase in defaults would result in a higher level of charge–offs and a higher level of loan loss provision, which could adversely affect the Company's earnings. Higher interest rates  also increase the Company's borrowing costs and could increase the rate paid on deposits, which could more than offset, in the Company’s net interest margin, the increase in rates earned by the Company on loans and investments.

Competition. The Company operates in a competitive environment for its financial products and services. The Company expects competitive pressures to increase due to legislative, regulatory and technological changes and the continued consolidation in the financial services industry. Investment banks and insurance companies are competing with banks in traditional banking businesses such as lending and consumer banking. Many of the Company's competitors are larger and better capitalized than the Company, and have fewer regulatory constraints and lower cost structures.  The Company also expects the financial services industry to become even more competitive as technological advances enable more companies to provide financial services. The Company expects that the consolidation of the financial services industry will result in larger, better-capitalized companies offering a wide array of financial services and products. Furthermore, recent legislative changes will increase competition in the financial services industry.

Fiscal and Monetary Policies. The Company's business and financial results are affected significantly by the fiscal and monetary policies of the federal government and its agencies. The Company is affected by the policies of the Federal Reserve Board, which generally regulates the supply of money and credit in the United States. The Federal Reserve Board's policies directly and indirectly influence the rate of interest that commercial banks pay on their interest–bearing deposits and can affect the value of financial instruments held by the Company. Those policies also determine to a significant degree the Company’s cost of funds for lending and investing. Changes in those policies are beyond the Company's control. Federal Reserve Board policies can also affect the Company's customers and counter parties, potentially increasing the risk that customers and counter parties may default on their obligations to the Company.

Recent Legislation.   The Gramm–Leach–Bliley Act (the “Act”) permits affiliation among banks, securities firms and insurance companies by creating a new type of financial services company called a "financial holding company." Financial holding companies may offer many kinds of financial services, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Under the Act, securities firms and insurance companies that elect to become a financial holding company may acquire banks and other financial institutions. The Act significantly changes the competitive environment in which the Company conducts business.  The Act also imposes new restrictions on the Company’s use of customer financial information that could make it difficult or costly for the Company to cross-sell banking, insurance and investment products to its customers.

Mergers and Acquisitions. The Company has in the past expanded its business in part by acquiring banks, insurance agencies and other companies engaged in financial services. The Company continues to explore opportunities to acquire banking institutions and other companies. Discussions are continually being carried on related to such acquisitions.  Generally, the Company does not comment on such discussions or possible acquisitions until a definitive agreement has been signed. A number of factors related to past and future acquisitions could adversely affect the Company's business and financial results, including those described above. In addition, the Company's acquisitions generally are subject to approval by federal and, in some cases, state regulatory agencies. The failure to receive required regulatory approvals within the time frame or on the conditions expected by management could also adversely affect the Company's business and earnings.

          Other factors, such as credit, market, operational, liquidity, interest rate and other risks are described elsewhere in this report. Factors relating to the regulation and supervision of the Company are also described or incorporated in the Company's 2000 Annual Report to shareholders.  There are also other factors besides those described or incorporated in this report on Form 10–K that could cause actual conditions, events or results to differ from those contained in the forward–looking statements. Forward–looking statements speak only as of the date they are made. The Company does not undertake to update forward–looking statements to reflect circumstances or events that occur after the date the forward–looking statements are made.

ADMINISTRATION OF BANKS

          The Company provides policy and management direction and specialized staff support in general areas while relying on Bank managers for day-to-day operations, customer service decisions and community relations.  The Company is responsible for policy-related functions, such as supervisory credit review, audits, personnel policies and internal examination activities.  Resource allocations for administrative support by the Company are balanced to provide adequate support services for the Banks' operations, while carefully controlling service costs charged to the Banks.  The major areas of administration are as follows:

          CREDIT.  The Company's lending activities are guided by the general loan policy established by the Board of Directors.  The Senior Credit Committee of the Company has established loan approval limits for each region of the Company and Bank office.  Amounts in excess of the individual Bank lending authority are presented to the regional credit officers.  Loans above $1,500,000 per pass rated borrower, $1,000,000 per watch rated borrower and $250,000 per classified borrower are presented to the Senior Credit Committee for approval.  The Company's credit policy establishes guidelines for approval of all credits, including loans and purchased loans and loan participations.  The credits of the Banks are subject to internal review by Bank officers every 12 months.  The loan portfolios of the Banks are subject to examination by the Company's credit examination staff every 12 to 24 months, the frequency of which is based on a variety of factors, including the credit quality of the institution.  The credit examination staff is also responsible for credit review with respect to the assets of banks to be acquired by the Company.

          FINANCE.  The Board of Directors of the Company has established policies in the areas of asset/liability management, investments, capital expenditures, accounting procedures and capital and dividend management.  Policies are implemented and monitored for compliance by the Chief Financial Officer and the Asset/Liability Committee of the Company.

          OPERATIONS.  Community First Service Corporation (“CFSC”), a subsidiary of the Company, provides data processing and operations support services to the Banks by contract.  CFSC's system is designed to  provide for all Bank and customer data-processing needs and can be expanded to accommodate future growth and additional service applications.  In addition to its office facilities in Fargo, North Dakota, CFSC also has a data processing facility in Golden, Colorado. Additional expenditures for equipment, consistent with the increased data processing volumes, would likely be necessary if additional significant acquisitions occur during 2001.

          MARKETING.  The Company is implementing a computer-based data warehoused customer relationship management system that will enable the Banks to deliver more value to their customers by focusing on the products and services most relevant to each customer.  It has also initiated a regular schedule of Company-wide sales campaigns that will focus on individual products.  The success of the first campaign, for an annuity product, demonstrated the power of a focused marketing effort across the entire network.  Future Company-wide marketing efforts will be aided by the enhanced online banking Web site that will be upgraded in 2001.

          OTHER SERVICES.  The Company provides other services for the benefit of the Banks, such as outside professional services, central human resources services, benefits administration, marketing guidance and centralized purchasing of supplies.

INSURANCE AGENCIES

          The Company currently owns and operates insurance agencies located in 47 communities served by the Banks through its direct subsidiary, Community First Insurance, Inc.  These agencies are primarily engaged in the sale of property and casualty insurance and make some sales of other types of insurance, such as life, accident and crop hail insurance.  The Company had commission revenue of $10.6 million in 2000.

OTHER ACTIVITIES

          The Company has steadily consolidated Banks located in each state into single national bank charters with multiple locations.  On March 22, 2001, the Company announced that it completed the consolidation of its remaining South Dakota state chartered bank into its national bank, resulting in the completion of the consolidation of twelve bank charters into one national charter.  On August 29, 2000 the Company merged 11 of its existing national bank charters into one national bank charter in order to increase efficiency and performance.  Subsidiary Banks of the Company in eight locations maintain trust departments, but their services are more broadly available and the Company may expand its trust activities in the future. Trust services are made available to customers in several locations through local trust officers or by appointment with members of the trust department.  In 1999, the Company consolidated all of its trust activity administration in the trust department in Fargo, North Dakota.

          Although the Company intends to maintain its focus on the banking business in its targeted market areas, the Company will consider other permitted business activities as opportunities arise.  The non-interest income activities of the Company in insurance, trust and securities sales are expected to become collectively a material revenue and profit center of the Company within the next few years.  In March 1998, the Company entered into a three-year agreement with INVEST Financial Corporation, a Delaware Corporation, and INVEST Financial Corporation Insurance Agency, Inc. of Illinois (“Invest”) under which the Banks would provide securities brokerage, insurance and investment advisory services to the Company's customers through their centers located within the Company's subsidiary bank branches.  The agreement provided for these companies to share sales commissions with the Company pursuant to an agreed upon commission schedule and requires them to perform various compliance and administrative functions related to their securities and insurance activities. Federal bank regulation permits bank holding companies to engage in other limited activities, such as the distribution of certain types of securities, and future changes in such regulation are expected to further expand the types of activities in which the Company may engage.

          In February, 2001 the Company’s agreement with Invest terminated, and the Company entered into a similar arrangement with Primevest  Financial Services, Inc.  In addition to full service brokerage, insurance and investment advisory services, the Primevest agreement also provides the Company’s customers with online financial services to complement the Company’s focus on technology enhancements to improve product and service delivery.  The Primevest agreement is a three year agreement.

COMPETITION

          Commercial banking is highly competitive.  In the conduct of certain aspects of their business, the Banks compete with other commercial banks, savings and loan institutions, issuers of fixed income investments, finance corporations, credit unions and money market funds, among other types of institutions.  The Banks compete with these institutions in such areas as obtaining new deposits, offering new types of services and setting loan rates and interest rates on various types of deposits, as well as other aspects of the banking business.  Management believes community residents and businesses prefer to deal with local banks and the Banks have generally been able to compete successfully in their respective communities because of the Company's emphasis on local ownership and the autonomy of Bank management in community relations.  At the same time, the Company provides the Banks with the advantages of centralized sophisticated administration and the opportunity to make larger loans and diversify their lending activity through Bank group participations.  Further, because most of the Banks have a significant market share in the communities they serve, the Company believes the Banks can, to a degree, influence deposit and loan pricing in their markets and are subject to less competition based on deposit and loan pricing than would be the case in larger metropolitan markets with more competitors.  However, the Banks have experienced increased price competition from credit unions and brokerage firms in certain market areas in recent periods.  Recent changes in government regulation of banking, particularly the legislation which removes restrictions on interstate banking and permits interstate branching, or legislation in certain states to permit statewide branching, may increase competition by both out-of-state and in-state banking organizations and by other financial institutions.  See “Supervision and Regulation,” below.  The Banks compete with other financial institutions, including government lending agencies, for high quality loans and the Company competes with securities and insurance firms and other banking institutions in the non-interest income activities of insurance, securities sales and trust activities in the Banks' market areas and for purchases of loan assets and investment assets.  While management believes the Banks will continue to compete successfully in their communities, there is no assurance that future competition will not adversely affect the Banks' earnings.

EMPLOYEES

          The Company had 2,667 employees at December 31, 2000, including 2,095 full-time employees and 572 part-time employees.  Of these individuals, 207 were employed at the holding company level, 1,988 (including 1,529 full-time employees) were employed at the Bank level, 350 were employed by CFSC and 122 were employed by CII and CFIA.

SUPERVISION AND REGULATION

          GENERAL.  As a bank holding company, the Company is subject to supervision and examination by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended (the “BHC Act”).  The Company's national bank subsidiary is regulated by the Office of the Comptroller of the Currency (“OCC”).  The deposits of the Company's banking subsidiary is insured by the Bank Insurance Fund (“BIF”), which subjects the subsidiary to regulation by the Federal Deposit Insurance Corporation (“FDIC”).  In addition to the impact of direct regulation, commercial banks are affected significantly by action taken by the Federal Reserve Board with respect to the money supply and credit availability.

          The Company has other financial services subsidiaries that are subject to regulation by the Federal Reserve Board and other applicable federal and state agencies.  For example, the Company's insurance subsidiary is subject to regulation by the state insurance licensing and regulatory agencies having jurisdiction in each office location.

          FINANCIAL MODERNIZATION.  On November 12, 1999, the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”) became law.  The GLB Act repealed provisions of the Glass-Steagall Act of 1933 and extensively revised the Bank Holding Company Act of 1956 by significantly expanding the range of permissible activities of banks and bank holding companies and permitting affiliations of banking, insurance and securities organizations.  The GLB Act included an extensive schedule of required implementing regulations over the 18 months following enactment, which will better define the law's scope and effect.  The Company continues to review the implications of the GLB Act on its business activities.

          HOLDING COMPANY REGULATION.  The Company is a bank holding company within the meaning of the BHC Act.  As a result, the Company's activities are subject to certain limitations under the BHC Act, and transactions between the Company and its affiliates are subject to certain restrictions.  Further, the Company is required to file periodic reports with the Federal Reserve Board and is subject to regular examination.  As a matter of policy, the Federal Reserve Board expects a bank holding company to act as a source of financial and managerial strength to each of its subsidiary banks and to commit capital and other resources to support each subsidiary bank.  The Federal Reserve Board has the authority to issue cease and desist orders against the Company if the Federal Reserve Board determines that actions by the Company are unsafe, unsound or violate the law.  Under certain circumstances, stock redemptions and dividends or distributions by the Company with respect to its equity securities may be considered unsafe or unsound practices.

          Under the BHC Act, the Company must obtain prior Federal Reserve Board approval before the Company acquires direct or indirect ownership or control of 5% or more of the voting stock of any bank or bank holding company, or the Company merges or consolidates with another bank holding company.  Further, the bank holding company is generally prohibited from acquiring direct or indirect ownership or control of a company that is not a bank or bank holding company, unless (i) the Federal Reserve Board has, by order or regulation, determined that the proposed non-banking activity is so closely related to banking or managing or controlling banks as to be a proper incident thereto, or (ii) the Company elects to become a “financial holding company” under the GLB Act and the proposed non-banking activity is a “financial activity”, within the terms of the GLB Act, or an “incidental” or “complementary” activity, as determined by order or regulation of the Federal Reserve Board and the Office of the Comptroller of the Currency.  In reviewing any application or proposal by a bank holding company, the Federal Reserve Board is required to consider the financial and managerial resources and future prospects of the bank holding company and the banks concerned, the convenience and needs of the community to be served, as well as the probable effect of the transaction upon competition.

          BANK REGULATION.  The banks are subject to detailed federal and state laws and regulation.  The national bank subsidiary of the Company is primarily supervised by the OCC, a bureau of the United States Department of the Treasury.  The OCC regularly examines national banks in such areas as reserves, loans, investments, trust services, management practices, compliance with the Community Reinvestment Act and other aspects of bank operations and policies.  These examinations are designed for the protection of the deposit insurance system and the enforcement of federal and state laws and regulations and not for the shareholders of the Company.  In addition to undergoing these regular examinations, national banks must furnish quarterly reports to the OCC containing detailed and accurate financial statements and schedules.

          Federal and state banking laws and regulations govern, among other things, the scope of a bank's business and investments a bank may make, reserves a bank must maintain, loans a bank may make and the collateral it takes, activities of banks with respect to mergers and consolidations and the establishment and closure of branches.  The OCC, in the case of national banks, is the primary federal regulatory authority under the Financial Institutions Supervisory Act, and is thereby provided authority under that Act to impose penalties, initiate civil and administrative actions and take other steps intended to prevent a bank from engaging in an unsafe or an unsound practice in the conduct of its business.

          With the adoption of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and the Interstate Banking and Branching Efficiency Act of 1994 (“IBBEA”), Congress made comprehensive revisions to the bank regulatory and funding provisions of the Federal Deposit Insurance Act.  Under FDICIA and the IBBEA, the primary regulatory authorities are required to take “prompt corrective action” with respect to depository institutions insured by the FDIC that do not meet the criteria for classification as either “well capitalized” or “adequately capitalized,” based upon the institution's leverage ratio, risk–adjusted Tier 1 capital ratio and risk–adjusted total capital ratio.  As of December 31, 2000, all of the Company's banking subsidiaries were classified as “well capitalized.”  Under-capitalized depository institutions are subject to a wide range of limitations in operations and activities, including capital distributions, payment of management fees, and limitations upon institution growth.

          FDICIA, as amended by IBBEA, directs each primary federal regulatory agency to establish regulations or guidelines relating to operational and managerial standards.  The federal banking agencies have published final rules implementing the safety and soundness standards required by FDICIA in the areas of internal controls and information systems, internal audit systems, loan documentation, asset growth, asset quality, earnings and compensation, fees and benefits. The impact of such standards on the Company has not been material.

          FDIC INSURANCE.  The FDIC insures deposits of the Banks up to the prescribed limit per depositor through the BIF, and the amount of FDIC assessments paid by each BIF member institution is based upon its relative risk of default as measured by regulatory capital ratios and other factors.  The BIF assessment rate currently ranges from zero to 27 cents per $100 of domestic deposits.  Under current FDIC assessment guidelines, the Company expects that it will not incur any FDIC deposit insurance assessments during the next fiscal year, although the current system for assigning assessment risk classification to insured depository institutions is being reviewed by the FDIC and the deposit insurance assessments are subject to change.  The Company is subject to separate assessments to repay bonds (“FICO bonds”) issued in the late 1980’s to recapitalize the former Federal Savings and Loan Insurance Corporation.  The assessment for the payments on the FICO bonds for the quarter beginning January 1, 2001 is 1.96 basis points for BIF-assessable deposits.  As of December 31, 2000, each of the Banks qualified for the lowest BIF assessment rate.

          FDIC insurance on deposits may be terminated by the FDIC, after notice and hearing, upon a finding by the FDIC that the insured bank has engaged or is engaging in unsafe or unsound practices, or is in an unsafe or unsound condition to continue operations as an insured bank, or has violated any applicable law, regulation, rule or order of or condition imposed by or written agreement entered into with the FDIC.

EXECUTIVE OFFICERS

          The executive officers of the Company are as follows:

Name	Age	Position
Donald R. Mengedoth	56	Chairman of the Board
Mark A. Anderson	44	President and Chief Executive Officer
Ronald K. Strand	54	Vice Chairman - Chief Operating Officer
David A. Lee	57	Vice Chairman - Regional Banking
Craig A. Weiss	39	Senior Vice President - Chief Financial Officer
Thomas R. Anderson	45	Senior Vice President - Treasury and Treasurer
Robert W. Jorgensen	53	Senior Vice President - Wyoming Region President
Keith A. Dickelman	46	Senior Vice President – Eastern Colorado Region President
Daniel M. Fisher	46	Chief Information Officer, President and Chief Executive Officer of Community First Service Corporation
Thomas E. Hansen	48	Senior Vice President - Central Region President
Bruce A. Heysse	49	Senior Vice President  - Credit Administration
Thomas A. Hilt	58	Senior Vice President - Chief Administrative Officer
Gary A. Knutson	53	Senior Vice President - Eastern Region President
Charles A. Mausbach	49	Senior Vice President - Southwestern Region President
Harriette S. McCaul	50	Senior Vice President – Manager of Human Resources
Bradley J. Rasmus	39	Senior Vice President – Regional President
Patricia J. Staples	45	Senior Vice President – Director of Market Development

          Donald R. Mengedoth has been Chairman of the Board and a director of the Company since its organization in 1986.  Until March 1, 2000, he had also served as President and Chief Executive Officer of the Company.  Under an Employment Agreement entered into on March 1, 2000, Mr. Mengedoth will serve as Chairman of the Board of Directors from March 1, 2000 to December 31, 2002.  Mr. Mengedoth was Senior Vice President of First Bank System, Inc. (“FBS”), currently known as U.S. Bancorp, from 1982 to 1987 and has worked in the banking business since 1966, including management positions in retail banking operations, human resources and commercial lending.  From 1984 to 1987, Mr. Mengedoth was Regional Managing Director of FBS.  From 1979 to 1982, Mr. Mengedoth was Vice President - Operations for FBS.  Prior to that time, he was Senior Vice President of First Bank Milwaukee.  He is President of the American Bankers Association.

          Mark A. Anderson was appointed President and Chief Executive Officer of the Company on March 1, 2000.  He has been Vice Chairman - Corporate Services of the Company since October 1998, Chief Financial Officer, Secretary and Treasurer of the Company since it began operation in 1986 and Chief Information Officer since  February 1998.  He was Vice President and Regional Controller for FBS from 1984 to 1987.  From 1979 to 1984, he held various positions with FBS-affiliated banks in the finance and credit analysis areas.  Mr. Anderson is a Chartered Financial Analyst and a Certified Management Accountant.

          Ronald K. Strand was appointed Chief Operating Officer of the Company on March 1, 2000.  He had been Vice Chairman - Financial Services Division since October 1998.  Mr. Strand was Executive Vice President - Banking Group since February 1993 and  was previously Senior Vice President and Region Manager for South Dakota and North Dakota for the Company from January 1991 to February 1993.  Previously, Mr. Strand had been Vice President and Regional Manager for the Company and President, Chief Executive Officer and a director of the Company's affiliate bank in Wahpeton, North Dakota since 1988.  Prior to his affiliation with the Company, he served as President and Chief Executive Officer of Norwest Bank of North Dakota, N.A., Wahpeton, from 1985 until 1988.  He was employed by Norwest for a total of 15 years, having previously worked in Norwest banks in Jamestown, North Dakota, and Moorhead, Minnesota.

          David A. Lee was appointed Vice Chairman - Regional Banking on March 1, 2000.  He had been Executive Vice President of Regional Banking of the Company since October 1998.  Mr. Lee was previously Senior Vice President and Eastern Region Manager and had been a Region Manager of the Company since 1988.  He was President and Chief Executive Officer and a director of the Company's affiliate bank in Little Falls from 1987 to January 1991.  Mr. Lee held various positions with FBS from 1966 to 1987.

          Craig A. Weiss was appointed Chief Financial Officer on March 1, 2000 and has been Senior Vice President - Finance of the Company since February 1998.  He was previously Vice  President Finance of the Company from 1988 to 1997 and Finance and Accounting Manager from 1987 to 1988.  Prior to 1987, he was employed by First Bank System, most recently as a Regional Financial Analyst.  Mr. Weiss is a Certified Public Accountant.

          Thomas R. Anderson was appointed Treasurer of the Company on March 1, 2000 and has been Senior Vice President - Treasury since February 1998.  He was previously Vice President/Funds Manager of the Company from 1988 to 1997 and Funds Management Officer from 1987 to 1988.  Prior to 1987, he was employed by Norwest Corporation for seven years, most recently as a Senior Financial Analyst.

          Robert W. Jorgensen has been Senior Vice President - Wyoming Region President since January 1999.  He was previously President of Community First National Bank, Paynesville, Minnesota from 1989 to 1998.

          Keith A. Dickelman has been Senior Vice President - Eastern Colorado Region President since January 1998.  He was previously President of Community First National Bank, Fergus Falls, Minnesota from 1995 to 1997 and from 1992 to 1995 served as a Senior Loan Officer and Senior Vice President of Community First National Bank, Fargo, North Dakota.

          Daniel M. Fisher was appointed Chief Information Officer of the Company on March 1, 2000.  He has been President and Chief Executive Officer of Community First Service Corporation since October 1998 and previously served as Executive Vice President - Bank Operations at the subsidiary.  Mr. Fisher was previously District Manager and Senior Vice President of Fiserv Inc., a financial services data and item processor from October 1996 to September 1998.  Prior to that, he served as Senior Vice President and Operations Manager of Norwest Bank Minnesota, N.A. from August 1988 to October 1996.

          Thomas E. Hansen has been Senior Vice President - Central Region President since April 1993.  He also served as President, Chief Executive Officer and a director of the Company's affiliate bank in Fargo, North Dakota from April 1993 to December 1996.  Previously, he was employed by Norwest Bank Fargo for 19 years, most recently as President.

          Bruce A. Heysse was appointed Senior Vice President – Credit Administration in February 2001.  Previously he was Senior Vice President  - Acquisitions and Integration from July 1996 to January 2001. He was Senior Vice President and Integration Manager of the Company from November 1995 to June 1996.  He was Vice President and Senior Credit Officer of the Company from 1987 to November 1995.  He began his banking career at the Company's affiliate bank in Wahpeton, North Dakota, and had a total of 11 years of banking experience prior to joining the Company.

          Thomas A. Hilt has been Senior Vice President - Chief Administrative Officer of the Company since 1987 and President of Community First Service Corporation, the Company's data processing subsidiary, since 1988.  He was Vice President and Manager - Operations Support for the Regional Division of FBS from 1984 to 1987.  Prior to 1984, he held various positions with FBS since 1967, including responsibility for systems development, programming, audit and examination functions.

          Gary A. Knutson has been Senior Vice President - Eastern Region President since July, 1996 and previously was Senior Vice President and Western Region Manager of the Company since September 1993.  He was President, Chief Executive Officer and a director of the Company's affiliate bank in Wahpeton, North Dakota from January 1991 to September 1993.  He began his banking career at the Company's affiliate bank in Lidgerwood, North Dakota, and had a total of 14 years of banking experience prior to joining the Company.

          Charles A. Mausbach has been Senior Vice President - Southwestern Region President since March1998.  He was President of Community First National Bank, Worthington, Minnesota from October 1992 to February 1998.

          Harriette S. McCaul, Ph.D., has been Senior Vice President – Manager of Human Resources since February 1997.  Previously, she was the Dean of the College of Business Administration at North Dakota State University in Fargo, North Dakota.  She joined NDSU in 1983 and held various teaching and administrative positions in the Business Department and human resources area.  Prior to that time, she was an instructor at Moorhead State University, Moorhead, Minnesota, and the director of faculty and staff benefits at the University of Kansas.

          Bradley J. Rasmus was appointed Senior Vice President – Regional President in February 2001.  Previously he was Senior Vice President - Financial Services from February 1999 to January 2001.  He was previously Vice President & Financial Services Sales Manager.  Mr. Rasmus has been employed with the Company since 1995.  From 1992 until 1995, he was Regional Vice President of Account Development for Richard Leahy Corporation, a financial services company.

          Patricia J. Staples has been Senior Vice President – Director of Market Development since July 1994.  She is also a director of Community First Service Corporation.  Previously, Ms. Staples was employed as the public relations manager with MeritCare Health System in Fargo, North Dakota for 10 years.

          ELECTION.  The Company's officers are elected by the Board of Directors.  The officers serve until their successors are elected or until their earlier resignation, removal or death.

ITEM 2.  PROPERTIES

          In January 1996, the Company formed a new subsidiary, Community First Properties, Inc. (“CFPI”), for the purpose of acquiring and owning the space currently occupied by the Company.  CFPI owns all of the portions of the office building not owned by the Company's Bank subsidiary at 520 Main Avenue, Fargo, North Dakota.

          The Company maintains its offices at 520 Main Avenue, Fargo, North Dakota, consisting of approximately 45,000 square feet at an annual rental of $615,000, payable to its subsidiary, CFPI.  The Company believes these facilities will be adequate for the foreseeable future.  The Company also utilizes office space at affiliate banks located in Denver, Colorado and Cheyenne, Wyoming as well as leasing approximately 4,000 square feet of office space in Phoenix, Arizona at an annual rental of approximately $89,000.  Each of the Banks owns its main office and those of its branches, and these facilities range in size from approximately 1,200 to 36,000 square feet.  During 1997, the Company constructed and owns a 47,000 square foot two-story building in Fargo, North Dakota which is leased to CFSC.

ITEM 3.  LEGAL PROCEEDINGS

          From time to time, the Company and its subsidiaries are subject to various legal actions and proceedings in the normal course of business, some of which may involve substantial claims for compensatory damages.  In some cases, these actions and proceedings relate in whole or in part to activities of banks prior to their acquisition and may be covered by agreements of former owners of these banks to indemnify the Company.  Although litigation is subject to many uncertainties and the ultimate exposure with respect to current matters cannot be ascertained, management does not believe that the final outcome will have a material adverse effect on the financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          Information as to the principal market on which the Company's common stock is traded, market price information for the common stock of the Company, the approximate number of holders of record as of the most recent practicable date, and the Company's dividend policy is incorporated herein by reference from the inside back cover of the 2000 Annual Report to Shareholders, and attached hereto as Exhibit 13.1.

ITEM 6.  SELECTED FINANCIAL DATA

          Selected financial data for the five years ended December 31, 2000, consisting of data captioned “Financial Highlights” on page 2 of the 2000 Annual Report to Shareholders, “Consolidated Statement of Condition—Five-Year Summary” on page 44 of the Annual Report and “Consolidated Statement of Income-Five Year Summary” on page 45 of the Annual Report are incorporated herein by reference, and attached hereto as Exhibit 13.1.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 15 through 26 of the 2000 Annual Report to Shareholders is incorporated hereby by reference, and attached hereto as Exhibit 13.1.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The information set forth on pages 15 through 26 of the 2000 Annual Report to Shareholders under the caption “Management's Discussion and Analysis - Results of Operations, Financial Condition and  Asset/Liability Management” is incorporated herein by reference, and attached hereto as Exhibit 13.1.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The Consolidated Statements of Financial Condition of the Company as of December 31, 2000 and 1999, and the related Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Shareholders' Equity and Cash Flows for each of the three years ended December 31, 2000, the Notes to the Consolidated Financial Statements and the Report of Ernst & Young LLP, independent auditors, contained in the Company's 2000 Annual Report to Shareholders on pages 27 through 43 are incorporated herein by reference, and attached hereto as Exhibit 13.1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          None.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The information set forth in the Company's 2001 Proxy Statement under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” is incorporated herein by reference.  Information regarding the executive officers of the Company is included under separate caption in Part I of this Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

          The information set forth in the 2001 Proxy Statement under the caption “Executive Compensation” is incorporated herein by reference, except that information under the captions “Compensation Committee Report on Executive Compensation” and “Comparative Stock Performance” is not so incorporated.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The information set forth in the 2001 Proxy Statement under the caption “Security Ownership of Principal Shareholders and Management” is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information set forth in the 2001 Proxy Statement under the caption “Certain Transactions” is incorporated herein by reference.

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM8-K

(a)	DOCUMENTS FILED AS PART OF THIS FORM 10-K:
	1.		FINANCIAL STATEMENTS.  See Item 8, above and Exhibit 13.1.
	2.		FINANCIAL STATEMENT SCHEDULES.  All financial statement schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
	3.		PRO FORMA FINANCIAL INFORMATION.  None.
(b)	REPORTS ON FORM 8-K.
	None.
(c)	EXHIBITS.
Exhibit Number		Description
2.1		Agreement and Plan of Reorganization dated as of June 25, 1996 between the Registrant and Mountain Parks Financial Corp. (incorporated by reference to the Appendix to the Registrant's Joint Proxy Statement with Mountain Parks Financial Corp. included in the Registration Statement on Form S-4 [File No. 333-14439], as declared effective by the Commission on November 7, 1996).
2.2		Stock Purchase Agreement dated as of February 18, 1997 by and among the Registrant, KeyCorp and Key Bank of the Rocky Mountains, Inc. (incorporated by reference to Exhibit 2.8 to the Registrant's Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended December 31, 1996, filed with the Commission as of May 8, 1997 [the “1996 Form 10-K”])
2.3		Restated Agreement and Plan of Merger dated as of August 22, 1997, including Agreement and First Amendment to Agreement dated as of the same date, between the Registrant and First National Summit Bankshares, Inc. (incorporated by reference to Appendices A and B to the Proxy Statement-Prospectus contained in the Registrant's Registration Statement on Form S-4 [File No. 333-38997] filed with the Commission on October 29, 1997).
2.4		Restated Agreement and Plan of Merger dated as of August 28, 1997 between the Registrant and Republic National Bancorp, Inc. (incorporated by reference to Appendix A to the Proxy Statement-Prospectus contained in the Registrant's Registration Statement on Form S-4 [File No. 333-38225] filed with the Commission on October 20, 1997).
2.5		Office Purchase and Assumption Agreement dated as of the 10th day of September, 1997 by and between Bank One, Arizona, National Association, Bank One, Colorado, National Association, Bank One, Utah, National Association and the Registrant, (incorporated by reference to Exhibit 2.6 to the Registrant's Registration Statement on Form S-4 [File No. 333-36091], filed with the Commission on September 22, 1997).
2.6		Agreement and Plan of Merger dated as of November 6, 1997, among the Registrant, Community First National Bank and Pioneer Bank of Longmont (the “Parties”)(incorporated by reference to Exhibit 2.7 to the Registrant's Registration Statement on Form S-4 [File No. 333-37527], filed with the Commission on November 21, 1997), and as amended by First Amendment to Agreement and Plan of Merger dated as of the 19th day of December, 1997, by and among the Parties (incorporated by reference to Appendix B to the Proxy Statement-Prospectus contained in the Registrant's Registration Statement on Form S-4 [File No. 333-48825] filed with the Commission on March 31, 1998).
2.7		Agreement and Plan of Merger dated as of January 8, 1998 by and between the Registrant and Community Bancorp, Inc. (incorporated by reference to Exhibit 2.14 to the Registrant's Registration Statement on Form S-4 [File No. 333-49367] filed with the Commission on June 9, 1998 (the “June 1998 Form S-4”)), and as amended by First Amendment to Agreement and Plan of Merger, dated as of the 9th day of March, 1998, between the Registrant and Community Bancorp, Inc. (incorporated by reference to Exhibit 2.15 to the June 1998 Form S-4).
2.8		Agreement and Plan of Merger dated as of April 2, 1998 between the Registrant and Western Bancshares of Las Cruces, Inc. (incorporated by reference to Exhibit 2.16 to the June 1998 Form S-4).

2.9	Agreement and Plan of Merger dated as of May 18, 1998 between the Registrant and Guardian Bancorp. (incorporated by reference to Exhibit 2.17 to the June 1998 Form S-4).
2.10	Agreement and Plan of Merger dated as of January 12, 1998 between the Registrant and FNB, Inc. (incorporated by reference to Exhibit 2.16 to the June 1998 Form S-4).
2.11	Agreement and Plan of Merger dated as of May 10, 1999 between the Registrant and Valley National Corporation (incorporated by reference to Appendix A to the Registrant's Registration Statement on Form S-4 [File No. 333-84843], as amended, filed with the Commission on August 31, 1999.
2.12	Agreement and Plan of Merger dated as of July 26, 1999, between the Registrant and River Bancorp, Inc., (incorporated by reference to Exhibit 2.12 to the 2000 10-K) including Assignment and First Amendment to Agreement and Plan of Merger dated as of November 30, 1999.
3.1	Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the 1996 Form 10-K), as amended by a Certificate of Amendment to the Registrant's Certificate of Incorporation as filed with the Delaware Secretary of State on May 7, 1998 (incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1998 [the “1998 Form 10-K”]).
3.2	Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement on Form S-1 [File No. 33-41246], as declared effective by the Commission on August 13, 1991 [the “1991 S-1”]).
4.1	Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred Stock of the Registrant (incorporated by reference to Exhibit A to Exhibit 1 to the Registrant's Registration Statement on Form 8-A, filed with the Commission on January 9, 1995 [the “Form 8-A”]).
4.2	Form of Rights Agreement dated as of January 5, 1995, between the Registrant, and Norwest Bank Minnesota, National Association (“Norwest Bank”), which includes as Exhibit B thereto the form of Rights Certificate (incorporated by reference to Exhibit 1 to the Form 8-A.)
4.3	Subordinated Indenture dated February 5, 1997, between the Registrant and Wilmington Trust Company, as Indenture Trustee, including form of Junior Subordinated Indenture (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3 [File No. 333-19921] filed with the Commission as of January 30, 1997 [the “1997 CFB Capital I Form S-3”]).
4.4	Amended and Restated Trust Agreement of CFB Capital I dated February 5, 1997, including Form of Capital Security Certificate of CFB Capital I (incorporated by reference to Exhibit 4.5 to the 1997 CFB Capital I Form S-3).
4.5	Capital Securities Guarantee Agreement dated as of February 5, 1997, between the Registrant and Wilmington Trust Company as Trustee (incorporated by reference to Exhibit 4.7 to the 1997 CFB Capital I Form S-3).
4.6	Indenture dated June 24, 1997 relating to the Registrant's 7.30% Subordinated Notes Due 2004 (the “New Notes”) between the Registrant and Norwest Bank, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-4 [File No. 333-36091] as declared effective by the Commission on November 10, 1997 [the “1997 Subordinated Note Form S-4”]).
4.7	Subordinated Indenture dated December 10, 1997, between the Registrant and Wilmington Trust Company, as Indenture Trustee, including form of Junior Subordinated Indenture (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3 [File No. 333-37521] as declared effective by the Commission on December 4, 1997 [the “1997 CFB Capital II Form S-3”]).
4.8	Amended and Restated Trust Agreement of CFB Capital II dated December 10, 1997, including Form of Capital Security Certificate of CFB Capital II (incorporated by reference to Exhibit 4.5 to the 1997 CFB Capital II Form S-3).
4.9	Capital Securities Guarantee Agreement dated as of December 10, 1997, between the Registrant and Wilmington Trust Company as Trustee (incorporated by reference to Exhibit 4.7 to the 1997 CFB Capital II Form S-3).
10.1	2000 Annual Incentive Plan for Holding Company Management.*
10.2	Restated 1987 Stock Option Plan (incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form S-8 [File No. 33-46744], as declared effective by the Commission on May 6, 1992).*
10.3	Form of Tax Sharing Agreement between the Registrant and each of its subsidiary Banks (incorporated by reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 [the “1995 Form 10-K”]).
10.4	Form of Service Agreement for Data Processing between Community First Service Corporation and each of the subsidiary Banks of the Registrant (incorporated by reference to Exhibit 10.4 to the 1995 Form 10-K).
10.5	Form of Bank Services Agreement between the Registrant and each of its subsidiary Banks (incorporated by reference to Exhibit 10.5 to the 1995 Form 10-K).
10.6	Form of Agency Agreement between the Registrant and each of its subsidiary Banks, and Assignment of Agency Agreement and Second Assignment of Agency Agreement, which assign the Registrant's interest in the Agency Agreement to Community First Financial, Inc. (relating to the Registrant's subsidiary Banks) (incorporated by reference to Exhibit 10.6 to the 1995 Form 10-K).
10.7	Lease dated April 27, 1993, between Community First Properties, Inc. (formerly Fargo Tower Partners) and the Registrant (incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994).
10.8	Promissory Note dated July 14, 1997 (Term Note) in the principal amount of $30,000,000, issued to Norwest Bank, as Agent, on behalf of Harris Trust and Savings Bank (“Harris”), Bank of America National Trust and Savings Association (“Bank of America”) and Norwest (incorporated by reference to Exhibit 10.8 to Registrant's Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 21, 1997 [the “1997 Form 10-K”]).
10.9	Promissory Notes dated July 14, 1997 (Current Notes), each in the principal amount of $8,333,333.33, issued to each of Harris, Bank of America and Norwest (incorporated by reference to Exhibit 10.9 to the 1997 Form 10-K).
10.10	Credit Agreement dated July 14, 1997 among the Company, Harris, Bank of America, Norwest as a lender, and Norwest as Agent (incorporated by reference to Exhibit 10.10 to the 1997 Form 10-K).
10.10.1	Amended and Restated Credit Agreement dated as of April 30, 1999 between the Company, Harris Trust and Savings Bank and Wells Fargo National Association.
10.10.2	First Amendment dated April 21, 2000 to Amended and Restated Credit Agreement dated April 30, 1999 between the Company and Harris Trust and Savings Bank and Wells Fargo National Association.
10.10.3	Second Amendment dated December 22, 2000 to Amended and Restated Credit Agreement dated as of April 30, 1999 between the Company and Harris Trust and Savings Bank and Wells Fargo National Association.
10.10.4	Current note dated December 22, 2000 in the principal amount of 35,000,000 issued to Wells Fargo Bank Minnesota, National Association.
10.11	Form of Indemnification Agreement entered into by and between the Registrant and the Registrant's officers and directors (incorporated by reference to Exhibit 10.33 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992 [the “1992 Form 10-K”]).
10.12	1996 Stock Option Plan, as approved by the Board of Directors on February 6, 1996 (incorporated by reference to Exhibit 10.15 to the 1995 Form 10-K),and as amended by resolution of the Board of Directors on February 1, 1999 (incorporated by reference to Exhibit 10.12 to the 1998 Form 10-K).

10.13	Supplemental Executive Retirement Plan, effective as of August 1, 1995 (incorporated by reference to Exhibit 10.13 to the 1997 Form 10-K).*
10.14	Registrant's Deferred Compensation Plan for Members of the Board of Directors, effective August 1, 1993, including First Amendment to the Registrant's Deferred Compensation Plan for Members of the Board of Directors, effective as of February 1, 1999 (incorporated by reference to Exhibit 10.14 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998 [the “1998 Form 10-K”]).
10.15.1		Change in Control Severance Agreement dated December 1, 1998 between the Registrant and Donald R. Mengedoth (incorporated by reference to Exhibit 10.15.1 to the 1998 Form 10-K).*
10.15.2		Change in Control Severance Agreement dated December 1, 1998 between the Registrant and Mark A. Anderson (incorporated by reference to Exhibit 10.15.2 to the 1998 Form 10-K).*
10.15.3		Form of Change in Control Severance Agreement dated December 1, 1998 between the Registrant and Messrs. David A. Lee, Ronald K. Strand and Bruce A. Heysse (incorporated by reference to Exhibit 10.15.3 to the 1998 Form 10-K).*
10.15.4		Form of Change in Control Severance Agreement dated December 1, 1998 between the Registrant and Registrant's executive officers (incorporated by reference to Exhibit 10.15.4 to the 1998 Form 10-K).*
10.15.5		Amended and Restated Employment Agreement dated July 1, 1999, among Valle de Oro Bank, N.A., Valley National Corporation and William V. Ehlen, assumed by the Registrant effective October 7, 1999 (incorporated by reference to Exhibit 10.15.5 to the 2000 Form 10-K).*
10.15.6		Salary Continuation Agreement dated January 10, 1996, by and between Valle de Oro Bank, N.A. and William V. Ehlen, assumed by the Registrant effective October 7, 1999. (incorporated by reference to Exhibit 10.15.6 to the 2000 Form 10-K)*
10.15.7		Employment Agreement made as of the 1st day of March, 2000, between the Registrant and Donald R. Mengedoth (Incorporated by reference to Exhibit 10.15.17 to the 1999 Form 10-K).*
10.16		Plan of Reorganization and Merger Agreement dated as of May 31, 2000 by and between Community First National Bank, Phoenix, Arizona, Community First National Bank, Spring Valley, California, Community First National Bank, Fort Morgan, Colorado, Community First National Bank, Decorah, Iowa, Community First National Bank, Fergus Falls, Minnesota, Community First National Bank, Alliance, Nebraska, Community First National Bank, Las Cruces, New Mexico, Community First National Bank, Salt Lake City, Utah, Community First National Bank, Spooner, Wisconsin, Community First National Bank, Cheyenne, Wyoming and Community First National Bank, Fargo, North Dakota.
10.17		Credit Agreement dated as of December 22, 2000 between the Company and Harris Trust and Savings Bank.
10.18		Subordinated Term Note dated December 22, 2000 in the principal amount of $25,000,000 issued to Harris Trust and Savings Bank.
10.19		Plan of Reorganization and Merger Agreement dated as of December 31, 2000 by and between Community First State Bank, a South Dakota banking corporation and Community First National Bank, a national banking association.
13.1		Annual Report to Shareholders.
21.1		Subsidiaries of the Registrant.
23.1		Consent of Ernst & Young LLP.

*Executive compensation plans and arrangements.

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.

	COMMUNITY FIRST BANKSHARES, INC.
	(“Registrant”)
Dated: March 26, 2001	By  /s/ Mark A. Anderson
	Mark A. Anderson
	President and Chief Executive Officer

          Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant, in the capacities and on the dates indicated.

Signature and Title	Date
/s/     Donald R. Mengedoth	March 22, 2001
Donald R. Mengedoth
Chairman of the Board of Directors
/s/     Mark A. Anderson	March 26, 2001
Mark A. Anderson
President and Chief Executive Officer
(Principal Executive Officer)
/s/     Craig A. Weiss	March 26, 2001
Craig A. Weiss
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/     Patrick E. Benedict	March 26, 2001
Patrick E. Benedict, Director
/s/     Patrick Delaney	March 26, 2001
Patrick Delaney, Director
/s/     John H. Flittie	March 23, 2001
John H. Flittie, Director
/s/     Darrell G. Knudson	March 26, 2001
Darrell G. Knudson, Director
/s/     Dennis M. Mathisen	March 23, 2001
Dennis M. Mathisen, Director
/s/     Marilyn R. Seymann	March 26, 2001
Marilyn R. Seymann, Director
/s/     Harvey L. Wollman	March 26, 2001
Harvey L. Wollman, Director
/s/     Annette Quintana	March 23, 2001
Annette Quintana, Director

EX-10.1

Exhibit 10.1

COMMUNITY FIRST BANKSHARES, INC.

ANNUAL INCENTIVE PLAN

2000

2000 AIP
GROUP		TARGET INCENTIVE	MAXIMUM
I	CEO	50%	100%
II	VICE CHAIRS/EVP’S	35%	70%
III	SVP’S	25%	50%
IV	VP’S	15%	30%

SPLIT 50% INTERNAL & 50% EXTERNAL
	TARGET	INTERNAL	EXTERNAL
I	50%	25%	25%
II	35%	17.5%	17.5%
III	25%	12.5%	12.5%
IV	15%	7.5%	7.5%

INTERNAL AWARD CALCULATION

Based on performance versus plan EPS as target.
No award if less than 90% of plan.
Double internal amount @ 110% of plan (see schedule).
Round up at .5 (plan) and down at <.5.

			Award % of Base Salary
% of Plan	Fully Diluted EPS	I	II	III	IV
90.00%	$1.530	0.000%	0.000%	0.000%	0.000%
91.00%	$1.547	2.500%	1.750%	1.250%	0.750%
92.00%	$1.564	5.000%	3.500%	2.500%	1.500%
93.00%	$1.581	7.500%	5.250%	3.750%	2.250%
94.00%	$1.598	10.000%	7.000%	5.000%	3.000%
95.00%	$1.615	12.500%	8.750%	6.250%	3.750%
96.00%	$1.632	15.000%	10.500%	7.500%	4.500%
97.00%	$1.649	17.500%	12.250%	8.750%	5.250%
98.00%	$1.666	20.000%	14.000%	10.000%	6.000%
99.00%	$1.683	22.500%	15.750%	11.250%	6.750%
100.00%	$1.700	25.000%	17.500%	12.500%	7.500%
101.00%	$1.717	27.500%	19.250%	13,750%	8.250%
102.00%	$1.734	30.000%	21.000%	15.000%	9.000%
103.00%	$1.751	32.500%	22.750%	16.250%	9.750%
104.00%	$1.768	35.000%	24.500%	17,500%	10.500%
105.00%	$1.785	37.500%	26.250%	18.750%	11.250%
106.00%	$1.802	40.000%	28.000%	20.000%	12.000%
107.00%	$1.819	42.500%	29.750%	21.250%	12.750%
108.00%	$1.836	45.000%	31.500%	22.500%	13.500%
109.00%	$1.853	47.500%	33.250%	23.750%	14.250%
110.00%	$1.870	50.000%	35.000%	25.000%	15.000%

EXTERNAL AWARD CALCULATION

SNL peer group (30 banks) for current performance year based on group as of 12/31/98.

Combines incentive for Return on Equity (ROE) and Total Shareholder Return (TSR) (see matrix).

SNL 20 Bank Group

Percentile	85th or higher	100%	150%	200%
ROE	50th*	50%	100%	150%
	49th or lower	0%	50%	100%
		49th or lower	50th *	85th or higher
				Percentile TSR

*Award will be prorated from 50^th% to 85^th%.

External award calculation:

		% of Salary at Performance Level
	Target	50%	100%	150%	20%
I	25%	12.5%	25%	37.5%	50%
II	17.5%	8.75%	17.5%	26.25%	35%
III	12.5%	6.25%	12.5%	18.75%	25%
IV	7.5%	3.75%	7.5%	11.25%	15%

The Selected Peer Group reflects our selection of the 29 other institutions most like the subject institution to be used as a peer group in comparing relative compensation levels.  The automated process searches in sequence for:

1.	Banks in the same state within 40% of total assets.
2.	Banks in the same region within 40% of total assets.
3.	Banks in the same state within 80% of total assets.
4.	Banks in the same region within 80% of total assets.
5.	Any bank within 40% of total assets.
6.	Any bank within 80% of total assts.
7.	Banks closest in asset size.

If at any point in the sequence 29 banks are found, the sequence stops and those banks form the Selected Peer Group.  If step six is reached and there are still not 29 other banks, the banks closest in asset size any where in the country are chosen to round out the peer group.

EX-10.10.1

Exhibit 10.10.1

AMENDED AND RESTATED CREDIT AGREEMENT

          THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of the 30th day of April, 1999, and is by and among COMMUNITY FIRST BANKSHARES, INC., a Delaware corporation with offices located in Fargo, North Dakota (the “Borrower”), HARRIS TRUST AND SAVINGS BANK (“Harris”) and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION (“Norwest;” Harris and Norwest each referred to herein as a “Bank” and collectively as “Banks”), and Norwest as agent for the Banks (in such capacity, the “Agent”).

RECITALS

          WHEREAS, the Borrower has requested the Banks (i) to establish a back-up revolving line of credit, for the benefit of the Borrower in the amount of $35,000,000.00, and (ii) to make a reducing revolving term loan to the Borrower in the amount of $10,000,000.00;

          WHEREAS, the Banks are willing to grant said requests, subject to the provisions of this Credit Agreement;

          NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein, the parties agree as follows:

          SECTION 1  Definitions

          In addition to those terms defined in the above Recitals, as used herein:

1.1     “Advance” shall mean a Credit Advance or a Term Loan Advance.

1.2     “Agreement” shall mean this Credit Agreement and all amendments and supplements hereto which may from time to time become effective hereafter.

1.3     “Bank Group” shall mean the Borrower and the Subsidiary Banks.

1.4     “Base Rate” shall mean the “base” or “prime” rate of interest established by Norwest
as in effect and announced from time to time.

1.5     “Base Rate Borrowing” shall mean those Advances bearing interest at all times at a
variable rate determined by reference to the Base Rate.

1.6     “Borrowed Money” shall mean funds obtained by incurring contractual indebtedness, but shall not include money borrowed from any Bank.

1.7     “Business Day” shall mean (i) for all purposes other than those described in the following clause (ii), any day on which the Agent is open for transacting substantially all of its commercial business, and (ii) with respect to all notices and determinations in connection with, and payments of principal of and interest on, Eurodollar Borrowings, any Business Day described in preceding clause (i) on which trading by and between banks in United States Dollar deposits in the London Interbank Eurodollar market is transacted.

1.8     “Closing Date” shall mean the date on which this Agreement is fully executed and delivered to the Agent.

1.9     “Core Capital” shall mean the sum of the consolidated total equity of the Bank Group plus capital and trust preferred Securities.

1.10   “Credit” shall mean a revolving line of credit established by the Banks for the benefit of the Borrower in the aggregate amount of $35,000,000.00.

1.11   “Credit Advance” shall mean an advance of funds under the Credit.

1.12   “Credit Expiration Date” shall mean April 30, 2000.

1.13   “Credit Percentages” shall mean, relative to any Bank, the percentages identified as such set forth opposite the signature block for such Bank on the last page of this Agreement.

1.14   “Current Notes” shall mean the promissory notes of the Borrower substantially in the form of attached Exhibits A-1 and A-2, evidencing Credit Advances under the Credit.

1.15   “Eurodollar Borrowing” shall mean those Advances bearing interest at all times during the relevant Interest Period at a fixed rate determined by reference to the Eurodollar Rate.

1.16   “Eurodollar Rate” shall mean, with respect to any Interest Period for any Eurodollar Borrowing, the rate per annum (rounded up to the nearest one-sixteenth of one percent) equal to the offered quotation to the Agent in the London Interbank Eurodollar market for United States Dollar deposits for delivery on the first day of such Interest Period, for the number of days in such Interest Period, and in an amount comparable to the principal amount of the related Eurodollar Borrowing to be outstanding during such Interest Period, determined as of approximately 12:00 Noon, Minneapolis time, two Business Days before the beginning of such Interest Period.

1.17   “Events of Default” shall mean any and all events of default described in Section 8 hereof.

1.38   “Federal Funds Borrowing” shall mean those Advances bearing interest at all times at a variable rate determined by reference to the Federal Funds Rate.

1.19   “Federal Funds Rate” shall mean the overnight market rate quoted to the Agent at approximately 12:00 Noon, Minneapolis time, each Business Day by dealers in the Federal Funds market for the offering of dollars to the Agent for deposit, as such rate may increase or decrease from time to time.

1.20   “GAAP” shall mean Generally Accepted Accounting Principles applied on a basis consistent with those reflected in the financial statements referred to in Section 5.8 hereof.

1.21   “Interest Payment Date” shall mean (i) as to any Eurodollar Borrowing in respect of which an Interest Period of one, two or three months has been selected, the last day of such Interest Period, and (ii) as to any Eurodollar Borrowing in respect of which an Interest Period of six months has been selected, the last day of the first three month period falling within such Interest Period and the last day of such Interest Period.

1.22   “Interest Period” means, with respect to any Eurodollar Borrowing, (a) initially, the period commencing on, as the case may be, the date on which such Eurodollar Borrowing is made or the date on which such Eurodollar Borrowing results from the conversion of a Base Rate Borrowing or a Federal Funds Borrowing and ending one, two, three or six months thereafter, as selected in a notice of borrowing, continuance or conversion as provided in Sections 2.1, 2.3, 2.4 or 3.4 hereof, and (b) thereafter, each period commencing on the last day of the immediately preceding Interest Period and ending one, two, three or six months thereafter, as selected by irrevocable notice to the Agent (which notice must be received by the Agent before 12:00 Noon, Minneapolis time, three Business Days before the last day of the then current Interest Period with respect to such Eurodollar Borrowing); provided, however, that (i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day, (ii) the Borrower may not select an Interest Period that would otherwise extend beyond the Credit Expiration Date (with respect to the Credit), or the Term Loan Maturity Date (with respect to the Term Loan), (iii) if no notice is given with respect to selection on an Interest Period as provided above, the affected Eurodollar Borrowing shall be converted to a Base Rate Borrowing on the last day of the Interest Period then in effect and (iv) any Interest Period that begins on the last Business Day of a calendar month (or on a date for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

1.23   “Majority Banks” shall mean any group of banks which, in the aggregate, has commitments of 66-67% or more of the aggregate amount of the Credit and the Term Loan.

1.24   “Permitted Liens” shall mean (i) liens in favor of Norwest as agent for the Banks on a pro rata basis, (ii) liens existing as of the Closing Date and disclosed to the Banks in writing, (iii) liens for taxes not delinquent or which the Borrower is contesting in good faith in a manner that prevents enforcement of the matters being contested and for which adequate reserves have been provided, and (iv) purchase money liens securing indebtedness otherwise permitted under this Agreement, but only extending to the goods so acquired.

1.25   “Prior Loan Agreement” shall mean that certain Credit Agreement dated as of January 23, 1998 and amended by amendments dated as of July 2, 1998 and January 22, 1999 made between the Borrower, Norwest, Harris, Bank of America National Trust and Savings Association and the Agent.

1.26   “Reserve Adjusted Eurodollar Rate” shall mean, for any Interest Period, a rate per annum (rounded upward, if necessary, to the next higher 1/16 of 1%) equal to the rate obtained by dividing (i) the Eurodollar Rate for such Interest Period by (ii) a percentage equal to 1 minus the Reserve Requirement in effect from time to time during such Interest Period.

1.27   “Reserve Requirement” shall mean, relative to the Interest Period applicable to any Eurodollar Borrowing, a percentage (expressed as a decimal) equal to the aggregate maximum reserve requirement (including all basic, supplemental, marginal and other reserves and taking into account any transitions, adjustments or other scheduled changes in reserve requirements during such interest Period) on the first day of such Interest Period as specified under F.R.S. Board Regulation D or any other F.R.S. Board regulation then in effect which prescribes reserve requirements applicable to non-personal time deposits (as currently defined in such Regulation D), applicable to the class of banks of which the Banks are members, on deposits of the type used as a reference in determining the Reserve Adjusted Eurodollar Rate and having a maturity approximately equal to such Interest Period.

1.28   “Subsidiary Banks” shall mean each bank for which 51% or more of its voting stock is controlled directly, or indirectly via a subsidiary, by the Borrower.

1.29   “Tangible Equity Capital” shall mean the sum of perpetual preferred stock, common stock surplus and undivided profits, capital reserves, and net unrealized holding gains (and losses) on “available-for-sale” securities, as disclosed in the Subsidiary Banks’ Call Reports.

1.30   “Term Loan” shall mean a reducing revolving term loan made by the Banks to the Borrower in an aggregate amount not exceeding $10,000,000.00.

1.31   “Term Loan Advance” shall mean an advance of funds under the Term Loan.

1.32   “Tern Loan Maturity Date” shall mean January 23, 2006.

1.33   “Term Loan Percentages” shall mean, relative to any Bank, the percentages identified as such set forth opposite the signature block for such Bank on the last page of this Agreement.

1.34   “Term Notes” shall mean the promissory notes of the Borrower substantially in the form of attached Exhibits B-1 and B-2, evidencing the Term Loan.

1.35.  “Tier 1 Core Capital” shall mean the core capital elements set forth by the Federal Reserve Board in 12 CFR Parts 208 and 225.

1.36   “Tier 2 Supplementary Capital” shall mean the allowance for loan and lease losses, as disclosed in the Subsidiary Banks, Call Reports.

1.37   “Total Liabilities” shall mean the aggregate amount of the Borrower’s total  liabilities.. less capital and trust preferred securities to the extent included as total liabilities.

          SECTION 2  The Credit

2.1     Subject to the other provisions of this Agreement, each Bank shall make Credit Advances to the Borrower under The Credit from time to time from the effective date hereof until the Credit Expiration Date in aggregate principal amounts not exceeding such Bank’s Credit Percentage of THIRTY-FIVE MILLION AND NO/100 DOLLARS ($35,000,000.00), at any one time outstanding.  Each Credit Advance will be requested to the Agent in writing by an authorized officer of the Borrower.  The proceeds of the initial Credit Advance shall be used for the exclusive purpose of paying off any indebtedness outstanding under Section 2 of the Prior Loan Agreement.  Each request (other than the request for the initial Credit Advance) shall be accompanied by a Notice of Borrowing, substantially in the form of attached Exhibit C, stating (among other things) that the proceeds of the requested Credit Advance will be used only to pay commercial paper notes at maturity.  Each Credit Advance shall be made on a Business Day, and shall be comprised of either a Base Rate Borrowing, a federal Funds Borrowing, or (provided there exists no Event of Default) a Eurodollar Borrowing, as requested by the Borrower.  Any Credit Advance for which the Borrower fails to specify at the time of the related request either a Base Rate Borrowing, a Federal Funds Borrowing or a Eurodollar Borrowing shall be a Base Rate Borrowing.  Requests for Credit Advances must be received by the Agent no later than 12:00 Noon, Minneapolis time, on the day of an Credit Advance comprised of a Base Rate Borrowing or a Federal Funds Borrowing, and no later than 12:00 Noon, Minneapolis time, on the third Business Day immediately preceding an Credit Advance comprised of a Eurodollar Borrowing.  The person making the request may ask the Agent to quote an indication of the Eurodollar Rate which would be applicable to the Credit Advance for an Interest Period specified by such person.  If the person does not immediately accept the quoted Eurodollar Rate, the related Credit Advance shall be a Base Rate Borrowing.  If the quoted Eurodollar Rate is immediately accepted, the requested Credit Advance shall be a Eurodollar Borrowing; provided, however, that each Credit Advance comprised of a Eurodollar Borrowing shall be in the amount of $5,000,000.00, or a greater amount in increments of $1,000,000.00.  Each request for an advance shall be deemed a representation and warranty by the Borrower that the representations and warranties set forth in Section 5 hereof are true as of the date of such request.  Each Credit Advance will be evidenced by a notation on each Bank’s records, which shall be conclusive evidence of such Credit Advance, and by the related Current Note.  Within the limits of the Credit and subject to the terms and conditions hereof, the Borrower may borrow, prepay pursuant to Section 2.11 hereof and reborrow pursuant to this Section 2.1.

2.2     The Agent shall notify each Bank of each request for a Credit Advance by telephone or fax no later than 1:00 p.m., Minneapolis time on the day on which the Agent received the request.  Subject to the notice requirements of Section 2.1 hereof and to the further provisions of this Section 2.2, the Agent will make the Credit Advance to the Borrower no later than 4:40 p.m., Minneapolis time, on the Business Day requested by the Borrower.  On or before 3.30 p.m., Minneapolis time, on such Business Day, each Bank shall deposit with the Agent same-day funds in an amount equal to such Bank’s Percentage of the related Credit Advance.  Such deposit will be made to an account which the Agent shall specify from time to time by notice to the Banks.  To the extent funds are received from the Banks in accordance with this Section 2.2, the Agent shall make such funds available to the Borrower by wire transfer to the account(s) the Borrower shall have designated to the Agent at or before the time of the related request.

2.3     Eurodollar Borrowings may be continued as such upon the expiration of an Interest Period with respect thereto by compliance with the notice provisions set forth in Sections 1.22 and 2.1 hereof, provided, however, that Eurodollar Borrowings may not be continued as such when any Event of Default exists, but (subject to the Bank’s rights under Section 8 hereof) shall be automatically converted to Base Rate Borrowings on the last day of the existing Interest Period.  If the Borrower shall fail to notify the Bank of its desire to continue a Eurodollar Borrowing, as described in the first sentence of this Section 2.3, such borrowing shall be automatically converted to a Base Rate Borrowing on the last day of the existing Interest Period.

2.4     For so long as there exists no Event of Default, and subject to the dollar restrictions specified in Section 2.1 hereof, the Borrower may elect to convert any Base Rate Borrowing or Federal Funds Borrowing to a Eurodollar Borrowing by compliance with the notice provisions set forth in Sections 1.22 and 2.1 hereof.  The Borrower may elect to convert any Eurodollar Borrowing to a Base Rate Borrowing or Federal Funds Borrowing on the last day of the related Borrow Interest Period by compliance with the notice provisions set forth in Sections 1.22 and 2.1 hereof.

2.5     Subject to the provisions of Section 2.7 hereof, interest on that portion of the outstanding principal of the Current Note comprised of Base Rate Borrowings shall be calculated at an annual rate equal to the Base Rate in effect from time to time, and shall change as and when the Base Rate changes.  Subject to the provisions of Section 2.7 hereof, interest on that portion of the outstanding principal of the Current Note comprised of Federal Funds Borrowings shall be calculated at all annual rate equal to one percent (1.0%) in excess of the Federal Funds Rate in effect from time to time, and shall change as and when the Federal Funds Rate changes.  Interest  shall be calculated on the basis of the actual number of days elapsed in a year of 365 days.

2.6     Subject to the provisions of Section 2.7 hereof, interest on the unpaid principal of Eurodollar Borrowings shall be calculated for each Interest Period at a fixed annual rate equal to the sum, of the Reserve Adjusted Eurodollar Rate determined for such Interest Period plus one percent (1.0%).  Interest shall be calculated on the basis of the actual number of days elapsed in a year of 360 days.

2.7     Notwithstanding the provisions of Sections 2.5 and 2.6 hereof, for so long as there exists any Event of Default, interest on the Current Notes shall accrue at an annual rate of two percent (2.0%) in excess of the rate which would otherwise apply to the Current Notes.

2.8     Interest on the unpaid principal of Base Rate Borrowings and Federal Funds Borrowings shall be payable monthly, commencing May 23, 1999, and continuing on the same day of each succeeding month, and on the Credit Expiration Date.

2.9     Interest on the unpaid principal of each Eurodollar Borrowing shall be payable in arrears on the related Interest Payment Date.

2.10   The principal of tile Current Notes shall be repayable on the Credit Expiration Date.

2.11   The Borrower may at any time prepay Base Rate Borrowings and Federal Funds Borrowings in whole or from time to time in part without premium or penalty.  The Borrower may prepay any Eurodollar Borrowing only in its entirety and only on the last day of the relevant Interest Period.

2.12   If the Agent or any Bank determines (which determination shall be conclusive and binding upon the Borrower) that by reason of circumstances affecting the Interbank Eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for any Interest Period with respect to (i) a proposed Eurodollar Borrowing or (ii) the continuation of Eurodollar Borrowings beyond the expiration of the then current Interest Period with respect thereto, the Agent shall forthwith give immediate notice of such determination to the Borrower at least one Business Day before, as the case may be, the requested borrowing date for such Eurodollar Borrowings on the last day of such Interest Period.  If such notice is given, (i) any requested Eurodollar Borrowing shall be made as Base Rate Borrowings and (ii) any outstanding Eurodollar Borrowings shall be converted, on the last day of the then-current Interest Period with respect thereto, to Base Rate Borrowings.  Until such notice has been withdrawn by the Agent, no further Eurodollar Borrowings shall be made, nor shall the Borrower have the right to convert Base Rate Borrowings or Federal Funds Borrowings into Eurodollar Borrowings.

2.13   Notwithstanding any other provision hereof, if any law, regulation, treaty or directive or any change therein or in the interpretation or application thereof by any governmental authority, agency or instrumentality or any court makes it unlawful for any Bank to make or maintain Eurodollar Borrowings as contemplated by this Agreement, such Bank and the Agent shall give notice (by telephone confirmed in writing) thereof to the Borrower, and (i) such Bank’s commitment to make Eurodollar Borrowings shall forthwith be canceled, (ii) each then-outstanding Eurodollar Borrowing (if any) shall automatically be converted to a Base Rate Borrowing on the last day of the then-current Interest Period for such Eurodollar Borrowing or within such earlier period as required by law, and (iii) such Bank shall thereafter make any requested Eurodollar Borrowing available as a Base Rate Borrowing.  The Borrower hereby agrees promptly to pay such Bank, upon demand, any additional amount necessary to compensate such Bank for any costs incurred by such Bank in making any conversion of Eurodollar Borrowings in accordance with this Section 2.13, including (but not limited to) any interest or fees payable by such Bank to lenders of funds obtained by it in order to make or maintain such Eurodollar Borrowings (the Bank’s notice of such costs, as certified to the Borrower, to be conclusive absent manifest error).

2.14   The Borrower shall pay the Agent, in advance on a calendar quarter basis, on behalf of the Banks a facility fee of one-quarter of one percent (0.25%) of the amount of the Credit, based on actual number of days elapsed in a year of 365 days.

          SECTION 3  The Term Loan

3.1     Subject to the other provisions of this Agreement, each Bank shall make Term Loan Advances to the Borrower under the Term Loan from time to time from the effective date hereof until the Term Loan Maturity Date in aggregate principal amounts at any one time outstanding not exceeding such Bank’s Term Loan Percentage of the Maximum Term Loan Amount determined pursuant to Section 3.2 hereof.  Each Term Loan Advance will be requested to the Agent in writing by an authorized officer of the Borrower on a Notice of Borrowing substantially in the form of Exhibit C hereto.  The proceeds of the initial Term Loan Advance shall be used for the exclusive purpose of paying off any indebtedness outstanding under Section 3 of the Prior Loan Agreement.  Requests for Term Loan Advances must be received by the Agent no later than 12:00 Noon, Minneapolis time, on the day of a Term Loan Advance comprised of a Base Rate Borrowing or a Federal Funds Borrowing, and no later than 12:00 Noon, Minneapolis time, on the third Business Day immediately preceding a Term Loan Advance comprised of a Eurodollar Borrowing.

3.2     The Maximum Term Loan Amount shall initially be $10,000,000.00 from the date of this Agreement through June 30, 1999.  The Maximum Term Loan Amount shall thereafter be reduced in semi-annual increments of $714,000.00 each, commencing June 30, 1999 and continuing on the last day of each consecutive December and June thereafter.  Within such Maximum Term Loan Amount and subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow under the Term Loan.

3.3     The Agent shall promptly notify each Bank of the Borrower’s request for a Term Advance, and the amount of the term Loan Advance.  Subject to the further provisions of this Section 3.3, the Agent will fund the Term Loan Advance no later than 4:30 p.m., Minneapolis time, on the Business Day requested by the Borrower.  On or before 3:30 p.m., Minneapolis time, on such Business Day, each Bank shall deposit with the Agent same-day funds constituting such Bank’s Term Loan Percentage of the Term Loan Advance.  Such deposit will be made to an account which the Agent shall specify by notice to the Banks.  To the extent funds are received from the Banks in accordance with this Section 3.3, the Agent shall make such funds available to the Borrower by wire transfer to the account(s) the Borrower shall have designated to the Agent at or before the time of the related request.

3.4         The Term Loan shall be comprised of Base Rate Borrowings, Federal Funds Borrowings, and/or Eurodollar Borrowings; provided, however, that Eurodollar Borrowings shall be in the amount of $5,000,000.00, or a greater amount in increments of $1,000,000.00; provided, further, that no Eurodollar Borrowing may be in an amount, or for an Interest Period, which would cause the Borrower to make a prepayment of such Eurodollar Borrowing prior to the last day of such Interest Period in order to comply with the principal repayment schedule set forth in Section 3.8 hereof subject to the provisions of Section 3.5 hereof, interest on that portion of the unpaid principal of the Term Note comprised of a Base Rate Borrowing shall be calculated at an annual rate equal to the Base Rate in effect from time to time, and shall change as and when the Base Rate changes; interest on that portion of the unpaid principal of the Term Note comprised of a Federal Funds Borrowing shall be calculated at an annual rate equal to one and one-quarter percent (1.25%) in excess of the Federal funds Rate in effect from time to time, and shall change as and when the Federal Funds Rate changes; and, interest on that portion of the unpaid principal of the Term Note comprised of a Eurodollar Borrowing shall be calculated for each Interest Period at a fixed annual rate equal to the sum of the Reserve Adjusted Eurodollar Rate determined for such Interest Period plus one and one-quarter percent (1.25%).  Reference is hereby made to Sections 1.22, 2.1, 2.3 and 2.4 for statements of the terms relating to notice requirements for the creation, continuance or conversion of Base Rate Borrowings, Federal Funds Borrowings and Eurodollar Borrowings.  Interest on the Term Note shall be calculated on basis of the actual number of days elapsed in a year of 360 days.

3.5     Notwithstanding the provisions of Section 3.4 hereof, for so long as there exists any Event of Default, interest on the Term Note shall accrue at an annual rate of two percent (2.0%) in excess of the rate which would otherwise apply to the Term Note.

3.6     Interest on the unpaid principal of Base Rate Borrowings and federal Funds Borrowings shall be payable quarterly, commencing June 3 0, 1999, and continuing on the last day of each succeeding calendar quarter, and on the Term Loan Maturity Date.

3.7     Interest on the unpaid principal of each Eurodollar Borrowing shall be payable in arrears on the related Interest Payment Date.

3.8     The principal of the Term Notes shall be repayable in semi-annual installments, commencing June 30, 1999 and continuing on the last day of each consecutive December and June thereafter through and including December 31, 2005, each installment in the amount, if any, necessary to reduce the aggregate principal outstanding under the Term Loan to the new Maximum Term Loan Amount, to be allocated amount the Term Notes pro rata.  On January 23, 2006 all then-remaining outstanding principal of the Term Loan shall be due and payable.

3.9     The Borrower may at any time prepay Base Rate Borrowings and Federal Funds Borrowings in whole or from time to time in part without premium or penalty.  Reference is hereby made to Section 2.11 for statements of the terms pursuant to which Eurodollar Borrowings may be prepaid.  Prepayments shall be applied to scheduled installments in chronological order of their maturities.

3.10   The Borrower shall pay to the Agent in arrears on a calendar quarter basis, on behalf of the Banks within seven calendar days of receipt of the related fee statement, a fee (the “Unused Term Loan Fee”) calculated at an annual rate equal to two-tenths of one percent (0.20%) of the average daily unused portion of the Term Loan.  The Unused Term Loan Fee shall be calculated on the basis of actual number of days elapsed in a year of 360 days.  As used herein, the term “unused portion” shall mean the difference between the applicable Maximum Term Loan Amount and the outstanding principal balance of the Term Loan as of the date of determination.

          SECTION 4  Conditions Precedent

4.1     The Borrower represents that the following documents, delivered to the Agent in connection with the Prior Loan Agreement, have not been amended or rescinded and remain in full force and effect.

          A.      A copy, certified by the Secretary of State of Delaware, of the Borrower’s Certificate of Incorporation and all amendments thereto, together with a certificate (as of the Closing Date) of an officer of the Borrower to the effect that such Certificate of Incorporation has not been amended since the date of certification by the Secretary of State;

          B.       A certified (as of the Closing Date) copy of the Borrower’s By-laws;

4.2     The Borrower shall deliver the following to the Agent, in form and content acceptable to the Agent, on or before the Closing Date:

          A.      A certified (as of the Closing Date) copy of resolutions of the Borrower’s board of directors authorizing the execution, delivery and performance of this Agreement, the Current Notes, the Term Note, and each other document to be delivered pursuant hereto;

          B.       A certificate (as of the Closing Date) of an officer of the Borrower as to the incumbency and signatures of the officers of the Borrower signing this Agreement, the Current Notes, the Term Note, and each other document to be delivered pursuant hereto;

          C.      The Current Notes, duly executed by the Borrower;

          D.      The Term Notes, duly executed by the Borrower;

          E.       All instruments and documents comprising subordinated debt issued by the Borrower and remaining unpaid as of the Closing Date; and,

4.3     The Banks shall not be obligated to fund any requested Advance unless:

          A.      The representations and warranties contained in Section 5 hereof are true and accurate on and as of such date; and,

          B.       No Event of Default, and no event which might become an Event of Default after the lapse of time or the giving of notice and the lapse of time, has occurred and is continuing or will exist upon the date of such funding.

          SECTION 5  Representations and Warranties

          To induce the Banks to enter into this Agreement, the Borrower represents and warrants to the Banks as follows:

5.1     The Borrower is a corporation, duly organized, existing and in good standing under the laws of the State of Delaware.

5.2     The Borrower is authorized to transact business in the states of Delaware and North Dakota and in any other state where Borrower has been advised by its legal counsel to register as a foreign corporation.

5.3     Each Subsidiary Bank is authorized to transact business in the respective state where its banking office is located.

5.4     The execution, delivery and performance of this Agreement, the Current Notes, and the Term Notes by the Borrower are within its corporate powers, have been duly authorized, and are not in contravention of law, or the terms of the Borrower’s Certificate of Incorporation or By-laws, or of any undertaking to which the Borrower is a party or by which it is bound.

5.5     The property of the Borrower is not subject to any lien except liens disclosed in writing to the Banks prior to the Closing Date.

5.6     No litigation or Governmental proceeding is pending or, to the knowledge of the officers of the Borrower, threatened against the Borrower which could have a material adverse effect on the financial condition or business of the Borrower.

5.7     All authorizations of governmental agencies, bodies or authorities which are necessary to permit the transactions contemplated by this letter agreement have been obtained and are in full force and effect, and no further approval, consent, order or authorization of or designation, registration, declaration or filing with any governmental authority is required in connection with consummation of the transactions contemplated by this letter agreement.

5.8     As of the date of this Agreement, there exists no event of default under the Prior Loan Agreement, nor does there exist any event which, with the giving of notice or the passage of time (or both), could become such an event of default.

5.9     All financial statements delivered to the Banks by or on behalf of Borrower, including any schedules and notes pertaining thereto, have been prepared in accordance with GAAP consistently applied, and fully and fairly present the financial condition of the Borrower at the dates thereof and the results of operations for the periods covered thereby, and there have been no material adverse changes in the consolidated financial condition or business of the Borrower from December 31, 1998 to the date hereof.

5.10   The Borrower’s use of the proceeds of the Advances will not result in a violation of Regulation U issued by the Board of Governors of the Federal Reserve System.

          SECTION 6  Affirmative Covenants

          The Borrower covenants and agrees that, for so long as the Credit or the Tem Loan remain in existence or any indebtedness remains outstanding under the Current Notes or the Term Notes, unless the Majority Banks (via the Agent) shall otherwise consent in writing, it will:

6.1     Pay when due (and cause each other member of the Bank Group to pay when due) all taxes assessed against it or its respective property, except to the extent and for so long as contested in good faith in a manner that prevents enforcement of the matters being contested for which adequate reserves have been provided.

6.2     Maintain (and cause each other member of the Bank Group to maintain) its respective corporate existence and comply in all material respects with all laws and regulations applicable thereto,

6.3     Furnish directly to the Banks:

          A.      As soon as available, and in any event within 90 days after the end of each fiscal year of the Borrower, the annual financial statements of the Borrower, with the unqualified opinion of certified public accountants acceptable to the Agent, all such statements to be prepared on a basis consistent with the accounting practices reflected in any previously submitted financial statement.  All such financial statements shall be prepared on a consolidated and consolidating basis for the Borrower and each other member of the Bank Group.

          B.       As soon as available, and in any event within 90 days after the end of each fiscal year of the Borrower, the Annual Report of Domestic Bank Holding Companies (FR Y-6) required by the Federal Reserve Bank.

          C.      As soon as available, and in any event within 60 days after the end of each fiscal quarter of the Borrower, the complete Consolidated Report for Multi-Bank Holding Companies (FR Y-9C) required to be filed by the Borrower with the Federal Reserve Bank in the Federal Reserve District where the Borrower is located.

          D.      As soon as available, and in any event within 60 days after the end of each fiscal quarter of the Borrower, the complete Parent Company Only Financial Statement for Multi-Bank Holding Companies (FR Y-9LP) required by the Federal Reserve Bank.

          E.       As soon as available, and in any event within 45 days after the end of each quarter of each fiscal year of the Borrower, a Borrower’s Compliance Certificate (attached hereto as Exhibit D) of the Secretary or Treasurer of the Borrower (i) certifying that to the best of his knowledge, no Event of Default or event which with the giving of notice or lapse of time, or both, would constitute an Event of Default has occurred and is continuing or, if an Event of Default or such event has occurred and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto, and (ii) with computationsdemonstrating compliance with the covenants contained in Sections 7.1 through 7.6 hereof.

          F.       Within 15 days after the end of each month, (i) the internally prepared balance sheet of the Subsidiary Banks as of the end of such month, prepared on a consolidated basis, and (ii) the internally prepared income statement of  Subsidiary Banks as of the end of such month, prepared on a consolidating basis.  All of the foregoing shall be prepared in accordance with the requirements imposed by applicable regulatory authorities and applied on a basis consistent with the accounting practices reflected in any previous similar statements.

          G.      Within 45 days after the end of each fiscal quarter of the Subsidiary Banks, a summary, for the Bank Group as a whole, of the Watch List or Problem Loan Reports internally generated by the Borrower.

          H.      Immediately after obtaining knowledge thereof, notice in writing of any litigation wherein any person asserts any claim against any member of the Bank Group in excess of $500,000.00, and notice in writing of any proceedings before any governmental or regulatory agency involving any member of the Bank Group which, if decided adversely for any member of the Bank Group, would have a material adverse affect upon the business or operations of any member of the Bank Group (including without limitation, the issuance or proposed issuance of any Memorandum of Understanding, Cease and Desist Order, or other regulatory action, agreement or understanding, with respect to any member of the Bank Group by any federal or state regulatory agency having jurisdiction or control over any member of the Bank Group).

          I.        Prompt notice in writing of any negotiations to sell more than 5% of the capital stock or assets of any member of the Bank Group, together with copies of any buy/sell agreement.

          J.        A copy of the Annual Board of Directors Examination Report published by any member of the Bank Group, if so requested by the Agent or the Banks.

          K.      As soon as available, but without duplication of any other requirements set forth in this Section 6.3, such other information respecting the financial condition and results of operation of any member of the Bank Group (i) as required by law to be furnished to any regulatory authority having jurisdiction over any member of the Bank Group (including without limitation 10Q and 10K reports), and (ii) as the Agent or any Bank may from time to time reasonably request; provided, however, that the provisions of this Section 6.3(K) shall not apply to any information or reports which are prohibited from disclosure pursuant to applicable law or regulation.

          L.       Prompt notice in writing of any changes of the Borrower’s executive management personnel.

          M.      Promptly upon knowledge thereof, notice to the Agent in writing of the occurrence of any event which has or might, after the lapse of time or the giving of notice and the lapse of time, become an Event of Default.

6.4     Maintain (and cause each other member of the Bank Group to maintain) its equipment real estate and other properties in good condition and repair (normal wear and tear excepted), and pay and discharge or cause to be paid and discharged when due, the cost of repairs to or maintenance of the same, and will pay or cause to be paid all rental or mortgage payments due on such real estate.

6.5     Cause its properties (and the properties of each other member of the Bank Group) of an insurable nature to be adequately insured by reputable and solvent insurance companies against loss or damages customarily insured against by persons operating similar properties, and similarly situated, and carry such other insurance (including blanket bond coverage, errors and omissions coverage, and business interruption insurance) as usually carried by persons engaged in the same or similar businesses and similarly situated.

6.6     Keep true, complete and accurate books, records and accounts in accordance with GAAP.

6.7     Cause each Subsidiary Bank to be and remain categorized as “well capitalized,” as defined by the regulatory agencies having jurisdiction over the Subsidiary Banks.

          SECTION 7  Negative Covenants

          Without the written consent of the Majority Banks (via the Agent), for so long as the Credit or the Term Loan remains in existence or any indebtedness remains outstanding under the Current Notes or the Term Notes, the Borrower will not:

7.1     Permit the consolidated Tier I Core Capital of the Bank Group to be less than the greater of (i) 5.25% of the difference of consolidated total assets minus consolidated intangible assets and all goodwill, or (ii) the minimum required by any regulatory agency having jurisdiction over the Bank Group so that they are considered by such agency to be well capitalized.

7.2     Permit the consolidated Tier I Core Capital of The Bank Group to be less than the greater of (i) $300,000,000 or (ii) the minimum amount required by any regulatory agency having jurisdiction over The Bank Group so that they are considered by such agency to be well capitalized.

7.3     Permit the consolidated amount of the Bank Group’s non-performing assets to be greater than the sum of 15% of the Bank Group’s consolidated Tier I Core Capital plus the Bank Group’s consolidated Tier 2 Supplementary Capital at any time.

7.4     Permit the Bank Group’s consolidated net income as a percentage of its consolidated total assets to be less than 1.0% as of the end of each fiscal quarter, based upon a moving two-quarter average for the period ending June 30, 1999, a moving three-quarter average for the period ending September 30, 1999, and for each quarter thereafter a moving four-quarter average, including the current fiscal quarter reported plus the applicable number of immediately preceding fiscal quarters.

7.5     Permit the difference between the consolidated book value of the Subsidiary Banks’ securities portfolio, minus the consolidated market value of those securities classified in the “held-to-maturity” category, when expressed as an unrealized securities loss, to be more than 15% of the Subsidiary Banks’ consolidated Tangible Equity Capital as of the end of any fiscal quarter.

7.6     Permit its ratio of Total Liabilities to Core Capital to be greater than 40% as of the end of any fiscal quarter.

7.7     Permit the consolidated amount of the Bank Group’s non-performing assets to be greater than 100% of the Bank Group’s consolidated allowance for loan and lease losses.

7.8     Grant or suffer a lien upon any of its personal property assets (including without limitation stock in any Subsidiary Bank), other than Permitted Liens.

7.9     Enter into any transaction of merger or consolidation, or transfer, sell, assign, lease or otherwise dispose of (other than in the ordinary course of business) all or a substantial part of its properties or assets, or any of its notes or accounts receivable, or any stock or any assets or properties necessary or desirable for the proper conduct of its business, or change the nature of its business or wind up, liquidate or dissolve, or agree to do any of the foregoing.

7.10   Purchase any stock or other securities of, or make any loans or advances of credit to, or make any investments or acquire any controlling interest whatsoever in, any other corporation, bank, or non-bank institution other than the Subsidiary Banks existing as such as of the Closing Date, except in the ordinary course of business where such purchase, loan, advance, investment or acquisition is specifically authorized by any federal or state regulatory agency having jurisdiction or control over the Borrower or the Subsidiary Banks and where the aggregate asset size of such acquisition does not exceed $250,000,000; provided that the Agent and the Banks will not unreasonably withhold consent so long as the proforma effect of such action does not create a violation of this Agreement.

7.11   Repurchase or retire any stock of the Subsidiary Banks, or pay a dividend with respect to any class of its stock, if the proforma effect of such repurchase, retirement or dividend payment would be a violation of this Agreement.

7.12   Issue any debt or equal instruments of any type or class other than common stock and debt expressly subordinated (on written terms, acceptable to the Banks) to indebtedness owed to the Banks.

7.13   Make any modification to any instrument creating or evidencing subordinated debt, or make any prepayment of subordinated debt.

7.14   Assume, guarantee, endorse or otherwise become directly or indirectly liable in connection with the obligations of any other person or entity, except for the endorsement of negotiable instruments in the ordinary course of business, guaranties of lease obligations of the Borrower’s subsidiaries in the ordinary course of business, and existing guaranties in favor of Community First Service Corporation, Community First Properties, Inc., Community Insurance, Inc., or any other subsidiary of which the Borrower owns, directly or indirectly, at least 80% of the common stock.

7.15   Incur any indebtedness other than (i) subordinated indebtedness referred to in Section 7.12 hereof, (ii) unsecured indebtedness owed to Norwest as of the Closing Date, and (iii) other indebtedness acceptable to the Majority Banks.

          SECTION 8  Events of Default

8.1     Upon the occurrence of any of the following Events of Default:

          A.      Default in any payment of interest or of principal on any Current Note or the Term Note or the when due, and continuance thereof for 10 calendar days;

          B.       The failure of the Borrower to pay any fee when due in accordance with the provisions of this Agreement, and continuance of such failure for 10 calendar days;

          C.      Default in the observance or performance of any one or more of the covenants set forth in Section 6.7 or in Section 7 hereof,

          D.      Default in the observance or performance of any other agreement of the Borrower set forth herein (i.e., other than those addressed in Sections 8.1(A), 8.1(B) or 8.2(C) hereof), and continuance thereof for 30 calendar days;

          E.       Default in any payment of interest or of principal on any other promissory note (i.e., other than the Current Notes and the Term Note) made by the Borrower and held by any of the Banks, and continuance thereof for 10 calendar days;

          F.       Default by the Borrower in the payment of any other indebtedness for Borrowed Money in an amount exceeding $500,000.00 or in the observance or performance of any term, covenant or agreement of the Borrower in any agreement relating to any such indebtedness of the Borrower, the effect of which default is to permit the holder of such indebtedness to declare the same due prior to the date fixed for its payment under the terms thereof;

          G.      Any judgment or judgments, writ or writs, or warrantor warrants of attachment, or any similar process or processes, the aggregate amount of which (after reduction by the amount covered by insurance) exceeds $500,000.00, shall be entered or filed against the Borrower or any Subsidiary Bank or against any of its property and which remains unvacated, unbonded, unstayed or unsatisfied for a period of 30 calendar days;

          H.      Any representation or warranty made by the Borrower herein, or in any statement or certificate furnished by the Borrower hereunder is untrue in any material respect; or,

          I.        The issuance or proposed issuance, against any member of the Bank Group, of any cease and desist order, memorandum of understanding or capital maintenance agreement by any federal or state regulator agency having jurisdiction or control over such member; provided, however, that this Section 8.1(1) shall not apply to supervisory actions outstanding against any institution as of the date of acquisition of such institution by the Borrower then, or at any time thereafter, unless such Event of Default is remedied, the Majority Banks (via the Agent) may, by notice in writing to the Borrower, terminate the Credit and the Term Loan and declare the Current Notes and the Term Notes to be due and payable, or any or all of the foregoing, whereupon the Credit and Term Loan shall terminate forthwith and the Current Notes and the Term Notes shall immediately become due and payable, or any or all of the foregoing, as the case may be.

8.2     Upon the occurrence of any of the following Events of Default:

Any member of the Bank Group becomes insolvent or bankrupt, or makes an appointment for the benefit of creditors or consents to the appointment of a custodian, trustee or receiver for itself or for the greater part of its properties; or a custodian, trustee or receiver is appointed for any member of the Bank Group or, for the greater part of its properties without its consent, and is not discharged within 60 calendar days; or bankruptcy, reorganization or liquidation proceedings are instituted by or against any member of the Bank Group and, if instituted against it, are consented to by it or remain undismissed for 60 calendar days; then the Credit and the Term Loan shall automatically terminate and the Current Notes and the Term Notes shall automatically become immediately due and payable, without notice or demand.

8.3     In addition to its other obligations as set forth in this Agreement, if the indebtedness evidenced by the Current Notes or the Term Notes is accelerated pursuant to Sections 8.1 or 8.2 hereof, the borrower shall immediately pay the Banks a premium in respect of Eurodollar Borrowings outstanding as of such date.  The premium on each such Eurodollar Borrowing shall be calculated as follows:

The amount of interest that would have accrued on the Eurodollar Borrowing (from the date of acceleration to the last day of the relevant Interest Period) computed at an annual rate equal to (i) the rate then in effect with respect to the Eurodollar Borrowing, minus (ii) the yield (including both interest and discount) on a hypothetical United States Treasury Security that could be purchased on the date of acceleration and maturing on (or about) the last day of the relevant Interest Period, provided that no premium shall be payable (and no credit or rebate shall be given) if the yield described in clause (ii) above exceeds the rate described in clause (i).

          SECTION 9  The Agent

9.1     Each Bank hereby appoints Norwest as its Agent under and for the purpose of this Agreement,  the Current Notes, the Term Notes, and each other related document.  Each Bank authorized the Agent to act on behalf of such Bank under this Agreement, the Current Notes, the Term Notes, and each other related document and, in the absence of other written instructions from the Majority Banks received from time to time by the Agent (with respect to which the Agent agrees that it will comply, except as otherwise provided in this Section 9 or as otherwise advised by counsel that such compliance would be unlawful), to exercise such powers hereunder and thereunder as are specially delegated to or required of the Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto.  Notwithstanding any other provision in this Agreement, the Agent shall not, without the prior written consent of each Bank, (i) increase the amount of the Credit, the Credit Percentages, the amount of the Term Loan, or the Term Loan Percentages, (ii) modify any interest rate or fee applicable to the Current Notes or the Term Notes, (iii) modify the Credit Expiration Date, the Term Loan Maturity Date, the last day of any Interest Period or the date on which any payment in respect of the Current Notes or the Term Note is due, (iv) forgive all or any portion of any payment of principal or interest due under the Current Notes or the Term Note, or (v) modify any provision of this sentence.  All other provisions set forth in this Agreement, other than those specified in the immediately preceding sentence, may be modified only with the approval of the Majority Banks.  The Agent is hereby expressly authorized by the Banks without hereby limiting any implied authority, (i) to receive on behalf of the Banks all payments of principal of and interest on the Advances and the Term Loan, and all other amounts due to the Banks hereunder, and promptly to distribute to each Bank its proper share of each payment so received, and (ii) to give notice on behalf of each of the Banks to the Borrower of any Event of Default specified in this Agreement of which the Agent has actual knowledge acquired in connection with its agency hereunder.  Each Bank hereby indemnities (which indemnity shall survive any termination of this Agreement) the Agent, in its capacity as Agent, pro rata according to such Bank’s Credit Percentage and Term Loan Percentage, from and against any and all liabilities, obligations, losses, damages, claims, costs or expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Agent in any way relating to or arising out of this Agreement, the Current Notes, the Term, Notes, and any other related document, including reasonable attorneys’ fees, and as to which the Agent is not reimbursed by the Borrower; provided, however, that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Agent’s gross negligence or willful misconduct.  The Agent shall not be required to take any action hereunder, under the Current Notes, the Term Notes, or under any other related document, or to prosecute or defend any suit in respect of this Agreement, the Current Notes, the Term Notes, or any other related document, unless it is indemnified hereunder to its satisfaction.  If any indemnity in favor of the Agent shall be or become, in the Agents determination, inadequate, the Agent may call for additional indemnification from the Banks and cease to do the acts indemnified against hereunder until such additional indemnity is given.

9.2     Unless the Agent shall have been notified by telephone, confirmed in writing, by any Bank by 3:00 p.m., Minneapolis time, on the day of the making of any Advance that such Bank will not make available the amount which would constitute its Credit Percentage or Term Loan Percentage of such Advance on the date specified therefor, the Agent may assume that such Bank has made such amount available to the Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If and to the extent that such Bank shall not have made such amount available to the Agent, such Bank and Borrower severally agree to repay the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Agent made such amount available to the Borrower to the date such amount is repaid to the Agent, at the interest rate applicable at the time of such Advance to the extent such Advance is repaid by the Borrower and at the Federal Funds Rate to the extent such Advance is repaid by such Bank.

9.3     Neither the Agent nor any of its directors, officers, employees or agents shall be liable to any Bank for any action taken or omitted to be taken by the Agent under this Agreement or any other related document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other related document, nor for the creation, perfection or priority of any liens purported to be created by any related documents, or the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security, nor to make any inquiry respecting the performance by the Borrower of its obligations hereunder or under any other related document.  Any such inquiry which may be made by the Agent shall not obligate it to make any further inquiry or to take any action.  The Agent shall be entitled to rely upon advice of counsel concerning legal maters and upon any notice, consent, certificate, statement or writing which the Agent believes to be genuine and to have been presented by a proper person.

9.4     The Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrower and all Banks, if the Agent at any time shall resign, the Majority Banks may appoint another Bank as a successor Agent which shall thereupon become the Agent hereunder.  If no successor Agent shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within 30 days after the retiring Agents’ giving notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be one of the Banks or a commercial banking institution organized under the laws of the United States (or any state thereof or a U.S. branch or agency of a commercial banking, institution, and having a combined capital and surplus of at least $500,000,000.  Upon the acceptance of any appointment as agent hereunder by a successor Agent, such successor Agent shall be entitled to receive from any retiring Agent such documents of transfer and assignment as such successor Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligation under this Agreement After any retiring Agent’s resignation hereunder as the Agent, the provisions of this Section 9 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement.

9.5     Norwest shall have the same rights and powers with respect to (i) loans made by it or any of its affiliates, and (ii) promissory notes held by it or any of its affiliates as any other Bank and may prosecute the same as if it were not the Agent.  Norwest and its affiliate may accept deposits from lend money to, and generally engage in any kind of business with the Borrower or any affiliate of the Borrower as if Norwest were not the Agent hereunder.

9.6     Each Bank acknowledges that it has, independently of the Agent and each other Bank, and based on such Bank’s review of the financial information of the Borrower, this Agreement, the other related documents (the terms and provisions of which being satisfactory to such Bank) and such other documents, information and investigations as such Bank has deemed appropriate, made its own credit decision to enter into this Agreement.  Each Bank also acknowledges that it will, independently of the Agent and each other Bank, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other related document.

9.7     Except as permitted under the terms and conditions of this Section 9.7 or, with respect to participations, under Section 9.8 hereof, no Bank may sell, assign or transfer its rights or obligations under this Agreement or its interest in any Current Note or any Term Note.  Any Bank, at any time upon at least five (5) Business Days’ prior written notice to the Agent and the Borrower, may assign such Bank’s Current Note or Term Note, or a portion thereof (so long as any such portion is not less than $2,500,000.00 and is in equal percentages of such assigning Bank’s interest in the Credit and the Term Loan), to a domestic bank (an “Applicant”) on any date (the “Adjustment Date”) selected by such Bank, but only so long as the Borrowers and the Agent shall have provided their prior written approval of such proposed Applicant, which prior written approval will not be unreasonably withheld.  Notwithstanding the foregoing, (i) assignments may be made by a Bank to another Bank already a party to this Agreement in an amount not less than $1,000,000.00, and (ii) no such consent of the Borrower shall be required to sale of an interest to an affiliate of a Bank or, in any event, if an Event of Default shall exist.  Upon receipt of such approval and to confirm the status of each additional Bank as a party to this Agreement and to evidence the assignment in accordance herewith:

          A.      The Agent, the Borrower, the assigning Bank and such Applicant shall, on or before the Adjustment Date, execute and deliver to the Agent an Assignment Certificate in substantially the form of Exhibit E (an “Assignment Certificate”);

          B.       The affected Borrower will execute and deliver to the Agent, for delivery by the Agent in accordance with the terms of the Assignment Certificate, (i) a new Current Note payable to the order of the Applicant in an amount corresponding to the applicable commitment acquired by such Applicant, (ii) a new Current Note payable to the order of the assigning Bank in an amount corresponding to the retained Credit Percentage, (iii) a new Term Note payable to the order of the Applicant in an amount corresponding to the applicable commitment acquired by such Applicant, and (iv) a new Term Note payable to the order of the assigning Bank in an amount corresponding to the retained Term Loan Percentage.  Such new notes shall be in an aggregate principal amount equal to the aggregate principal amount of the notes to be replaced by such new notes, shall be dated the effective date of such assignment and shall otherwise be in the form of the notes to be replaced thereby.  Such new notes shall be issued in substitution for, but not in satisfaction or payment of, the notes being replaced thereby and such new notes shall be treated as notes for purposes of this Agreement; and,

          C.      The assigning Bank shall pay to the applicable Agent an administrative fee of $2,500.00.

Upon the execution and delivery of such Assignment Certificate and such new Current Notes and Term Notes, and effective as of the effective date thereof, (i) this Agreement shall be deemed to be amended to the extent, and only to the extent, necessary to reflect the addition of such additional Bank and the resulting adjustment of the Credit Percentages and Term Loan Percentages arising therefrom, (ii) the assigning Bank shall be relieved of all obligations hereunder to the extent of the reduction of the assigning Bank’s Credit Percentages and Term Loan Percentage, and (iii) the Applicant shall become a party hereto and shall be entitled to all rights, benefits and privileges accorded to a Bank herein and in each other document or instrument executed pursuant hereto and subject to all obligations of a Bank hereunder, including, without limitation, the right to approve or disapprove actions which, in accordance with the terms hereof, require the approval of the Majority Banks or all Banks.  Promptly after the execution of any Assignment Certificate, a copy thereof shall be delivered by the Agent to each Bank and to the Borrowers.  In order to facilitate the addition of additional Banks hereto, the Borrower and the Banks shall cooperate fully with the Agent in connection therewith and shall provide all reasonable assistance requested by the Agent relating thereto, including, without limitation, the furnishing of such written materials and financial information regarding the Borrower as the Agent may reasonably request, the execution of such documents as the Agent may reasonably request with respect thereto, and the participation by officers of the Borrower, and the Banks in a meeting or teleconference call with any Applicant upon the request of the Agent.

9.8     In addition to the rights granted in Section 9.7 hereof, each Bank may grant participations in all or a portion of its Current Note or its Term Note to any domestic or foreign commercial bank (having a branch office in the United States), insurance company, financial institution or an affiliate of such Bank.  No holder of any such participation, however, shall be entitled to require any Bank to take or omit to take any action hereunder except those actions described in Section 9.1 hereof requiring consent of all Banks.  The Banks shall not, as among the ]Borrowers, the Agent and the Banks, be relieved of any of their respective obligations hereunder as a result of any such grant of a participation.  The Borrowers hereby acknowledge and agree that any participation described in this Section 9.8 may rely upon, and possess all rights under, any opinions, certificates, or other instruments or documents delivered under or in connection with any Loan Document, except as set forth in this Section 9.8, no Bank may grant any participation in the Credit or the Term Loan.

9.9     Each Bank hereby agrees with each other Bank that if such Bank shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise (“Set-off”), in respect of any Advance, in excess of its ratable share of payments based on its Credit Percentage and its Term Loan Percentage, then such Bank shall purchase for cash at face value, but without recourse, ratably from each of the other Banks such amount of the Advances, or Participations therein, held by each such other Banks (or interest therein) as shall be necessary to cause such Bank to share such excess payment ratably with all the other Banks; provided, however, that if any such purchase is made by any Bank, and if such excess payment or part thereof is thereafter recovered from such purchasing Bank, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest.

9.10   All payments of principal, interest and fees under this Agreement shall be applied pro rata to the Banks in the same proportions that the aggregate obligations owed to each Bank under this Agreement bear to the aggregate obligations owed to all Banks under this Agreement without priority or preference among the Banks or between the Credit and the Term Loan.  The obligations of the Banks to indemnify the Agent set out on Section 9.1 of this Agreement shall be pro rata according to the proportions that each Bank’s Credit Percentage and Term Loan Percentage bears to the aggregate total of all Banks’ Credit Percentages and Term Loan Percentages.

          SECTION 10  Miscellaneous

10.1   The provisions of this Agreement shall be in addition to those of any guaranty, pledge or security agreement, note or other evidence of liability held by the Banks, all of which shall be construed as complementary to each other.  Nothing herein contained shall prevent the Banks from enforcing any or all of the rights and remedies available to them at law, in equity or by agreement.

10.2   From time to time, the Borrower will execute and deliver (or cause to be executed and delivered) to the Agent such additional documents and will provide such additional information as the Banks may reasonably require to carry out the terms of this Agreement and be informed of the status and affairs of the Borrower and the other members of the Bank Group.

10.3   The Borrower will pay all expenses, including the reasonable fees and expenses of legal counsel for each of the Banks, including without limitation the allocated costs of in-house counsel, incurred in connection with the administration, amendment, modification or enforcement of this Agreement, the Current Notes, the Term Notes, and the other documents described herein.

10.4   Any notices or consents required or permitted by this Agreement shall be in writing and shall be deemed delivered if delivered in person or if sent by United States mail, postage prepaid, or telegraph or telex, as follows, unless such address is changed by written notice hereunder:

A.	If to the Borrower;
	Community First Bankshares, Inc.
	P.O. Box 6022
	Fargo, North Dakota 58108-6022
	Attention.  Mark A. Anderson, Executive Vice President

B.	If to the Agent:
	Norwest Bank Minnesota, National Association Norwest Center
	Sixth Street & Marquette Avenue
	Minneapolis, Minnesota 55479-0015
	Attention:  Sidney W. Bennett, Vice President

                    C.      If to the Banks:

                                        The address set forth below the signature line for each Bank.

10.5   The Banks shall have the right at all times to enforce the provisions of this Agreement, the Current Notes, the Term Notes, and the other documents described herein in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of the Banks in refraining from so doing at any time or times.  The failure of the Banks at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same.  All rights and remedies of the Bank are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy.

10.7   This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and permitted assigns of the parties hereto.  The Borrower has no right to assign any of its rights or obligations hereunder without the prior written consent of each of the Banks.  This Agreement, and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a writing signed on behalf of each party.  This Agreement supersedes and replaces the Prior Loan Agreement.

10.8   If any provision of this Agreement shall be held invalid under any applicable laws, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provision, and, to this end, the provisions hereof are severable.

10.9   This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original, but which taken together shall constitute one and the same instrument.

10.10 The substantive laws of the State of Minnesota shall govern the construction of this Agreement and the rights and remedies of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

NORWEST BANK MINNESOTA,	COMMUNITY FIRST
NATIONAL ASSOCIATION, Agent	BANKSHARES, INC.

By:	By:  /s/  Mark Anderson
Sidney W. Bennett, Vice President	Mark A. Anderson,
	Vice Chairman
	By:  /s/  Thomas R. Anderson
	Thomas R. Anderson
	Senior Vice President

EX-10.10.2

Exhibit 10.10.2

FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT is made as of the 21 day of April, 2000, and is by and among COMMUNITY FIRST BANKSHARES, INC. (the “Borrower”), HARRIS TRUST AND SAVINGS BANK (“Harris”) and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION (“Norwest”; Harris and Norwest are each referred to herein as a “Bank” and collectively as “Banks”), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as agent for the Banks (in such capacity, the “Agent”).

REFERENCE IS HEREBY MADE to that certain Amended and Restated Credit Agreement dated as of April 30, 1999 (the “Credit Agreement”) made by and among the Borrower, the Banks and the Agent.  Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them in the Credit Agreement.

WHEREAS, the Borrower has requested the Banks (i) to extend the maturity of the Credit from April 30, 2000 to April 30, 2001, and (ii) to increase the amount of the Term Loan from $10,000,000.00 to $75,000,000.00 and convert it to a one-year revolving credit line.

WHEREAS, the Banks are willing to grant the Borrower’s requests, subject to the provisions of this First Amendment.

NOW, THEREFORE, in consideration of the premises and for other valuable consideration received, it is agreed as follows:

1.      Section 1.12 of the Credit Agreement is hereby revised in its entirety to read as follows:

1.12   “Credit Expiration Date” shall mean April 30, 2001.

2.      Section 1.13 of the Credit Agreement is hereby revised in its entirety to read as follows:

1.13   “Credit Percentages” shall mean 35% with respect to Harris and 65% with respect to Norwest.

3.      Section 1.22 of the Credit Agreement is hereby revised in its entirety to read as follows:

1.22 “Interest Period” means with respect to any Eurodollar Borrowing, (a) initially, the period commencing on, as the case may be, the date on which such Eurodollar Borrowing is made or the date on which such Eurodollar Borrowing results from the conversion of a Base Rate Borrowing or a Federal Funds Borrowing, and ending one, two, three or six months thereafter, as selected in a notice of borrowing, continuance or conversion as provided in Sections 2.1, 2.3, or 2.4 hereof, and (b) thereafter, each period commencing on the last day of the immediately preceding Interest Period and ending one, two, three or six months thereafter, as selected by irrevocable notice to the Agent (which notice must be received by the Agent before 12:00 Noon, Minneapolis time, three Business Days before the last day of the then current Interest Period with respect to such Eurodollar Borrowing), provided, however, that (i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extensions would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day, (ii) the Borrower may not select the Interest Period that would otherwise extend beyond the Credit Expiration Date (with respect to the Credit), (iii) if no notice is given with respect to selection on an Interest Period as provided above, the affected Eurodollar Borrowing shall be converted to a Base Rate Borrowing on the last day of the Interest Period then in effect, and (iv) any Interest Period that begins on the last Business Day of a calendar month (or on a date for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

4.       Sections 1.30, 1.31, 1.32, 1.33 and 1.34 of the Credit Agreement are each hereby revised in their entirety to read as follows:

1.30   “Second Credit Line” shall mean the Second Credit Line made by the Banks to the Borrower in an aggregate amount not exceeding $75,000,000.00.

1.31   “Second Credit Line Advance” shall mean an advance of funds under the Second Credit Line.

1.32   “Second Credit Line Maturity Date” shall mean April 30, 2001.

1.33   “Second Credit Line Percentages” shall mean 37% with respect to Harris and 63% with respect to Norwest.

1.34   “Second Credit Notes” shall mean the promissory notes of the Borrower substantially in the form of attached Exhibits B-1 and B-2 to the First Amendment, evidencing the Second Credit Line.

5.      Section 3 of the Credit Agreement is hereby revised in entirety to read as follows:

SECTION 3   The Second Credit Line

3.1     Subject to other provisions of this Agreement, each Bank shall make Second Credit Line Advances to the Borrower under the Second Credit Line from time to time from the effective date hereof until the Second Credit Line Maturity Date in aggregate principal amounts at any one time outstanding not exceeding such Bank’s Second Credit Line Percentage of the Maximum Second Credit Line Amount determined pursuant to Section 3.2 hereof.  Each Second Credit Line Advance will be requested to the Agent in writing by an authorized officer of the Borrower on a Notice of Borrowing substantially in the form of Exhibit C hereto.  The initial balance of the Second Credit Line shall be the balance outstanding under the Term Loan which is replaced by the Second Credit Line.  Requests for Second Credit Line Advances must be received by the Agent no later than 12:00 Noon, Minneapolis time, on the day of a Second Credit Line Advance.

3.2     The Maximum Second Credit Line amount shall be $75,000,000.00.  Within such maximum Second Credit Line Amount and subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow under the Second Credit Line.

3.3     The Agent shall promptly notify each Bank of the Borrower’s request for a Second Credit Line Advance, and the amount of the Second Credit Line Advance by telephone or fax no later than 1:00 p.m., Minneapolis time, on the day on which the Agent received the request.  Subject to the further provisions of this Section 3, the Agent will fund the Second Credit Line Advance no later than 4:30 p.m., Minneapolis time, on the Business Day requested by the Borrower.  On or before 3:30 p.m., Minneapolis time, on such Business Day, each Bank shall deposit with the Agent same-day funds constituting such Bank’s Second Credit Line Percentage of the Second Credit Line Advance.  Such deposit will be made to an account which the Agent shall specify by notice to the Banks.  To the extent funds are received from the Banks in accordance with this Section 3.3, the Agent shall make such funds available to the Borrower by wire transfer to the account(s) the Borrower shall have designated to the Agent at or before the time of the related request.

3.4     Interest on the unpaid balance of the Second Credit Notes shall be calculated at an annual rate equal to one and one-quarter percent (1.25%) in excess of the Federal Funds Rate in effect from time to time, and shall change as and when the Federal Funds Rate changes.  Interest on the Second Credit Notes shall be calculated on basis of the actual number of days elapsed in a year of 360 days.

3.5     Notwithstanding the provisions of Section 3.4 hereof, for so long as there exists any Event of Default, interest on the Second Credit Notes shall accrue at an annual rate of two percent (2.0%) in excess of the rate which would otherwise apply to the Second Credit Notes.

3.6     Interest on the unpaid principal of the Second Credit Notes shall be payable quarterly, commencing June 30, 2000, and continuing on the last day of each succeeding calendar quarter, and on the Second Credit Line Maturity Date.

3.7     The principal of the Second Credit Notes shall be due and payable in full on the Second Credit Line Maturity Date.

3.8     The Borrower may at any time prepay principal under the Second Credit line in whole or from time to time in part without premium or penalty.

3.9     The Borrower shall pay to the Agent, within 20 days following the end of each semi-annual period, commencing with the period ending October 31, 2000, on behalf of the Banks, a fee (the “Unused Second Credit Line Fee”) calculated at an annual rate equal to two-tenths of one percent (0.20%) of the average daily unused portion of the Second Credit line; provided however, that no fee shall be due for any semi-annual period where the average daily usage is greater than 50% of the Maximum Second Credit Line Amount.  The Unused Second Credit Line Fee shall be calculated on the basis of actual number of days elapsed in a year of 360 days.  As used herein the Second Credit “unused portion” shall mean the difference between the applicable Maximum Second Credit Line Amount and the outstanding principal balance of the Second Credit Line as of the date of determination.

6.          All remaining references to “Term Loan” or “Term Note” in the Credit Agreement are hereby amended so that they shall refer to the “Second Credit Line” or the “Second Credit Note”, as the case may be.

7.          Simultaneously with the execution of this First Amendment, the Borrower shall execute and deliver the following new promissory notes (which, for purposes of this First Amendment only, shall collectively be referred to herein as the “New Notes”) to the Agent for the benefit of the Banks:

A.      Current Note in the face amount of $12,250,000.00 payable to Harris and substantially in the form of attached Exhibit A-1.  Said note shall replace, but shall not be deemed payment or satisfaction of, that certain Current Note dated April 30, 1999 made by the Borrower in the face amount of $17,500,000.00 payable to Harris.

B.      Current Note in the face amount of $22,750,000.00 payable to Norwest and substantially in the form of attached Exhibit A-2.  Said note shall replace, but shall not be deemed payment or satisfaction of, that certain Current Note dated April 30, 1999 made by the Borrower in the face amount of $17,500,000.00 payable to Norwest.

C.      Second Credit Note in the face amount of $27,750,000.00 payable to Harris and substantially in the form of attached Exhibit B-1.  Said note shall replace, but shall not be deemed payment or satisfaction of, that certain Term Note dated April 30, 1999 made by the Borrower in the face amount of $5,000,000.00 payable to Harris.

D.      Second Credit Note in the face amount of $47,250,000.00 payable to Norwest and substantially in the form of attached Exhibit B-2.  Said note shall replace, but shall not be deemed payment or satisfaction of, that certain Term Note dated April 30, 1999 made by the Borrower in the face amount of $5,000,000.00 payable to Norwest.

All references in the Credit Agreement to the “Current Notes” shall be deemed to mean the Current Notes described in paragraphs A and B of this Section.  Exhibits A-1 and A-2 of this First Amendment shall replace Exhibits A-1 and A-2 of the Credit Agreement.

All references in the Credit Agreement to the “Term Notes” shall be deemed to mean the Second Credit Notes described in paragraphs D and E of this Section.  Exhibits B-1 and B-2 of this First Amendment shall replace Exhibits B-1 and B-2 of the Credit Agreement.

8.       The Borrower hereby represents and warrants to the Banks as follows:

A.      As of the date of this First Amendment, the outstanding principal balance of each of the Current Notes is $0.0.

B.      As of the date of this First Amendment, the outstanding principal balance of each of the Tern Notes is $0.0.

C.      The Credit Agreement, the Current Notes and the Second Credit Notes constitute valid, legal and binding obligations owed by the Borrower to the Banks, subject to no counterclaim, defense, offset, abatement or recoupment.

D.      As of the date of this First Amendment, (i) each of the representations and warranties contained in Section 5.1, 5.2, 5.3, 5.5, 5.6 and 5.10 of the Credit Agreement is true, and (ii) there exists no Event of Default, nor does there exist any event which, with the giving of notice or the passage of time, or both, could become an Event of Default.

E.       All authorizations of governmental agencies, bodies or authorities which are necessary to permit the transactions contemplated by this First Amendment have been obtained and are in full force and effect, and no further approval, consent, order or authorization of, or designation, registration, declaration or filing with, any governmental, authority is required in connection with the consummation of the transactions contemplated by this First Amendment.

F.       The execution, delivery and performance of this First Amendment and the New Notes by the Borrower are within its corporate powers, have been duly authorized, and are not in contravention of law or the terms of the Borrower’s Articles of Incorporation or By-laws, or of any undertaking to which the Borrower is a party or by which it is bound.

G.      All financial statements delivered to the Bank by or on behalf of the Borrower, including all schedules and notes pertaining thereto, have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, and fully and fairly present the financial condition of the Borrower at the date thereof and the result of operations for the periods covered thereby, and there have been no material adverse changes in the financial condition or business of the Borrower from December 31, 1999 to the date hereof.

9.       Upon request by the Banks, the Borrower shall deliver a Corporate Certificate of Authority to the Agent dated as of the date of this First Amendment, and in form and content acceptable to the Agent.

10.      This First Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but which taken together shall constitute one and the same instrument.

11.      Except as expressly modified by this First Amendment, the Credit Agreement remains unchanged and in full force and effect.

IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed this First Amendment as of the date first written above.

COMMUNITY FIRST BANKSHARES, INC.	NORWEST BANK MINNESOTA   NATIONAL ASSOCIATION, as Agent
By:  /s/ Mark A. Anderson	By:  /s/ Sidney W. Bennett
Mark A. Anderson       President and Chief Executive Officer	Sidney W. Bennett,       Vice President
By:  /s/ Thomas R. Anderson
Thomas R. Anderson       Treasurer
HARRIS TRUST AND SAVINGS BANK	NORWEST BANK MINNESOTA   NATIONAL ASSOCIATION
By:  /s/ David J. Konrad	By:  /s/ Sidney W. Bennet
	Sidney W. Bennett,       Vice President
Its:  Vice President

EX-10.10.3

Exhibit 10.10.3

SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDMENT is made as of the 22nd day of December, 2000, and is by and among COMMUNITY FIRST BANKSHARES, INC. (the “Borrower”), HARRIS TRUST AND SAVINGS BANK (“Harris”) and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (“Wells Fargo”) formerly known as Norwest Bank Minnesota, National Association; (Harris and Wells Fargo are each referred to herein as a “Bank” and collectively as “Banks”), and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as agent for the Banks (in such capacity, the “Agent”).

REFERENCE IS HEREBY MADE to that certain Amended and Restated Credit Agreement dated as of April 30, 1999, as amended by a First Amendment dated as of April 21, 2000 (the “Credit Agreement”) made by and among the Borrower, the Banks and the Agent.  Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them in the Credit Agreement.

WHEREAS, the Borrower and the Banks have agreed (i) to delete the $75,000,000 Second Credit Line from the Credit Agreement, (ii) to remove Harris as a party to the Credit Agreement, and (iii) to provide that Wells Fargo will fund the full amount of the $35,000,000 Credit Line.

WHEREAS, the Banks are willing to grant the Borrower’s requests, subject to the provisions of this Second Amendment.

NOW, THEREFORE, in consideration of the premises and for other valuable consideration received, it is agreed as follows:

1.	The Second Credit Line in the amount of $75,000,000 is hereby terminated and all provisions relating to such Second Credit Line or the prior Term Loan are hereby deleted from the Credit Agreement.
2.	Harris will, from the effective date of this Second Amendment, no longer be a party to the Credit Agreement.  The Borrower, the Agent and the Banks each acknowledges that Harris shall have no further obligations under the Credit Agreement and Harris acknowledges that all amounts owed to it under the Credit Agreement, whether from the Borrower, Wells Fargo or the Agent have been paid in full.
3.	Section 1.13 of the Credit Agreement is hereby revised in its entirety to read as follows:
	1.13	“Credit Percentages” shall mean 100% with respect to Wells Fargo.

4.	Simultaneously with the execution of this Second Amendment, the Borrower shall execute and deliver the following new promissory note (which, for purposes of this Second Amendment only, shall collectively be referred to herein as the “New Note”) to the Agent for the benefit of the Banks:
	A.		Current Note in the face amount of $35,000,000.00 payable to Wells Fargo and substantially in the form of attached Exhibit A.  Said note shall replace, but shall not be deemed payment or satisfaction of, the prior Current Notes.
	All references in the Credit Agreement to the “Current Notes” shall be deemed to mean the Current Note described in paragraph A of this Section.  Exhibits A of this Second Amendment shall replace Exhibit A-1 of the Credit Agreement.
5.	The Borrower hereby represents and warrants to the Banks as follows:
	A.		As of the date of this Second Amendment, the outstanding principal balance of each of the Current Notes is $0.00 and 0.00.
	B.	The Credit Agreement, as amended hereby, and the Current Note constitute valid, legal and binding obligations owed by the Borrower to the Banks, subject to no counterclaim, defense, offset, abatement or recoupment.
	C.	As of the date of this Second Amendment, (i) each of the representations and warranties contained in Sections 5.1, 5.2, 5.3, 5.5, 5.6 and 5.10 of the Credit Agreement is true, and (ii) there exists no Event of Default, nor does there exist any event which, with the giving of notice or the passage of time, or both, could become an Event of Default.
	D.	All authorizations of governmental agencies, bodies or authorities which are necessary to permit the transactions contemplated by this Second Amendment have been obtained and are in full force and effect, and no further approval, consent, order or authorization of, or designation, registration, declaration or filing with, any governmental authority is required in connection with the consummation of the transactions contemplated by this Second Amendment.
	E.	The execution, delivery and performance of this Second Amendment and the New Note by the Borrower are within its corporate powers, have been duly authorized, and are not in contravention of law or the terms of the Borrower’s Articles of Incorporation or By-laws, or of any undertaking to which the Borrower is a party or by which it is bound.
	F.	All financial statements delivered to the Bank by or on behalf of the Borrower, including all schedules and notes pertaining thereto, have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, and fully and fairly present the financial condition of the Borrower at the dates thereof and the results of operations for the periods covered thereby, and there have been no material adverse changes in the financial condition or business of the Borrower from September 30, 2000 to the date hereof.

7.	Upon request by the Banks, the Borrower shall deliver a Corporate Certificate of Authority to the Agent dated as of the date of this Second Amendment, and in form and content acceptable to the Agent.
8.	This Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but which taken together shall constitute one and the same instrument.
9.	Except as expressly modified by this Second Amendment, the Credit Agreement remains unchanged and in full force and effect.

IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed this Second Amendment as of the date first written above.

COMMUNITY FIRST BANKSHARES, INC	WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Agent
By: /s/ Mark A. Anderson	By: /s/ Sidney W. Bennett
Mark A. Anderson,        President and Chief Executive Officer	Sidney W. Bennett,        Vice President
By: /s/ Thomas R. Anderson
Thomas R. Anderson,        Treasurer
HARRIS TRUST AND SAVINGS BANK	WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
By:	By: /s/ Sidney W. Bennett
	Sidney W. Bennett,       Its:  Vice President
Its:

EXHIBIT A

CURRENT NOTE

$35,000,000.00                                                                                                      December 22, 2000

          FOR VALUE RECEIVED, the undersigned, COMMUNITY FIRST BANKSHARES, INC., a Delaware corporation with offices in Fargo, North Dakota, promises to pay on April 30, 2001 to the order of Wells Fargo Bank Minnesota, National Association (the “Bank”) at the Bank’s principal office in Minneapolis, Minnesota, or at any other place designated at any time by the holder hereof, in lawful money of the United States of America, the principal sum of THIRTY FIVE MILLION AND 00/100 DOLLARS ($35,000,000.00), or so much thereof as is disbursed and remains outstanding hereunder as shown by the Bank’s liability record on the dates payments are due hereunder, together with interest on the unpaid balance hereof from the date hereof until this Note is fully paid at annual rates determined in accordance with the provisions of the Credit Agreement defined below.  Interest on this Note shall be calculated on the basis of actual number of days elapsed (i) in a 365-day year in the case of the Base Rate Borrowings and Federal Funds Borrowings (as defined in the Credit Agreement), and (ii) in a 360-day year in the case of Eurodollar Borrowings (as defined in the Credit Agreement).

          This Note constitutes a Current Note issued pursuant to the provisions of that certain Amended and Restated Credit Agreement of even date herewith (the “Credit Agreement”) made between the undersigned, the Bank, and Wells Fargo Bank Minnesota, National Association (as lender and as agent).  Reference is hereby made to the Credit Agreement for statements of the terms pursuant to which accrued interest on this Note is payable.  Reference is also hereby made to the Credit Agreement for statements of the terms pursuant to which the indebtedness evidenced hereby was created, may be prepaid voluntarily, may be reborrowed and may be accelerated.

          Unless prohibited by law, the undersigned agrees to pay all costs of collection, including reasonable attorneys’ fees and legal expenses, incurred by the holder hereof in the event this Note is not duly paid.  The holder hereof may change any terms of payment of this Note, including extensions of time and renewals, and release any security for, or any party to, this Note, without notifying or releasing any accommodation maker, endorser or guarantor from liability in connection with this Note.  Presentment or other demand for payment, notice of dishonor and protest are hereby waived by the undersigned and each endorser or guarantor.  This Note shall be governed by the substantive laws of the State of Minnesota.

COMMUNITY FIRST BANKSHARES, INC.

By:

Mark A. Anderson,
President and Chief Executive Officer

By:

Thomas R. Anderson,
Treasurer

EX-10.10.4

Exhibit 10.10.4

CURRENT NOTE

$35,000,000.00 December 22, 2000

FOR VALUE RECEIVED, the undersigned, COMMUNITY FIRST BANKSHARES, INC., a Delaware corporation with offices in Fargo, North Dakota, promises to pay on April 30, 2001 to the order of Wells Fargo Bank Minnesota, National Association (the “Bank”) at the Bank’s principal office in Minneapolis, Minnesota, or at any other place designated at any time by the holder hereof, in lawful money of the United States of America, the principal sum of THIRTY FIVE MILLION AND 00/100 DOLLARS ($35,000,000.00), or so much thereof as is disbursed and remains outstanding hereunder as shown by the Bank’s liability record on the dates payments are due hereunder, together with interest on the unpaid balance hereof from the date hereof until this Note is fully paid at annual rates determined in accordance with the provisions of the Credit Agreement defined below.  Interest on this Note shall be calculated on the basis of actual number of days elapsed (i) in a 365-day year in the case of the Base Rate Borrowings and Federal Funds Borrowings (as defined in the Credit Agreement), and (ii) in a 360-day year in the case of Eurodollar Borrowings (as defined in the Credit Agreement).

This Note constitutes a Current Note issued pursuant to the provisions of that certain Amended and Restated Credit Agreement of even date herewith (the “Credit Agreement”) made between the undersigned, the Bank, and Wells Fargo Bank Minnesota, National Association (as lender and as agent).  Reference is hereby made to the Credit Agreement for statements of the terms pursuant to which accrued interest on this Note is payable.  Reference is also hereby made to the Credit Agreement for statements of the terms pursuant to which the indebtedness evidenced hereby was created, may be prepaid voluntarily, may be reborrowed and may be accelerated.

Unless prohibited by law, the undersigned agrees to pay all costs of collection, including reasonable attorneys’ fees and legal expenses, incurred by the holder hereof in the event this Note is not duly paid.  The holder hereof may change any terms of payment of this Note, including extensions of time and renewals, and release any security for, or any party to, this Note, without notifying or releasing any accommodation maker, endorser or guarantor from liability in connection with this Note.  Presentment or other demand for payment, notice of dishonor and protest are hereby waived by the undersigned and each endorser or guarantor.  This Note shall be governed by the substantive laws of the State of Minnesota.

COMMUNITY FIRST BANKSHARES, INC.

By:  /s/ Mark A. Anderson

      Mark A. Anderson,

      President and Chief Executive Officer

By:  /s/Thomas R. Anderson

      Thomas R. Anderson,

      Treasurer

EX-10.16

Exhibit 10.16

PLAN OF REORGANIZATION AND MERGER AGREEMENT

          This Plan of Reorganization and Merger Agreement is dated as of May 31, 2000, and is entered into by and between Community First National Bank, Phoenix, Arizona, Community First National Bank, Spring Valley, California, Community First National Bank, Fort Morgan, Colorado, Community First National Bank, Decorah, Iowa, Community First National Bank, Fergus Falls, Minnesota, Community First National Bank, Alliance, Nebraska, Community First National Bank, Las Cruces, New Mexico, Community First National Bank, Salt Lake City, Utah, Community First National Bank, Spooner, Wisconsin, Community First National Bank, Cheyenne, Wyoming, (collectively, the “Target Banks”), and Community First National Bank, Fargo, North Dakota (the “North Dakota Bank”and, collectively with the Target Banks, the “Banks”).  Each of the Banks are national banking associations duly organized and existing under the laws of the United States.

          The Boards of Directors of the Banks deem it fair and equitable to, and in the best interests of, their respective shareholders, that the Target Banks be merged with and into the North Dakota Bank, with the North Dakota Bank being the Surviving Bank (as hereinafter defined), on the terms and conditions herein set forth under and pursuant to the National Bank Act (the “Act”).  Each such Board of Directors has approved this Plan of Reorganization and Merger Agreement, has authorized its execution and delivery and has directed that this Plan of Reorganization and Merger Agreement and the Merger be submitted to its respective shareholders for approval.

          NOW, THEREFORE, in consideration of the promises and the mutual agreements, provisions and covenants herein contained, the parties hereto adopt and agree to the following agreements, terms and conditions relating to the merger of the Target Banks with and into the North Dakota Bank (hereinafter, the “Merger”) and the mode of carrying the same into effect.

          1.       Merger.  The Target Banks will be merged with and into the North Dakota Bank, which will be the surviving corporation (hereinafter called the “Surviving Bank” whenever reference is made to it as of the Closing Date or thereafter).  Such Merger will be pursuant to the provisions of and with the effect provided in the Act.  The date or dates when the Merger will be consummated is hereinafter referred to as the “Closing Date” as defined in Section 12 below.

          2.       Name.  The name of the Surviving Bank will be “Community First National Bank.”

          3.       Board of Directors; Officers.  The Board of Directors of the Surviving Bank at the Closing Date will consist of the following individuals:  Keith A. Dickleman, Thomas E. Hanson, Robert W. Jorgenson, Gary A. Knutson, David A. Lee and Charles A. Mausbach.

Such directors will serve as directors of the Surviving Bank until the next annual meeting of the Surviving Bank or until such time as their successors have been elected and have qualified.  Additional directors may be appointed from time to time as set forth in the Surviving Bank’s Articles of Association and Bylaws.  The executive officers of the Surviving Bank shall consist of the following individuals:  David A. Lee, Chairman, President and Chief Executive Officer; and Thomas R. Anderson, Chief Investment Officer.

Other officers of the Bank shall be appointed from time to time by the Board of Directors of the Surviving Bank.  Such officers will serve until their successors are elected or appointed in accordance with the Bylaws of the Surviving Bank.

          4.       Capital of the Surviving Bank.  The amount of capital stock of the Surviving Bank shall be $10,000,000 divided into 100,000 shares of common stock, each of $100.00  par value, and at the time the merger shall become effective, the Surviving Bank shall have a surplus of not less than $394,988,000 and undivided profits, including capital reserves, which when combined with the capital and surplus will be equal to the combined capital structures of the merging banks before the Merger, adjusted however, for the capital reduction proposed incident to consummation of the merger, and for normal earnings and expenses (and if applicable, purchase accounting adjustments) between March 31, 2000, and the effective time of the Merger.

          5.       Articles of Association.  Effective as of the time this Merger shall become effective as specified in the merger approval to be issued by the Comptroller of the Currency, the articles of association of the Surviving Bank shall read in their entirety as set forth in Exhibit A hereto.

          6.       Bylaws.  The Bylaws of the North Dakota Bank in effect at the time of this Merger shall continue as the Bylaws of the Surviving Bank.

          7.       Effect of the Merger.  At the Closing Date, the separate corporate existence of the Banks will cease, and the Banks will become a single bank, the Surviving Bank, as provided in Section 215a of the Act.  The Surviving Bank will thereafter have all the rights, privileges, immunities, and powers, and be subject to all the duties and liabilities of a corporation incorporated under the Act.  The Surviving Bank will thereafter possess all the rights, privileges, immunities, and franchises of a public as well as of a private nature of the Banks, respectively; and all property, real, personal, and mixed and all debts due on any account, including subscriptions for shares, and all other choses in action, and every other interest of or belonging to or due to the Banks will vest in the Surviving Bank without any further act or deed.  As of the Closing Date, the Surviving Bank will be responsible and liable for all the liabilities and obligations of the Banks; a claim of or against or a pending proceeding by or against either of the Banks may be prosecuted as if the Merger had not taken place, or the Surviving Bank may be substituted in place of either of the Banks.  Neither the rights of creditors nor any liens upon the property of either of the Banks will be impaired by the Merger.

          8.       Cancellation and Reissuance of Common Stock.  At the Closing Date, each share of Common Stock of the North Dakota Bank validly issued and outstanding immediately prior to the Closing Date will remain issued and outstanding as shares of the Surviving Bank.  Each share of Common Stock of the Target Banks validly issued and outstanding immediately prior to the Closing Date will be canceled.

          9.       Shareholder Approval.  This Plan of Reorganization and Merger Agreement will be submitted to the respective shareholders of the Banks for ratification and confirmation by consent or at meetings to be called and held in accordance with the applicable provisions of law and the respective Articles of Association and Bylaws of the Banks.  The Banks will proceed expeditiously and cooperate fully in the procurement of any other consents and approvals and in the taking of any other action, and the satisfaction of all other requirements prescribed by law or otherwise, necessary for consummation of the Merger, and the other transactions contemplated by this Agreement on the terms herein provided.

          10.     Termination.  This Plan of Reorganization and Merger Agreement may be terminated and the Merger abandoned by mutual consent of the respective Boards of Directors of the Banks at any time prior to the Closing Date.

          11.     Waivers; Amendments.  Any of the Banks may, at any time prior to the Closing Date, by action taken by its Board of Directors or officers thereunto authorized, waive the performance of any of the obligations of the other or waive compliance by the other with any of the covenants or conditions contained in this Plan of Reorganization and Merger Agreement or agree to the amendment or modification of this Plan of Reorganization and Merger Agreement by an agreement in writing executed in the same manner as this Plan of Reorganization and Merger Agreement.

          12.     Closing Date.  The Merger will become effective on the day on which the Office of the Comptroller of the Currency shall declare the Merger effective (the “Closing Date”).  The Merger may, at the election of the North Dakota Bank and with the consent of the Comptroller of the Currency, be consummated in stages, involving such Target Banks as may be appropriate, in order to effectuate an orderly data processing conversion and consolidation of operations of the Banks.

          13.     Captions.  The captions in this Plan of Reorganization and Merger Agreement are for convenience only and will not be considered a part of or affect the construction or interpretation of any provision of this Plan of Reorganization and Merger Agreement.  This Plan of Reorganization and Merger Agreement may be executed in several counterparts, each of which will constitute one and the same instrument.

          14.     Governing Law.  This Plan of Reorganization and Merger Agreement is to be construed and interpreted in accordance with the laws of the United States.

          WITNESS, the signature of said merging Banks as of this 31 day of May, 2000, each set by its authorized officer and attested thereto, pursuant to a resolution of its Board of Directors, acting by a majority.

	COMMUNITY FIRST NATIONAL BANK
	Phoenix, Arizona
By	/s/ Thomas R. Anderson
	Its Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Spring Valley, California
By	/s/ Thomas R. Anderson
	Its Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Fort Morgan, Colorado
By	/s/ Thomas R. Anderson
	Its Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Decorah, Iowa
By	/s/ Thomas R. Anderson
	Its Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Fergus Falls, Minnesota
By	/s/ Thomas R. Anderson
	Its Investment Officer

	COMMUNITY FIRST NATIONAL BANK
	ALLIANCE, Nebraska
By	/s/ Thomas R. Anderson
	Its  Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Las Cruces, New Mexico
By	/s/ Thomas R. Anderson
	Its  Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Salt Lake City, Utah
By	/s/ Thomas R. Anderson
	Its  Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Spooner, Wisconsin
By	/s/ Thomas R. Anderson
	Its  Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Cheyenne, Wyoming
By	/s/ Thomas R. Anderson
	Its  Investment Officer
	COMMUNITY FIRST NATIONAL BANK
	Fargo, North Dakota
By	/s/ Thomas R. Anderson
	Its  Investment Officer

EX-10.17

Exhibit 10.17

CREDIT AGREEMENT
RE: SUBORDINATED TERM NOTE

DATED AS OF
DECEMBER 22, 2000

BETWEEN

COMMUNITY FIRST NATIONAL BANK

AND

HARRIS TRUST AND SAVINGS BANK

TABLE OF CONTENTS

SECTION	DESCRIPTION
SECTION 1.	THE CREDITS.
Section 1.1.	Term Loan
Section 1.2.	Manner and Disbursement of Loans.

SECTION 2.	INTEREST AND CHANGE IN CIRCUMSTANCES.
Section 2.1.	Interest Rate Options.
Section 2.2.	Minimum Amounts
Section 2.3.	Computation of Interest.
Section 2.4.	Manner of Rate Selection
Section 2.5.	Change of Law
Section 2.6.	Unavailability of Deposits or Inability to Ascertain Adjusted LIBOR
Section 2.7.	Taxes and Increased Costs
Section 2.8.	Change in Capital Adequacy Requirements.
Section 2.9.	Funding Indemnity.
Section 2.10.	Lending Branch.
Section 2.11.	Discretion of Bank as to Manner of Funding

SECTION 3.	FEES, PREPAYMENTS, TERMINATIONS AND APPLICATIONS.
Section 3.1.	Voluntary Prepayments
Section 3.2.	Place and Application of Payments.
Section 3.3.	Notations

SECTION 4.	DEFINITIONS; INTERPRETATION
Section 4.1.	Definitions.
Section 4.2.	Interpretation

SECTION 5.	REPRESENTATIONS AND WARRANTIES
Section 5.1.	Organization and Qualification
Section 5.2.	Corporate Authority and Validity of Obligations
Section 5.3.	Use of Proceeds
Section 5.4.	Financial Reports
Section 5.5.	No Material Adverse Change
Section 5.6.	Full Disclosure
Section 5.7.	Governmental Authority and Licensing
Section 5.8.	Approvals
Section 5.9.	Affiliate Transactions
Section 5.10.	Compliance with Laws
Section 5.11.	Other Agreements
Section 5.12.	No Default

SECTION 6.	CONDITIONS PRECEDENT
SECTION 7.	COVENANTS
Section 7.1.	Maintenance of Business
Section 7.2.	Financial Reports
Section 7.3.	Inspection
Section 7.4.	Compliance with Laws
Section 7.5.	Burdensome Contracts With Affiliates
Section 7.6.	No Changes in Fiscal Year

SECTION 8.	EVENTS OF DEFAULT AND REMEDIES
Section 8.1.	Events of Default.
Section 8.2.	Non-Bankruptcy Defaults.
Section 8.3.	Bankruptcy Defaults

SECTION 9.	MISCELLANEOUS
Section 9.1.	Non-Business Day
Section 9.2.	No Waiver, Cumulative Remedies
Section 9.3.	Amendments, Etc
Section 9.4.	Costs and Expenses; Indemnification
Section 9.5.	Documentary Taxes
Section 9.6.	Survival of Representations
Section 9.7.	Survival of Indemnities
Section 9.8.	Notices
Section 9.9.	Construction
Section 9.10.	Headings
Section 9.11.	Severability of Provisions
Section 9.12.	Counterparts
Section 9.13.	Binding Nature, Governing Law, Etc
Section 9.14.	Submission to Jurisdiction;  Waiver of Jury Trial

Signature.............................................................................Error! Bookmark not defined.

Exhibit A	—	Term Note
Exhibit B	—	Compliance Certificate

CREDIT AGREEMENT
RE: SUBORDINATED TERM NOTE

Harris Trust and Savings Bank
Chicago, Illinois

Ladies and Gentlemen:

          The undersigned, Community First National Bank, a national banking association (the “Borrower”), applies to you (“Harris”) for your commitment, subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, to extend credit to the Borrower, all as more fully hereinafter set forth.  All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in Section 4.1 hereof.

SECTION 1.         THE CREDITS.

          Section 1.1. Term Loan.  Subject to the terms and conditions hereof, Harris agrees to make a subordinated term loan to the Borrower in the principal amount of $25,000,000 (the “Term Loan” or the “Loan”).  The Term Loan shall be made on the date hereof.  The Term Loan shall be made against and evidenced by a subordinated promissory note of the Borrower in the form (with appropriate insertions) attached hereto as Exhibit A (the “Term Note” or the “Note”).  The Term Note shall be dated the date of issuance thereof and be expressed to bear interest as set forth in Section 2 hereof.  The Term Note, and the Term Loan evidenced thereby, shall mature and all principal not sooner paid shall be due and payable on December 22, 2007 (the “Term Loan Final Maturity Date”), the final maturity thereof.

          Section 1.2. Manner and Disbursement of Loans.  The Term Loan shall initially constitute part of the Base Rate Portion of the Note except to the extent the Borrower has otherwise timely elected that the Loan, or any part thereof, constitute part of a LIBOR Portion as provided in Section 2 hereof.  The Borrower agrees that Harris may rely upon any written or telephonic notice given by any person Harris in good faith believes is an Authorized Representative without the necessity of independent investigation and, in the event any telephonic notice conflicts with the written confirmation, such telephonic notice shall govern if Harris has acted in reliance thereon.  Subject to the provisions of Section 6 hereof, the proceeds of the Loan shall be made available to the Borrower at the principal office of Harris in Chicago, Illinois, in immediately available funds.

SECTION 2.         INTEREST AND CHANGE IN CIRCUMSTANCES.

          Section 2.1. Interest Rate Options.

          (a)      Subject to all of the terms and conditions of this Section 2, portions of the principal indebtedness evidenced by the Note (all of the indebtedness evidenced by the Note bearing interest at the same rate for the same period of time being hereinafter referred to as a “Portion” of the Note) may, at the option of the Borrower, bear interest with reference to the Base Rate (the “Base Rate Portion”) or with reference to an Adjusted LIBOR (“LIBOR Portions”), and Portions of Note may be converted from time to time from one basis to another.  All of the indebtedness evidenced by the Note which is not part of a LIBOR Portion shall constitute a single Base Rate Portion applicable to the Note.  All of the indebtedness evidenced by the Note which bears interest with reference to a particular Adjusted LIBOR for a particular Interest Period shall constitute a single LIBOR Portion applicable to the Note.  There shall not be more than three (3) LIBOR Portions applicable to the Note outstanding at any one time.  Anything contained herein to the contrary notwithstanding, the obligation of Harris to create, continue, or effect by conversion any LIBOR Portion shall be conditioned upon the fact that at the time no Default or Event of Default shall have occurred and be continuing.  The Borrower hereby promises to pay interest on each Portion at the rates and times specified in this Section 2.

          (b)      Base Rate Portion.  The Base Rate Portion shall bear interest at the rate per annum equal to the Base Rate as in effect from time to time.  Interest on each Base Rate Portion shall be payable quarterly in arrears on the last day of each March, June, September and December in each year (commencing March 31, 2001) and at maturity of the Note, and interest after maturity (whether by lapse of time, acceleration, or otherwise) shall be due and payable upon demand.  Any change in the interest rate on any Base Rate Portion resulting from a change in the Base Rate shall be effective on the date of the relevant change in the Base Rate.

          (c)      LIBOR Portions.  Each LIBOR Portion shall bear interest for each Interest Period selected therefor at a rate per annum determined by adding 1.40% to the Adjusted LIBOR for such Interest Period, provided that if any LIBOR Portion is not paid when due (whether by lapse of time, acceleration, or otherwise), or at the election of Harris upon notice to the Borrower during the existence of any other Event of Default, such Portion shall automatically be converted into and added to the Base Rate Portion of the Note and shall thereafter bear interest at the interest rate applicable to the Base Rate Portion of the Note.  Interest on each LIBOR Portion shall be due and payable on the last day of each Interest Period applicable thereto and, with respect to any Interest Period applicable to a LIBOR Portion in excess of 3 months, on the date occurring every 3 months after the date such Interest Period began and at the end of such Interest Period, and interest after maturity (whether by lapse of time, acceleration, or otherwise) shall be due and payable upon demand.  The Borrower shall notify Harris on or before 11:00 a.m. (Chicago time) on the third Business Day preceding the end of an Interest Period applicable to a LIBOR Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which event the Borrower shall notify Harris of the new Interest Period selected therefor; and in the event the Borrower shall fail to so notify Harris, such LIBOR Portion shall automatically be converted into and added to the Base Rate Portion of the Note as of and on the last day of such Interest Period.

          Section 2.2. Minimum Amounts.  Each LIBOR Portion shall be in an amount equal to $1,000,000 or such greater amount which is an integral multiple of $1,000,000.

          Section 2.3. Computation of Interest.  All interest on the Note shall be computed on the basis of a year of 360 days for the actual number of days elapsed.

          Section 2.4. Manner of Rate Selection.  The Borrower shall notify Harris by 11:00 a.m. (Chicago time) at least 3 Business Days prior to the date upon which the Borrower requests that any LIBOR Portion be created or that any part of the Base Rate Portion be converted into a LIBOR Portion (each such notice to specify in each instance the amount thereof and the Interest Period selected therefor).  If any request is made to convert a LIBOR Portion of the Note into the Base Rate Portion available hereunder, such conversion shall only be made so as to become effective as of the last day of the Interest Period applicable thereto.  All requests for the creation, continuance, and conversion of Portions under this Agreement shall be irrevocable.  Such requests may be written or oral and Harris is hereby authorized to honor telephonic requests for creations, continuances, and conversions received by it from any person Harris in good faith believes to be an Authorized Representative without the necessity of independent investigation, the Borrower hereby indemnifying Harris from any liability or loss ensuing from so acting.

          Section 2.5. Change of Law.  Notwithstanding any other provisions of this Agreement or the Note, if at any time Harris shall determine that any change in applicable laws, treaties, or regulations, or in the interpretation thereof, makes it unlawful for Harris to create or continue to maintain any LIBOR Portion, it shall promptly so notify the Borrower and the obligation of Harris to create, continue, or maintain any such LIBOR Portion under this Agreement shall be suspended until it is no longer unlawful for Harris to create, continue, or maintain such LIBOR Portion.  If the continued maintenance of any such LIBOR Portion is unlawful, the Borrower shall prepay on demand to Harris the outstanding principal amount of the affected LIBOR Portion together with all interest accrued thereon and all other amounts payable to Harris with respect thereto under this Agreement; provided, however, the Borrower may elect to convert the principal amount of the affected Portion into the Base Rate Portion, subject to the terms and conditions of this Agreement (including, without limitation, Section 2.9 hereof).

          Section 2.6. Unavailability of Deposits or Inability to Ascertain Adjusted LIBOR.  Notwithstanding any other provision of this Agreement or the Note, if Harris shall determine prior to the commencement of any Interest Period that deposits in the amount of any LIBOR Portion scheduled to be outstanding during such Interest Period are not readily available to Harris in the relevant market or, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining Adjusted LIBOR, then Harris shall promptly give notice thereof to the Borrower and the obligations of Harris to create, continue, or effect by conversion any such LIBOR Portion in such amount and for such Interest Period shall be suspended until deposits in such amount and for the Interest Period selected by the Borrower shall again be readily available in the relevant market and adequate and reasonable means exist for ascertaining Adjusted LIBOR.

          Section 2.7. Taxes and Increased Costs.  With respect to any LIBOR Portion, if Harris shall determine that any change in any applicable law, treaty, regulation, or guideline (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System), or any new law, treaty, regulation, or guideline, or any interpretation of any of the foregoing, by any governmental authority charged with the administration thereof or any central bank or other fiscal, monetary, or other authority having jurisdiction over Harris or its lending branch or the LIBOR Portions contemplated by this Agreement (whether or not having the force of law),  shall:

          (i)       impose, increase, or deem applicable any reserve, special deposit, or similar requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds or disbursements by, Harris which is not in any instance already accounted for in computing the interest rate applicable to such LIBOR Portion;

          (ii)      subject Harris, any LIBOR Portion or the Note to the extent it evidences such LIBOR Portion to any tax (including, without limitation, any United States interest equalization tax or similar tax however named applicable to the acquisition or holding of debt obligations and any interest or penalties with respect thereto), duty, charge, stamp tax, fee, deduction, or withholding in respect of this Agreement, any LIBOR Portion or the Note to the extent it evidences such LIBOR Portion, except such taxes as may be measured by the overall net income or gross receipts of Harris or its lending branches and imposed by the jurisdiction, or any political subdivision or taxing authority thereof, in which Harris’s principal executive office or its lending branch is located;

          (iii)     change the basis of taxation of payments of principal and interest due from the Borrower to Harris hereunder or under the Note to the extent it evidences any LIBOR Portion (other than by a change in taxation of the overall net income or gross receipts of Harris); or

          (iv)     impose on Harris any penalty with respect to the foregoing or any other condition regarding this Agreement, any LIBOR Portion, or its disbursement, or the Note to the extent it evidences any LIBOR Portion;

and Harris shall determine that the result of any of the foregoing is to increase the cost (whether by incurring a cost or adding to a cost) to Harris of creating or maintaining any LIBOR Portion hereunder or to reduce the amount of principal or interest received or receivable by Harris (without benefit of, or credit for, any prorations, exemption, credits, or other offsets available under any such laws, treaties, regulations, guidelines, or interpretations thereof), then the Borrower shall pay on demand to Harris from time to time as specified by Harris such additional amounts as Harris shall reasonably determine are sufficient to compensate and indemnify it for such increased cost or reduced amount.  If Harris makes such a claim for compensation, it shall provide to the Borrower a certificate setting forth the computation of the increased cost or reduced amount as a result of any event mentioned herein in reasonable detail and such certificate shall be conclusive if reasonably determined.

          Section 2.8. Change in Capital Adequacy Requirements.  If Harris shall determine that the adoption after the date hereof of any applicable law, rule, or regulation regarding capital adequacy, or any change in any existing law, rule, or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by Harris (or any of its branches) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on Harris’s capital as a consequence of its obligations hereunder or for the credit which is the subject matter hereof to a level below that which Harris could have achieved but for such adoption, change, or compliance (taking into consideration Harris’s policies with respect to liquidity and capital adequacy) by an amount deemed by Harris to be material, then from time to time, within 15 days after demand by Harris, the Borrower shall pay to Harris such additional amount or amounts reasonably determined by Harris as will compensate Harris for such reduction.

          Section 2.9. Funding Indemnity.  (a) In the event Harris shall incur any loss, cost, or expense (including, without limitation, any loss, cost, or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired or contracted to be acquired by Harris to fund or maintain any LIBOR Portion or the relending or reinvesting of such deposits or other funds or amounts paid or prepaid to Harris) as a result of:

          (i)       any payment of a LIBOR Portion on a date other than the last day of the then applicable Interest Period for any reason, whether before or after default, and whether or not such payment is required by any provision of this Agreement; or

          (ii)      any failure by the Borrower to create, borrow, continue, or effect by conversion a LIBOR Portion on the date specified in a notice given pursuant to this Agreement;

then upon the demand of Harris, the Borrower shall pay to Harris such amount as will reimburse Harris for such loss, cost, or expense.

          (b)      If Harris requests reimbursement or payment under this Section, it shall provide to the Borrower a certificate setting forth the computation of the loss, cost, expense, or funding indemnity giving rise to the request for reimbursement and payment in reasonable detail and such certificate shall be conclusive if reasonably determined.

          Section 2.10. Lending Branch. Harris may, at its option, elect to make, fund or maintain Portions of the Loans hereunder at such of its branches or offices as Harris may from time to time elect.  To the extent reasonably possible, Harris shall designate an alternate branch or funding office with respect to the LIBOR Portions to reduce any liability of the Borrower to Harris under Section 2.7 hereof or to avoid the unavailability of an interest rate option under Section 2.6 hereof, so long as such designation is not otherwise disadvantageous to Harris.

          Section 2.11. Discretion of Bank as to Manner of Funding.  Notwithstanding any provision of this Agreement to the contrary, Harris shall be entitled to fund and maintain its funding of all or any part of the Note in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder (including, without limitation, determinations under Sections 2.6, 2.7, and 2.9 hereof) shall be made as if Harris had actually funded and maintained each LIBOR Portion during each Interest Period applicable thereto through the purchase of deposits in the relevant market in the amount of such LIBOR Portion, having a maturity corresponding to such Interest Period, and bearing an interest rate equal to the LIBOR for such Interest Period.

SECTION 3.         PREPAYMENTS, TERMINATIONS AND APPLICATIONS.

          Section 3.1. Voluntary Prepayments.  So long as the Borrower has not received a notice from the OCC with contrary instructions, the Borrower shall have the privilege of prepaying the Loan in whole or in part (but, if in part, then (i) if the Loan constitutes part of a Base Rate Portion, in an amount not less than $50,000, (ii) if the Loan constitutes part of a LIBOR Portion, in an amount not less than $1,000,000, and (iii) in each case, in an amount such that the minimum amount required for a Loan pursuant to Section 2.2 hereof remain outstanding) at any time upon prior notice to Harris (such notice if received subsequent to 11:00 a.m. (Chicago time) on a given day to be treated as though received at the opening of business on the next Business Day) by paying to Harris the principal amount to be prepaid and accrued interest thereon to the date of prepayment, and in the case of any prepayment of a LIBOR Portion of the Loan, accrued interest thereon to the date of prepayment plus any amounts due Harris under Section 2.9 hereof.

          Section 3.2. Place and Application of Payments.  All payments of principal, interest, fees, and all other Obligations payable under the Loan Documents shall be made to Harris at its office at 111 West Monroe Street, Chicago, Illinois (or at such other place as Harris may specify) no later than 1:00 p.m. (Chicago time) on the date any such payment is due and payable.  Payments received by Harris after 1:00 p.m. (Chicago time) shall be deemed received as of the opening of business on the next Business Day.  All such payments shall be made in lawful money of the United States of America, in immediately available funds at the place of payment, without set–off or counterclaim and without reduction for, and free from, any and all present or future taxes, levies, imposts, duties, fees, charges, deductions, withholdings, restrictions, and conditions of any nature imposed by any government or any political subdivision or taxing authority thereof (but excluding any taxes imposed on or measured by the net income of Harris).  Unless the Borrower otherwise directs, principal payments shall be applied first to the Base Rate Portion until payment in full thereof, with any balance applied to the LIBOR Portions in the order in which their Interest Periods expire.  No amount repaid on the Term Note may be reborrowed.

          Section 3.3. Notations.  The Loan made against the Note, the status of all amounts evidenced by the Note as constituting part of the Base Rate Portion or a LIBOR Portion, and, in the case of any LIBOR Portion, the rates of interest and Interest Periods applicable to such Portions shall be recorded by Harris on its books and records or, at its option in any instance, endorsed on a schedule to the Note and the unpaid principal balance and status, rates and Interest Periods so recorded or endorsed by Harris shall be prima facie evidence in any court or other proceeding brought to enforce the Note of the principal amount remaining unpaid thereon, the status of the Loan evidenced thereby and the interest rates and Interest Periods applicable thereto; provided that the failure of Harris to record any of the foregoing shall not limit or otherwise affect the obligation of the Borrower to repay the principal amount of the Note together with accrued interest thereon.  Prior to any negotiation of the Note, Harris shall record on a schedule thereto the status of all amounts evidenced thereby as constituting part of the Base Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion, the rates of interest and the Interest Periods applicable thereto.

SECTION 4.         DEFINITIONS; INTERPRETATION.

          Section 4.1. Definitions.  The following terms when used herein shall have the following meanings:

          “Adjusted LIBOR” means a rate per annum determined by Harris in accordance with the following formula:

Adjusted LIBOR =	LIBOR
	100%-Reserve Percentage

“Reserve Percentage” means, for the purpose of computing Adjusted LIBOR, the maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental or other special reserves) imposed by the Board of Governors of the Federal Reserve System (or any successor) under Regulation D on Eurocurrency liabilities (as such term is defined in Regulation D) for the applicable Interest Period as of the first day of such Interest Period, but subject to any amendments to such reserve requirement by such Board or its successor, and taking into account any transitional adjustments thereto becoming effective during such Interest Period.  For purposes of this definition, LIBOR Portions shall be deemed to be Eurocurrency liabilities as defined in Regulation D without benefit of or credit for prorations, exemptions or offsets under Regulation D.  “LIBOR” means, for each Interest Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to Harris at 11:00 a.m. (London, England time) 2 Business Days before the beginning of such Interest Period by 3 or more major banks in the interbank eurodollar market selected by Harris for a period equal to such Interest Period and in an amount equal or comparable to the applicable LIBOR Portion scheduled to be outstanding from Harris during such Interest Period.  “LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period which appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the date 2 Business Days before the commencement of such Interest Period.  “Telerate Page 3750” means the display designated as “Page 3750” on the Dow Jones Telerate Service (or such other page as may replace Page 3750 on that service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits).  Each determination of LIBOR made by Harris shall be conclusive and binding absent manifest error.

          “Affiliate” means any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person.  A Person shall be deemed to control another Person for the purposes of this definition if such Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the other Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise; provided that, in any event for purposes of this definition, any Person that owns, directly or indirectly, 5% or more of the securities having the ordinary voting power for the election of directors or governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.

          “Agreement” means this Credit Agreement re: Subordinated Term Note, as the same may be amended, modified, or restated from time to time in accordance with the terms hereof.

           “Authorized Representative” means those persons shown on the list of officers provided by the Borrower pursuant to Section 6(d)(v) hereof or on any update of any such list provided by the Borrower to Harris, or any further or different officer of the Borrower so named by any Authorized Representative of the Borrower in a written notice to Harris.

          “Bank” is defined in the introductory paragraph hereof.

          “Base Rate” means, for any day, the greater of (a) the rate of interest announced by Harris from time to time as its prime commercial rate, as in effect on such day (it being understood and agreed that such rate may not be Harris’s best or lowest rate), and (b) the sum of (i) the rate determined by Harris to be the average (rounded upwards, if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to Harris at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) by two or more Federal funds brokers selected by Harris for the sale to Harris at face value of Federal funds in an amount equal or comparable to the principal amount owed to Harris for which such rate is being determined, plus (ii) 3/8 of 1%.

          “Base Rate Portion” is defined in Section 2.1(a) hereof.

          “Borrower” is defined in the introductory paragraph hereof.

          “Business Day” means any day other than a Saturday or Sunday on which Harris is not authorized or required to close in Chicago, Illinois and, when used with respect to LIBOR Portions, a day on which Harris is also dealing in United States Dollar deposits in London, England.

          “Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default.

          “Event of Default” means any event or condition identified as such in Section 8.1 hereof.

          “FDIC” means the Federal Deposit Insurance Corporation.

          “GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.

                    “Indebtedness for Borrowed Money” means for any Person (without duplication) (a) all indebtedness of such Person for borrowed money, whether current or funded, or secured or unsecured, (b) all indebtedness for the deferred purchase price of Property or services, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of a default are limited to repossession or sale of such Property), (d) all indebtedness secured by a purchase money mortgage or other lien to secure all or part of the purchase price of Property subject to such mortgage or lien, (e) all obligations under leases which shall have been or must be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee, (f) any liability in respect of banker’s acceptances or letters of credit, (g) any indebtedness, whether or not assumed, secured by liens on Property acquired by such Person at the time of acquisition thereof, and (h) all indebtedness referred to in clause (a), (b), (c), (d), (e), (f), and (g) above which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which any of them have otherwise assured a creditor against loss.

          “Interest Period” means, with respect to any LIBOR Portion, the period commencing on, as the case may be, the creation, continuation or conversion date with respect to such LIBOR Portion and ending 1, 2 or 3 months thereafter as selected by the Borrower in its notice as provided herein; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

          (i)       if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day, unless in the case of an Interest Period for a LIBOR Portion the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

          (ii)      no Interest Period may extend beyond the final maturity date of the Note;

          (iii)     the interest rate to be applicable to each Portion for each Interest Period shall apply from and including the first day of such Interest Period to but excluding the last day thereof; and

          (iv)     no Interest Period may be selected if after giving effect thereto the Borrower will be unable to make a principal payment scheduled to be made during such Interest Period without paying part of a LIBOR Portion on a date other than the last day of the Interest Period applicable thereto.

For purposes of determining an Interest Period, a month means a period starting on one day in a calendar month and ending on a numerically corresponding day in the next calendar month, provided, however, if an Interest Period begins on the last day of a month or if there is no numerically corresponding day in the month in which an Interest Period is to end, then such Interest Period shall end on the last Business Day of such month.

                    “LIBOR Portions” is defined in Section 2.1(a) hereof.

          “Loan Documents” means this Agreement, the Note, and each other instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith.

          “Material Adverse Effect” means (a) a material adverse change in, or material adverse effect upon, the operations, business, Property, condition (financial or otherwise) or prospects of the Borrower, (b) a material impairment of the ability of the Borrower to perform its obligations under any Loan Document, or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of any Loan Document or the rights and remedies of Harris thereunder.

          “Note” means the Term Note.

          “Obligations” means all obligations of the Borrower to pay principal and interest on the Term Loan, all fees and charges payable hereunder, and all other payment obligations of the Borrower arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held, or acquired.

          “OCC” means the office of the Comptroller of the Currency.

          “Parent” means Community First Bankshares, Inc., a Delaware corporation.

          “Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or any other entity or organization, including a government or agency or political subdivision thereof.

           “Portion” is defined in Section 2.1(a) hereof.

          “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

          “Term Loan” is defined in Section 1.1 hereof.

          “Term Loan Final Maturity Date” is defined in Section 1.1 hereof.

          “Term Note” is defined in Section 1.1 hereof.

          “Unpermitted Change of Control” means any merger or consolidation to which the Borrower is a party where (a) such merger or consolidation was not at the direction of the OCC, and (b) the surviving entity (i) is not a bank which is subject to FDIC supervision, (ii) has not assumed the obligations and liabilities of the Borrower hereunder or (iii) will be in default under this Agreement.

          Section 4.2. Interpretation.  The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined.  The words “hereof”, “herein”, and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All references to time of day herein are references to Chicago, Illinois time unless otherwise specifically provided.

SECTION 5.         REPRESENTATIONS AND WARRANTIES.

          The Borrower represents and warrants to Harris as follows:

          Section 5.1. Organization and Qualification.  The Borrower is duly organized, validly existing, and in good standing as a national banking association under the laws of the United States of America, has full and adequate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying where the failure to do so could reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit the Borrower from changing its form of organization.

          Section 5.2. Authority and Validity of Obligations.  The Borrower has full right and authority to enter into this Agreement and the other Loan Documents, to make the borrowings herein provided for, to issue its Note in evidence thereof, and to perform all of its obligations hereunder and under the other Loan Documents.  The Loan Documents delivered by the Borrower have been duly authorized, executed, and delivered by the Borrower and constitute valid and binding obligations of the Borrower enforceable in accordance with their terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and this Agreement and the other Loan Documents do not, nor does the performance or observance by the Borrower of any of the matters and things herein or therein provided for, (a) contravene or constitute a default under any provision of law or any judgment, injunction, order or decree binding upon the Borrower or any provision of the articles of association or by-laws of the Borrower or any covenant, indenture or agreement of or affecting the Borrower or any of its Property, or (b) result in the creation or imposition of any Lien on any Property of the Borrower.

          Section 5.3. Use of Proceeds.  The Borrower shall use the entire proceeds of the Loan to increase its capital funds.

          Section 5.4. Financial Reports.  The statements of condition of the Borrower as at December 31 of each of the years 1997 through 1999, both inclusive, and of earnings of the Borrower for the fiscal years ended December 31 of each of the years 1997 through 1999, both inclusive heretofore furnished to Harris, are complete and correct and have been prepared in conformity with the accounting principles applicable to banks.  Such financial statements fairly present the financial condition of the Borrower as at the respective dates thereof and the statements of earnings fairly present the results of the operations of the Borrower for the respective periods covered thereby.

          Section 5.5. No Material Adverse Change.  Since September 30, 2000, there has been no change in the condition (financial or otherwise) or business prospects of the Borrower except those occurring in the ordinary course of business, none of which individually or in the aggregate have been materially adverse.

          Section 5.6. Full Disclosure.  The statements and information furnished to Harris in connection with the negotiation of this Agreement and the other Loan Documents and the commitment by Harris to provide all or part of the financing contemplated hereby do not contain any untrue statements of a material fact or omit a material fact necessary to make the material statements contained herein or therein not misleading, Harris acknowledging that, as to any projections furnished to Harris, the Borrower only represents that the same were prepared on the basis of information and estimates the Borrower believed to be reasonable.

          Section 5.7. Governmental Authority and Licensing.  The Borrower has received all licenses, permits, and approvals of all federal, state, local, and foreign governmental authorities, if any, necessary to conduct their businesses, in each case where the failure to obtain or maintain the same could reasonably be expected to have a Material Adverse Effect.  No investigation or proceeding which, if adversely determined, could reasonably be expected to result in revocation or denial of any material license, permit or approval is pending or, to the knowledge of the Borrower, threatened.  The Borrower has not received any notice from the OCC which would prevent the Borrower from prepaying the Note or paying the Note at maturity.

          Section 5.8. Approvals.  No authorization, consent, license, or exemption from, or filing or registration with, any court or governmental department, agency, or instrumentality, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery, or performance by the Borrower of any Loan Document, except for such approvals which have been obtained prior to the date of this Agreement and remain in full force and effect.

          Section 5.9. Affiliate Transactions.  The Borrower is not a party to any contracts or agreements with any of its Affiliates on terms and conditions which are less favorable to the Borrower than would be usual and customary in similar contracts or agreements between Persons not affiliated with each other.

          Section 5.10.  Compliance with Laws.  The Borrower is in compliance with the requirements of all federal, state and local laws, rules and regulations applicable to or pertaining to their Property or business operations (including, without limitation, the Occupational Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and regulations establishing quality criteria and standards for air, water, land and toxic or hazardous wastes and substances), non-compliance with which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  The Borrower has not received notice to the effect that its operations are not in compliance with any of the requirements of applicable federal, state or local environmental, health and safety statutes and regulations or are the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

          Section 5.11  Other Agreements.  The Borrower is not in default under the terms of any covenant, indenture or agreement of or affecting the Borrower or any of its Property, which default if uncured could reasonably be expected to have a Material Adverse Effect.

          Section 5.12.  No Default.  No Default or Event of Default has occurred and is continuing.

SECTION 6.         CONDITIONS PRECEDENT.

          The obligation of Harris to make the Loan under this Agreement is subject to the following conditions precedent:

          (a)      each of the representations and warranties set forth in Section 5 hereof and in the other Loan Documents shall be true and correct as of such time, except to the extent the same expressly relate to an earlier date;

          (b)      the Borrower shall be in compliance with the terms and conditions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing or would occur as a result of making such extension of credit;

          (c)      such extension of credit shall not violate any order, judgment, or decree of any court or other authority or any provision of law or regulation applicable to Harris (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System) as then in effect.

          (d)      Harris shall have received the following (and, with respect to all documents, each to be properly executed and completed) and the same shall have been approved as to form and substance by Harris:

          (i)       the Note;

          (ii)      copies (executed or certified as may be appropriate) of resolutions of the Board of Directors or other governing body of the Borrower authorizing the execution, delivery, and performance of the Loan Documents;

          (iii)     articles of association of the Borrower certified by the appropriate governmental office of the state of its organization;

          (iv)     by–laws for the Borrower certified by an appropriate officer of such Person acceptable to Harris;

          (v)      an incumbency certificate containing the name, title and genuine signature of the Borrower’s Authorized Representatives;

          (vi)     a good standing certificate for the Borrower dated as of a date no earlier than 30 days prior to the date hereof, from the appropriate governmental offices;

          (e)      Harris shall have received the initial fees provided for in a fee letter between the Borrower and Harris;

          (f)       legal matters incident to the execution and delivery of the Loan Documents and to the transactions contemplated hereby shall be satisfactory to Harris and its counsel; and Harris shall have received the favorable written opinion of counsel for the Borrower in form and substance satisfactory to Harris and its counsel;

          (g)      Harris shall have received satisfactory evidence that its obligations to extend credit to or for the benefit of the Parent have terminated; and

          (h)      Harris shall have received such other agreements, instruments, documents, certificates and opinions as Harris may reasonably request.

SECTION 7.         COVENANTS.

          The Borrower agrees that, so long as any credit is available to or in use by the Borrower hereunder, except to the extent compliance in any case or cases is waived in writing by Harris:

          Section 7.1. Maintenance of Business.  The Borrower shall preserve and maintain its existence as a bank the deposits of which are insured by the FDIC.

          Section 7.2. Financial Reports.  The Borrower shall, and shall cause the Parent to, furnish to Harris and its duly authorized representatives such information respecting the business and financial condition of the Borrower as Harris may reasonably request; provided however, that in no event shall the Borrower be required to disclose any confidential correspondence or reports of supervisory activity; and without any request, shall furnish to Harris:

          (a)      as soon as available, and in any event within 60 days after the last day of each calendar quarter, a copy of the FDIC Call Reports for the Borrower and each bank subsidiary of the Borrower.

          (b)      as soon as publicly available, and in any event within 90 days after the close of each fiscal year of the Parent, a copy of the consolidated  and consolidating balance sheet of the Parent and its subsidiaries as of the close of such period and the consolidated and consolidating statements of income, retained earnings, and cash flows of the Parent and its subsidiaries for such period, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied by an unqualified opinion thereon or a firm of independent public accountants of recognized national standing, selected by the Parent and satisfactory to Harris, to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of the Parent and its subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances;

          (c)      promptly after knowledge thereof shall have come to the attention of any responsible officer of the Borrower, written notice of any notice received by the Borrower which would prevent the Borrower from making prepayments on the Note or otherwise affect the Borrower’s ability to fulfill its Obligations hereunder or of any threatened or pending litigation or governmental proceeding or labor controversy against the Borrower which, if adversely determined, would adversely effect the financial condition, Properties, business or operations of the Borrower or of the occurrence of any Default or Event of Default hereunder; and

          (d)      as soon as available, and in any event within 60 days after the last day of each calendar quarter the Borrower shall deliver to Harris a written certificate in the form attached hereto as Exhibit B signed by the chief financial officer of the Borrower, or such other officer of the Borrower satisfactory to Harris, to the effect that to the best of such officer’s knowledge and belief no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken by the Borrower to remedy the same.

          Section 7.3. Inspection.  The Borrower shall, and shall cause each Subsidiary to, permit Harris and its duly authorized representatives and agents to visit and inspect any of the Properties, corporate books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, its officers, employees, and independent public accountants (and by this provision the Borrower hereby authorizes such accountants to discuss with Harris the finances and affairs of the Borrower and of each Subsidiary) at such reasonable times and reasonable intervals as Harris may designate; provided however, that in no event shall the Borrower be required to disclose any confidential correspondence or reports of supervisory activity.

          Section 7.4. Compliance with Laws.  The Borrower shall, and shall cause each Subsidiary to, comply in all respects with the requirements of all federal, state, local, and foreign laws, rules, regulations, ordinances and orders applicable to or pertaining to its Property or business operations, where any such non–compliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of its Property.

          Section 7.5. Burdensome Contracts With Affiliates.  The Borrower shall not enter into any contract, agreement or business arrangement (including, without limitation, contracts for the sale of any Property) with any of its Affiliates on terms and conditions which are less favorable to the Borrower or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other.

          Section 7.6. No Changes in Fiscal Year.  The Borrower shall not change its fiscal year from its present basis.

SECTION 8.         EVENTS OF DEFAULT AND REMEDIES.

          Section 8.1. Events of Default.  Any one or more of the following shall constitute an “Event of Default” hereunder:

          (a)      default for a period of 15 days in the payment when due of all or any part of any Obligation payable by the Borrower hereunder or under any other Loan Document (whether at the stated maturity thereof or at any other time provided for in this Agreement), or default for a period of 15 days shall occur in the payment when due of any other indebtedness or obligation (whether direct, contingent or otherwise) of the Borrower owing to Harris; or

          (b)      default in the observance or performance of any other provision hereof which is not remedied within 30 days after the earlier of (i) the date on which such failure shall first become known to any officer of the Borrower or (ii) written notice thereof is given to the Borrower by Harris; or

          (c)      any representation or warranty made by the Borrower herein or in any statement or certificate furnished by it pursuant hereto or in connection with any extension of credit made hereunder, proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within 30 days after the earlier of (i) the date on which such breach shall first become known to any officer of the Borrower or (ii) written notice thereof is given to the Borrower by Harris; or

          (d)      default shall occur under any Indebtedness for Borrowed Money issued, assumed or guaranteed by the Borrower aggregating more than the greater of (i) 5% of the Borrower’s capital or (ii) $250,000, or under any indenture, agreement or other instrument under which the same may be issued, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such Indebtedness for Borrowed Money (whether or not such maturity is in fact accelerated), or any such Indebtedness for Borrowed Money shall not be paid when due (whether by lapse of time, acceleration or otherwise); or

          (e)      any judgment or judgments, writ or writs, or warrant or warrants of attachment, or any similar process or processes in an aggregate amount in excess of the greater of (i) 5% of the Borrower’s capital or (ii) $250,000, shall be entered or filed against the Borrower or against any of their Property and which remains unvacated, unbonded, unstayed or unsatisfied for a period of 30 days; or

          (f)       dissolution or termination of the existence of the Borrower or an Unpermitted Change of Control shall occur; or

          (g)      the Borrower shall (i) make an assignment for the benefit of its creditors, (ii) admit in writing its inability to pay its debts generally as they become due, (iii) file a petition to take advantage of any applicable insolvency or reorganization statute, (iv) suspend payment of its obligations, (v) become insolvent, (vi) consent to the appointment of any receiver, conservator, liquidating agent or committee or governmental authority in any insolvency, readjustment of debt, marshalling of assets or liabilities or similar proceedings of or relating to it or of or relating to all or any substantial part of its property, or (vii) take any corporate action for the purpose of effecting any of the foregoing; or

          (h)      an order, judgment or decree of any court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets or liabilities or similar proceedings of or relating to the Borrower or of or relating to all or any substantial part of its property, or the winding-up or liquidation of its affairs, shall have been entered without the consent of the Borrower, and such decree or order shall have remained in force undischarged or unstayed for a period of 30 days from the date of entry thereof.

          Section 8.2. Non-Bankruptcy Defaults.  When any Event of Default described in subsection (a) through (f), both inclusive, of Section 8.1 has occurred and is continuing, Harris may, by notice to the Borrower, take one or more of the following actions:

          (a)      terminate the obligation of Harris to extend any further credit hereunder on the date (which may be the date thereof) stated in such notice;

          (b)      declare the principal of and the accrued interest on the Note to be forthwith due and payable and thereupon the Note, including both principal and interest and all fees, charges and other Obligations payable hereunder and under the other Loan Documents, shall be and become immediately due and payable without further demand, presentment, protest or notice of any kind; and

          (c)      enforce any and all rights and remedies available to it under the Loan Documents or applicable law.

          Section 8.3. Bankruptcy Defaults.  When any Event of Default described in subsection (g) or (h) of Section 8.1 has occurred and is continuing, then the Note, including both principal and interest, and all fees, charges and other Obligations payable hereunder and under the other Loan Documents, shall immediately become due and payable without presentment, demand, protest or notice of any kind, and the obligation of Harris to extend further credit pursuant to any of the terms hereof shall immediately terminate.  In addition, Harris may exercise any and all remedies available to it under the Loan Documents or applicable law.

SECTION 9.         MISCELLANEOUS.

          Section 9.1. Non-Business Day.  If any payment hereunder becomes due and payable on a day which is not a Business Day, the due date of such payment shall be extended to the next succeeding Business Day on which date such payment shall be due and payable.  In the case of any payment of principal falling due on a day which is not a Business Day, interest on such principal amount shall continue to accrue during such extension at the rate per annum then in effect, which accrued amount shall be due and payable on the next scheduled date for the payment of interest.

          Section 9.2. No Waiver, Cumulative Remedies.  No delay or failure on the part of Harris or on the part of the holder of the Obligations in the exercise of any power or right shall operate as a waiver thereof or as an acquiescence in any default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.  The rights and remedies hereunder of Harris and of the holder of the Obligations are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have.

          Section 9.3. Amendments, Etc.  No amendment, modification, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by Harris.  No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

          Section 9.4. Costs and Expenses; Indemnification.  The Borrower agrees to pay on demand the costs and expenses of Harris in connection with the negotiation, preparation, execution and delivery of this Agreement, the other Loan Documents and the other instruments and documents to be delivered hereunder or thereunder, and in connection with the transactions contemplated hereby or thereby, and in connection with any consents hereunder or waivers or amendments hereto or thereto, including the fees and expenses of counsel for Harris with respect to all of the foregoing (whether or not the transactions contemplated hereby are consummated).  The Borrower further agrees to pay to Harris or any other holder of the Obligations all costs and expenses (including court costs and attorneys’ fees), if any, incurred or paid by Harris or any other holder of the Obligations in connection with any Default or Event of Default or in connection with the enforcement of this Agreement or any of the other Loan Documents or any other instrument or document delivered hereunder or thereunder.  The Borrower further agrees to indemnify Harris, and any security trustee, and their respective directors, officers and employees, against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor, whether or not the indemnified Person is a party thereto) which any of them may pay or incur arising out of or relating to any Loan Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any extension of credit made available hereunder, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification.  The Borrower, upon demand by Harris at any time, shall reimburse Harris for any legal or other expenses incurred in connection with investigating or defending against any of the foregoing except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified.  The obligations of the Borrower under this Section shall survive the termination of this Agreement.

          Section 9.5. Documentary Taxes.  The Borrower agrees to pay on demand any documentary, stamp or similar taxes payable in respect of this Agreement or any other Loan Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder.

          Section 9.6. Survival of Representations.  All representations and warranties made herein or in any of the other Loan Documents or in certificates given pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder.

          Section 9.7. Survival of Indemnities.  All indemnities and other provisions relative to reimbursement to Harris of amounts sufficient to protect the yield of Harris with respect to the Loans, including, but not limited to, Sections 2.7 and 2.9 hereof, shall survive the termination of this Agreement and the payment of the Note.

          Section 9.8. Notices.  Except as otherwise specified herein, all notices hereunder shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party at its address or telecopier number set forth below, or such other address or telecopier number as such party may hereafter specify by notice to the other given by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt.  Notices hereunder shall be addressed:

to the Borrower at:	to Harris at:
Community First National Bank	Harris Trust and Savings Bank
520 Main Avenue	111 West Monroe Street
Fargo, North Dakota 58124	Chicago, Illinois  60603
Attention:      Thomas R. Anderson	Attention:      David J. Konrad
Telephone:    (701) 298-5623	Telephone:   (312) 461-71123
Telecopy:      (701) 235-6019	Telecopy:     (312) 765-8253

Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and a confirmation of such telecopy has been received by the sender, (ii) if given by mail, five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section; provided that any notice given pursuant to Section 1 or Section 2 hereof shall be effective only upon receipt.

          Section 9.9. Construction.  NOTHING CONTAINED HEREIN SHALL BE DEEMED OR CONSTRUED TO PERMIT ANY ACT OR OMISSION WHICH IS PROHIBITED BY THE TERMS OF ANY OF THE OTHER LOAN DOCUMENTS, THE COVENANTS AND AGREEMENTS CONTAINED HEREIN BEING IN ADDITION TO AND NOT IN SUBSTITUTION FOR THE COVENANTS AND AGREEMENTS CONTAINED IN THE OTHER LOAN DOCUMENTS.

          Section 9.10. Headings.  Section headings used in this Agreement are for convenience of reference only and are not a part of this Agreement for any other purpose.

          Section 9.11. Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

          Section 9.12. Counterparts.  This Agreement may be executed in any number of counterparts, and by different parties hereto on separate counterpart signature pages, and all such counterparts taken together shall be deemed to constitute one and the same instrument.

          Section 9.13 .Binding Nature, Governing Law, Etc.  This Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of Harris and the benefit of its successors and assigns, including any subsequent holder of the Obligations.  The Borrower may not assign its rights hereunder without the written consent of Harris.  This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby.  THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

          Section 9.14. Submission to Jurisdiction;  Waiver of Jury Trial.  The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating to this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby.  The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  THE BORROWER AND HARRIS EACH HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

[SIGNATURE PAGE TO FOLLOW]

                    Upon your acceptance hereof in the manner hereinafter set forth, this Agreement shall constitute a contract between us for the uses and purposes hereinabove set forth.

          Dated as of this 22nd day of December, 2000.

	COMMUNITY FIRST NATIONAL BANK
By
	Name  /s/  Thomas R. Anderson
	Title  Investment Officer

          Accepted and agreed to at Chicago, Illinois, as of the day and year last above written.

	HARRIS TRUST AND SAVINGS BANK
By
	Name  /s/  David J. Konrad
	Title  Vice President

EXHIBIT A

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION.  THIS OBLIGATION IS
SUBORDINATED TO THE CLAIMS OF DEPOSITORS, IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE BORROWER, AND IS NOT SECURED.

SUBORDINATED TERM NOTE

$25,000,000 December 22, 2000

          FOR VALUE RECEIVED, the undersigned, COMMUNITY FIRST NATIONAL BANK, a national banking association (the “Borrower”), hereby promises to pay to the order of HARRIS TRUST AND SAVINGS BANK (“Harris”) at its office at 111 West Monroe Street, Chicago, Illinois, the principal sum of TWENTY FIVE MILLION and 00/100 DOLLARS ($25,000,000), payable in principal installments in the amounts and at the times set forth in Section 1.1 of the Credit Agreement hereinafter mentioned, with all principal not sooner paid due and payable on the Term Loan Final Maturity Date.

          This Note evidences the Term Loan made to the Borrower by Harris under that certain Credit Agreement re: Subordinated Term Note dated as of December 22nd, 2000, between the Borrower and Harris (said Credit Agreement, as the same may be amended, modified or restated from time to time, being referred to herein as the “Credit Agreement”), and the Borrower hereby promises to pay interest at the office described above on the Term Loan evidenced hereby at the rates and at the times and in the manner specified therefor in the Credit Agreement.

          This Note is issued by the Borrower under the terms and provisions of the Credit Agreement, and this Note and the holder hereof are entitled to all of the benefits provided for thereby or referred to therein, to which reference is hereby made for a statement thereof.  This Note may be declared to be, or be and become, due prior to its expressed maturity, voluntary prepayments may be made hereon subject to the conditions of the Credit Agreement, all in the events, on the terms and with the effects provided in the Credit Agreement.  All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in the Credit Agreement.

          The Borrower hereby promises to pay all costs and expenses (including attorneys’ fees) suffered or incurred by the holder hereof in collecting this Note or enforcing any rights in any collateral therefor.  The Borrower hereby waives presentment for payment and demand.  THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                    The indebtedness of the Borrower evidenced by this Note, including the principal and premium, if any, and interest shall be subordinate and junior in right of payment to its obligations to its depositors, its obligations under bankers’ acceptances and letters of credit, and its obligations to its other creditors, including its obligations to the Federal Reserve Bank, Federal Deposit Insurance Corporation (“FDIC”), and any rights acquired by the FDIC as a result of loans made by the FDIC to the Borrower or the purchase or guarantee of any of its assets by the FDIC pursuant to the provisions of 12 USC 1823(c), (d) or (e), whether now outstanding or hereafter incurred.  In the event of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshaling of assets and liabilities or similar proceedings or any liquidation or winding up of or relating to the Borrower, whether voluntary or involuntary, all such obligations shall be entitled to be paid in full before any payment shall be made on account of the principal of, or premium, if any, or interest, on the Note.  In the event of any such proceedings, after payment in full of all sums owing on such prior obligations, the holder of the Note together with any obligations of the Borrower ranking on a parity with the Note, shall be entitled to be paid from the remaining assets of the Borrower the unpaid principal thereof and any unpaid premium, if any, and interest before any payment or other distribution, whether in cash, property, or otherwise, shall be made on account of any capital stock or any obligations of the Borrower ranking junior to the Note.  Nothing herein shall impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of and any premium and interest on the note according to its terms.

          Notwithstanding any other provisions of this Note, including specifically those set forth in the sections relating to subordination, events of default and covenants of the Borrower, it is expressly understood and agreed that the Office of the Comptroller of the Currency (“OCC”) or any receiver or conservator of the Borrower appointed by OCC shall have the right in the performance of his legal duties, and as part of liquidation designed to protect or further the continued existence of the Borrower or the rights of any parties or agencies with an interest in, or claim against, the Borrower or its assets, to transfer or direct the transfer of the obligations of this Note to any bank or bank holding company selected by such official which shall expressly assume the obligation of the due and punctual payment of the unpaid principal, and interest and premium, if any, on this Note and the due and punctual performance of all covenants and conditions; and the completion of such transfer and assumption shall serve to supersede and void any default, acceleration or subordination which may have occurred, or which may occur due or related to such transaction, plan, transfer or assumption, pursuant to the provisions of this Note, and shall serve to return the holder to the same position, other than for substitution of the obligor, it would have occupied had no default, acceleration or subordination occurred; except that any interest and principal previously due, other than by reason of acceleration, and not paid shall, in the absence of a contrary agreement by the holder of this Note, be deemed to be immediately due and payable as of the date of such transfer and assumption, together with the interest from its original due date at the rate provided for herein.

COMMUNITY FIRST NATIONAL BANK

By

Name

Title

EXHIBIT B

COMPLIANCE CERTIFICATE

To:     HARRIS TRUST AND SAVINGS BANK

          This Compliance Certificate is furnished to Harris Trust and Savings Bank (“Harris”) pursuant to that certain Credit Agreement re: Subordinated Term Note dated as of December ____, 2000, between Community First National Bank and you (the “Credit Agreement”).  Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement.

          THE UNDERSIGNED HEREBY CERTIFIES THAT:

          1.       I am the duly elected _____________________________________ of the Borrower;

          2.       I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements;

          3.       The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below;

          4.       The financial statements required by Section 7.2 of the Credit Agreement and being furnished to you concurrently with this certificate are, to the best of my knowledge, true, correct and complete as of the dates and for the periods covered thereby; and

          5.       The Attachment hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Credit Agreement, all of which data and computations are, to the best of my knowledge, true, complete and correct and have been made in accordance with the relevant Sections of the Credit Agreement.

          Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event:

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

          The foregoing certifications, together with the computations set forth in the Attachment hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this _________ day of __________________, ___.

COMMUNITY FIRST NATIONAL BANK

By

Name

Title

EX-10.18

EXHIBIT 10.18

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION.  THIS OBLIGATION IS
SUBORDINATED TO THE CLAIMS OF DEPOSITORS, IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE BORROWER, AND IS NOT SECURED.

SUBORDINATED TERM NOTE

$25,000,000                                                                                                           December 22, 2000

            For Value Received, the undersigned, COMMUNITY FIRST NATIONAL BANK, a national banking association (the “Borrower”), hereby promises to pay to the order of HARRIS TRUST AND SAVINGS BANK (“Harris”) at its office at 111 West Monroe Street, Chicago, Illinois, the principal sum of TWENTY FIVE MILLION and 00/100 DOLLARS ($25,000,000), payable in principal installments in the amounts and at the times set forth in Section 1.1 of the Credit Agreement hereinafter mentioned, with all principal not sooner paid due and payable on the Term Loan Final Maturity Date.

            This Note evidences the Term Loan made to the Borrower by Harris under that certain Credit Agreement re: Subordinated Term Note dated as of December 22nd, 2000, between the Borrower and Harris (said Credit Agreement, as the same may be amended, modified or restated from time to time, being referred to herein as the “Credit Agreement”), and the Borrower hereby promises to pay interest at the office described above on the Term Loan evidenced hereby at the rates and at the times and in the manner specified therefor in the Credit Agreement.

            This Note is issued by the Borrower under the terms and provisions of the Credit Agreement, and this Note and the holder hereof are entitled to all of the benefits provided for thereby or referred to therein, to which reference is hereby made for a statement thereof.  This Note may be declared to be, or be and become, due prior to its expressed maturity, voluntary prepayments may be made hereon subject to the conditions of the Credit Agreement, all in the events, on the terms and with the effects provided in the Credit Agreement.  All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in the Credit Agreement. 

            The Borrower hereby promises to pay all costs and expenses (including attorneys’ fees) suffered or incurred by the holder hereof in collecting this Note or enforcing any rights in any collateral therefor.  The Borrower hereby waives presentment for payment and demand.  THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

            The indebtedness of the Borrower evidenced by this Note, including the principal and premium, if any, and interest shall be subordinate and junior in right of payment to its obligations to its depositors, its obligations under bankers’ acceptances and letters of credit, and its obligations to its other creditors, including its obligations to the Federal Reserve Bank, Federal Deposit Insurance Corporation (“FDIC”), and any rights acquired by the FDIC as a result of loans made by the FDIC to the Borrower or the purchase or guarantee of any of its assets by the FDIC pursuant to the provisions of 12 USC 1823(c), (d) or (e), whether now outstanding or hereafter incurred.  In the event of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshaling of assets and liabilities or similar proceedings or any liquidation or winding up of or relating to the Borrower, whether voluntary or involuntary, all such obligations shall be entitled to be paid in full before any payment shall be made on account of the principal of, or premium, if any, or interest, on the Note.  In the event of any such proceedings, after payment in full of all sums owing on such prior obligations, the holder of the Note together with any obligations of the Borrower ranking on a parity with the Note, shall be entitled to be paid from the remaining assets of the Borrower the unpaid principal thereof and any unpaid premium, if any, and interest before any payment or other distribution, whether in cash, property, or otherwise, shall be made on account of any capital stock or any obligations of the Borrower ranking junior to the Note.  Nothing herein shall impair the obligation of the Borrower, which is absolute and unconditional, to pay the principal of and any premium and interest on the note according to its terms.

            Notwithstanding any other provisions of this Note, including specifically those set forth in the sections relating to subordination, events of default and covenants of the Borrower, it is expressly understood and agreed that the Office of the Comptroller of the Currency (“OCC”) or any receiver or conservator of the Borrower appointed by OCC shall have the right in the performance of his legal duties, and as part of liquidation designed to protect or further the continued existence of the Borrower or the rights of any parties or agencies with an interest in, or claim against, the Borrower or its assets, to transfer or direct the transfer of the obligations of this Note to any bank or bank holding company selected by such official which shall expressly assume the obligation of the due and punctual payment of the unpaid principal, and interest and premium, if any, on this Note and the due and punctual performance of all covenants and conditions; and the completion of such transfer and assumption shall serve to supersede and void any default, acceleration or subordination which may have occurred, or which may occur due or related to such transaction, plan, transfer or assumption, pursuant to the provisions of this Note, and shall serve to return the holder to the same position, other than for substitution of the obligor, it would have occupied had no default, acceleration or subordination occurred; except that any interest and principal previously due, other than by reason of acceleration, and not paid shall, in the absence of a contrary agreement by the holder of this Note, be deemed to be immediately due and payable as of the date of such transfer and assumption, together with the interest from its original due date at the rate provided for herein.

Community First National Bank

By 

Name  /s/ Thomas R. Anderson

Title  Investment Officer

EX-10.19

Exhibit 10.19

PLAN OF REORGANIZATION AND MERGER AGREEMENT

          This Plan of Reorganization and Merger Agreement is dated as of December 31, 2000, and is entered into by and between Community First State Bank, a South Dakota banking corporation with its principal office in Vermillion, South Dakota (the "Target Bank"), and Community First National Bank, national banking association with its principal office in Fargo, North Dakota (the "North Dakota Bank"and, collectively with the Target Bank, the "Banks").

          The Boards of Directors of the Banks deem it fair and equitable to, and in the best interests of, their respective shareholders, that the Target Bank be merged with and into the North Dakota Bank, with the North Dakota Bank being the Surviving Bank (as hereinafter defined), on the terms and conditions herein set forth under and pursuant to the National Bank Act (the "Act").  Each such Board of Directors has approved this Plan of Reorganization and Merger Agreement, has authorized its execution and delivery and has directed that this Plan of Reorganization and Merger Agreement and the Merger be submitted to its respective shareholders for approval.

          NOW, THEREFORE, in consideration of the promises and the mutual agreements, provisions and covenants herein contained, the parties hereto adopt and agree to the following agreements, terms and conditions relating to the merger of the Target Bank with and into the North Dakota Bank (hereinafter, the "Merger") and the mode of carrying the same into effect.

          1.       Merger.  The Target Bank will be merged with and into the North Dakota Bank, which will be the surviving corporation (hereinafter called the "Surviving Bank" whenever reference is made to it as of the Closing Date or thereafter).  Such Merger will be pursuant to the provisions of and with the effect provided in the Act.  The date or dates when the Merger will be consummated is hereinafter referred to as the "Closing Date" as defined in Section 12 below.

          2.       Name.  The name of the Surviving Bank will be "Community First National Bank."

          3.       Board of Directors; Officers.  The Board of Directors of the Surviving Bank at the Closing Date will consist of the following individuals:  Keith A. Dickleman, Thomas E. Hanson, Robert W. Jorgenson, Gary A. Knutson, David A. Lee and Charles A. Mausbach.

Such directors will serve as directors of the Surviving Bank until the next annual meeting of the Surviving Bank or until such time as their successors have been elected and have qualified.  Additional directors may be appointed from time to time as set forth in the Surviving Bank's Articles of Association and Bylaws.  The executive officers of the Surviving Bank shall consist of the following individuals:  David A. Lee, Chairman, President and Chief Executive Officer; and Thomas R. Anderson, Chief Investment Officer. Other officers of the Bank shall be appointed from time to time by the Board of Directors of the Surviving Bank.  Such officers will serve until their successors are elected or appointed in accordance with the Bylaws of the Surviving Bank.

          4.       Capital of the Surviving Bank.  The amount of capital stock of the Surviving Bank shall be $10,000,000 divided into 100,000 shares of common stock, each of $100.00  par value, and at the time the merger shall become effective, the Surviving Bank shall have a surplus of not less than $308,072,000 and undivided profits, including capital reserves, which when combined with the capital and surplus will be equal to the combined capital structures of the merging banks before the Merger, adjusted however, for the capital reduction proposed incident to consummation of the merger, and for normal earnings and expenses (and if applicable, purchase accounting adjustments) between September 31, 2000, and the effective time of the Merger.

          5.       Articles of Association.  Effective as of the time this Merger shall become effective as specified in the merger approval to be issued by the Comptroller of the Currency, the articles of association of the Surviving Bank shall read in their entirety as set forth in Exhibit A hereto.

          6.       Bylaws.  The Bylaws of the North Dakota Bank in effect at the time of this Merger shall continue as the Bylaws of the Surviving Bank.

          7.       Effect of the Merger.  At the Closing Date, the separate corporate existence of the Banks will cease, and the Banks will become a single bank, the Surviving Bank, as provided in Section 215a of the Act.  The Surviving Bank will thereafter have all the rights, privileges, immunities, and powers, and be subject to all the duties and liabilities of a corporation incorporated under the Act.  The Surviving Bank will thereafter possess all the rights, privileges, immunities, and franchises of a public as well as of a private nature of the Banks, respectively; and all property, real, personal, and mixed and all debts due on any account, including subscriptions for shares, and all other choses in action, and every other interest of or belonging to or due to the Banks will vest in the Surviving Bank without any further act or deed.  As of the Closing Date, the Surviving Bank will be responsible and liable for all the liabilities and obligations of the Banks; a claim of or against or a pending proceeding by or against either of the Banks may be prosecuted as if the Merger had not taken place, or the Surviving Bank may be substituted in place of either of the Banks.  Neither the rights of creditors nor any liens upon the property of either of the Banks will be impaired by the Merger.

          8.       Cancellation and Reissuance of Common Stock.  At the Closing Date, each share of Common Stock of the North Dakota Bank validly issued and outstanding immediately prior to the Closing Date will remain issued and outstanding as shares of the Surviving Bank.  Each share of Common Stock of the Target Bank validly issued and outstanding immediately prior to the Closing Date will be canceled.

9.       Shareholder Approval.  This Plan of Reorganization and Merger Agreement will be submitted to the respective shareholders of the Banks for ratification and confirmation by consent or at meetings to be called and held in accordance with the applicable provisions of law and the respective Articles of Association and Bylaws of the Banks.  The Banks will proceed expeditiously and cooperate fully in the procurement of any other consents and approvals and in the taking of any other action, and the satisfaction of all other requirements prescribed by law or otherwise, necessary for consummation of the Merger, and the other transactions contemplated by this Agreement on the terms herein provided.

          10.     Termination.  This Plan of Reorganization and Merger Agreement may be terminated and the Merger abandoned by mutual consent of the respective Boards of Directors of the Banks at any time prior to the Closing Date.

          11.     Waivers; Amendments.  Any of the Banks may, at any time prior to the Closing Date, by action taken by its Board of Directors or officers thereunto authorized, waive the performance of any of the obligations of the other or waive compliance by the other with any of the covenants or conditions contained in this Plan of Reorganization and Merger Agreement or agree to the amendment or modification of this Plan of Reorganization and Merger Agreement by an agreement in writing executed in the same manner as this Plan of Reorganization and Merger Agreement.

          12.     Closing Date.  The Merger will become effective on the day on which the Office of the Comptroller of the Currency shall declare the Merger effective (the "Closing Date").  The Merger may, at the election of the North Dakota Bank and with the consent of the Comptroller of the Currency, be consummated in stages, involving such Target Bank as may be appropriate, in order to effectuate an orderly data processing conversion and consolidation of operations of the Banks.

          13.     Captions.  The captions in this Plan of Reorganization and Merger Agreement are for convenience only and will not be considered a part of or affect the construction or interpretation of any provision of this Plan of Reorganization and Merger Agreement.  This Plan of Reorganization and Merger Agreement may be executed in several counterparts, each of which will constitute one and the same instrument.

          14.     Governing Law.  This Plan of Reorganization and Merger Agreement is to be construed and interpreted in accordance with the laws of the United States.

          WITNESS, the signature of said merging Banks as of this 22 day of December, 2000, each set by its authorized officer and attested thereto, pursuant to a resolution of its Board of Directors, acting by a majority.

COMMUNITY FIRST STATE BANK

Vermillion, South Dakota

By /s/ Thomas R. Anderson

   Its  Investment Officer

COMMUNITY FIRST NATIONAL BANK

Fargo, North Dakota

By /s/ Thomas R. Anderson

   Its  Investment Officer

~~~

EX-13.1

Exhibit 13.1

financial highlights

Years ended December 31 (In thousands, except per share data)

	2000	1999	1998	1997	1996
Earnings
Total interest income	$477,558	$465,206	$467,270	$342,789	$285,063
Total interest expense	210,281	185,818	194,787	140,488	114,088
Net interest income	267,277	279,388	272,483	202,301	170,975
Net income	71,634	74,913	45,463	60,865	42,925
Per common and common equivalent share
Basic earnings per share	$1.55	$1.50	$0.90	$1.31	$0.98
Diluted earnings per share	1.54	1.48	0.89	1.27	0.94
Net book value	8.25	8.12	8.49	8.11	6.40
Dividends paid	0.60	0.56	0.44	0.35	0.29
At year-end
Total assets	$6,089,729	$6,302,235	$6,239,772	$5,660,218	$3,789,855
Total loans	3,738,202	3,690,353	3,537,537	3,160,501	2,514,573
Allowance for loan losses	52,168	48,878	51,860	41,387	31,354
Total deposits	5,019,891	4,909,863	5,101,065	4,341,065	3,139,803
Common equity	345,431	407,269	424,656	405,039	276,802
Key performance ratios
Return on average common equity	19.90%	18.07%	11.03%	19.04%	16.42%
Return on average assets	1.16%	1.20%	0.75%	1.42%	1.23%
Net interest margin	4.90%	5.06%	5.12%	5.35%	5.53%
Dividend payout ratio	38.96%	37.84%	49.44%	27.56%	30.85%
Average common equity to average assets	5.83%	6.64%	6.83%	7.44%	7.18%
Nonperforming assets to period-end loans and OREO	0.70%	0.88%	0.78%	0.65%	0.86%
Allowance for loan losses to period-end loans	1.40%	1.32%	1.47%	1.31%	1.25%
Allowance for loan losses to nonperforming loans	220.58%	187.65%	227.75%	270.66%	180.95%
Net charge-offs to average loans	0.34%	0.66%	0.43%	0.24%	0.22%
Tier 1 capital	8.13%	10.01%	9.44%	11.54%	9.30%
Total risk-based capital	10.73%	12.45%	12.09%	14.89%	11.26%
Leverage ratio	5.94%	7.16%	6.47%	7.53%	6.92%
Efficiency ratio	62.57%	59.87%	67.01%	61.98%	60.35%
Earnings per share and ratios excluding goodwill and other intangible assets amortization and balances (“Cash”)
Diluted earnings per share	$1.70	$1.62	$1.06	$1.37	$1.00
Return on assets	1.30%	1.35%	0.92%	1.54%	1.32%
Return on average common equity	21.94%	19.84%	13.20%	20.45%	17.57%
Efficiency ratio	59.58%	56.95%	63.47%	59.73%	58.76%

To Our Shareholders:In 2000, Community First took steps to effectively expand our business to meet the broader needs and expectations of our customers. The first change involved a management transition in March, as Don Mengedoth became chairman in order to devote more time to his role as president of the American Bankers Association and I was appointed president and chief executive officer. This resulted in expanded roles for Ron Strand as chief operating officer, and Craig Weiss as chief financial officer.
            Change also brought opportunity in 2000, as we moved to consolidate our twelve national and state bank charters into a single national bank—a move that will better enable us to fund our balance sheet, implement operating efficiencies and reduce short-term borrowings. Our balance sheet changed further as we repurchased 8.8 million shares of our common stock, which we believe is an excellent use of our shareholders’ capital.
The launch of our re-designed Web site in the fourth quarter of 2000 was the first step in the transition to offer our customers online banking capabilities and investment services.

Expect more products and services—Upgrading our technology capabilities and expanding our product offerings are the result of re-thinking the role of banks in today’s world. Traditional bank offerings—such as savings accounts and loans—face competition not only from other banks but from substitute products like money market funds and credit card lines of credit. Our customers have different financial needs. And those needs change over time.

            To continue to grow, we must meet a broader range of our commercial and retail customers’ needs. Our business is not merely loans and checking accounts; it’s finding financial solutions to help our customers meet their future needs. It has been demonstrated that the most profitable customers of a bank are those who have been customers for the longest time, with the most accounts and services at the bank. By meeting a greater portion of a customer’s financial needs, we become thoroughly knowledgeable about that customer’s financial situation and build a stronger relationship.

            To offer more products and services, we have acquired insurance agencies in some of the markets we serve. We have forged a new relationship with PrimeVest to offer a broader array of investment products. With our new online investing capability available in 2001, we will provide even more investment choices to our customers through our online discount brokerage. Nearly three-quarters of the funds used to buy investment products from Community First come from outside our banks as these new products attract incremental dollars to our banks.

Expect more delivery channels

We not only want to give customers the products they need, but provide them in a way that fits their busy lifestyles. Our online banking site, available in 2001, will enable customers to pay bills electronically any time of day, any day of the week, as well as access their account information and transfer funds between accounts. As we enhance our Internet capabilities in the future, they will also be able to manage their investment portfolios and select insurance products online.
            Electronic delivery channels add choices and convenience for our customers, complementing our personal banking relationships and other channels such as our robust “bank by phone” capabilities. We will maintain a high level of personal service through our sales representatives by ensuring that each office has the appropriate staff to meet the needs of that market’s customer base. We will rely on electronic communications to handle routine transactions and use our highly-trained sales representatives to make sure that the needs of every customer are clearly understood, as we strive to provide the products and services that meet their needs.
            To meet our goal of providing more services to every customer, we need to re-orient the goals of our sales representatives from closing discrete transactions to building a complete financial management relationship with a customer, selling an array of financial products, meeting a number of different needs.

            As we reflect on the past and the opportunities ahead, I would like to thank Pat Benedict for his outstanding service on the Community First Bankshares Board of Directors. Pat joined us in 1992 and has decided not to stand for reelection in 2001. We thank Pat for his outstanding service and welcome his replacement board member, Annette Quintana.
            Community First is not merely a bank, but a financial services provider. We add value for our customers by making their financial affairs easier to manage and more successful. We also believe we have an obligation to our shareholders to increase the value of their holdings, which we do by managing our business and our capital well. We will continue to evaluate and implement strategies that enhance shareholder value. Whether you’re a customer, shareholder or employee, you have unique expectations of Community First. We will continue to work hard to surpass them. Thank you for your continued support.

Sincerely,

/s/ Mark A. Anderson

Mark A. Anderson

President and

Chief Executive Officer

February 15, 2001

financial  review

Management’s Discussion and Analysis

Consolidated Statements of Financial Condition

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Independent Auditor’s Letter

Five-Year Summary

Quarterly Results of Operations

management’s discussion and analysis Community First Bankshares, Inc.

            Basis of Presentation

The following represents management’s discussion and analysis of Community First Bankshares, Inc.’s (the “Company”) financial condition as of December 31, 2000 and 1999, and its results of operations for the years ended December 31, 2000, 1999 and 1998. This discussion should be read in conjunction with the consolidated financial statements and related footnotes and the five year summary of selected financial data. The information has been restated to reflect significant mergers accounted for as a pooling of interests as if they had occurred at the beginning of the first period presented. Purchases have been reflected in the Company’s results of operations for all periods following the acquisition and are reflected in the Company’s financial condition at all dates subsequent to the acquisition.

            Merger and Acquisition Activity

The Company has made a number of acquisitions during these periods. Each of these acquisitions has had an effect upon the Company’s results of operations and financial condition.
            Pooling of Interests Transactions. In the following transactions during the periods presented, the Company accounted for the acquisition using the pooling of interests method.

Pooling of Interests Transactions
Acquisition	Location of	Number of	Total Assets at
Month and	Bank or Name	Locations at	Date of Acquisition
Year	of Acquired Entity	Date of Acquisition	(in Millions)
December 1999	Ramsey, Minnesota	1	$35
October 1999	El Cajon, California	6	252
August 1998	Salt Lake City, Utah	2	99
July 1998	Las Cruces, New Mexico	3	159
May 1998	FNB, Inc., Colorado	2	120
April 1998	Longmont, Colorado	4	138
April 1998	Thornton, Colorado	4	78

            On December 21, 1999, the Company issued approximately 317,000 shares of common stock to acquire River Bancorp, Inc. (“River Bancorp”), a one-bank holding company headquartered in Ramsey, Minnesota. At acquisition, Ramsey had approximately $35 million in assets at one office in Ramsey, Minnesota. Because this acquisition was not material to the Company’s financial condition or operating results, the Company’s financial information has not been restated to reflect this merger.
            With respect to the other six acquisitions listed above, the Company’s results of operations and financial condition have been restated for all historical periods.

• On October 7, 1999, the Company issued approximately 3,022,000 shares of common stock to acquire Valley National Corporation (“Valley National”), a one-bank holding company headquartered in El Cajon, California. At acquisition, Valley National had approximately $252 million in assets at six banking offices located in California.

• On August 7, 1998, the Company issued approximately 1,526,000 shares of common stock to acquire Guardian Bancorp (“Guardian”), a one-bank holding company headquartered in Salt Lake City, Utah. At acquisition, Guardian had approximately $99 million in assets at two offices in Utah.

• On July 1, 1998, the Company issued approximately 1,932,000 shares of common stock to acquire Western Bancshares of Las Cruces, Inc. (“Western”), a one-bank holding company headquartered in Las Cruces, New Mexico. At acquisition, Western had approximately $159 million in assets at three offices in New Mexico.

• On May 7, 1998, the Company issued approximately 1,135,000 shares of common stock to acquire FNB Inc. (“FNB”), a two-bank holding company with banks in Greeley and Fort Collins, Colorado. At acquisition, FNB had approximately $120 million in assets.

• On April 30, 1998, the Company issued approximately 1,432,000 shares of common stock to acquire Pioneer Bank of Longmont (“Longmont”). At acquisition, Longmont had approximately $138 million in assets at four offices in Colorado.

• On April 3, 1998, the Company issued approximately 853,000 shares of common stock to acquire Community Bancorp, Inc. (“CBI”), a one-bank holding company headquartered in Thornton, Colorado. At acquisition, CBI had approximately $78 million in assets at one bank in Colorado.

            Purchase Transactions. On January 23, 1998, the Company completed the purchase and assumption of approximately $730 million in assets and liabilities of 37 offices of Banc One Corporation located in Arizona, Colorado and Utah. The transaction was accounted for as a purchase of certain assets and assumption of certain liabilities and resulted in the recognition of approximately $44 million of deposit premium. The purchase was funded through a combination of net proceeds from the issuance of 2,000,000 shares of common stock in December 1997 and the proceeds of the issuance of $60 million 8.20% Cumulative Capital Securities by a business trust subsidiary in December 1997.

            Overview

General

For the year ended December 31, 2000, the Company reported net income of $71.6 million, a decrease of $3.3 million, or 4.4%, from the $74.9 million earned during 1999. Diluted earnings per share were $1.54, compared to $1.48 in 1999. Return on average assets was 1.16% for 2000, compared with 1.20% for 1999. Return on average common shareholders’ equity for 2000 and 1999 was 19.90% and 18.07%, respectively. The decrease in return on assets is principally due to a reduction in net income, while the increase in return on equity is principally due to a reduction in total stockholder’s equity as a result of the Company’s stock repurchase initiative.
            For the year ended December 31, 1999, the Company reported net income of $74.9 million, an increase of $29.4 million, or 64.6% from the $45.5 million earned during 1998. Diluted earnings per share were $1.48, compared to $0.89 in 1998. Return on average assets was 1.20% for 1999, compared with 0.75% for 1998. Return on average common shareholders’ equity for 1999 and 1998 was 18.07% and 11.03%, respectively.
            Total assets were $6.1 billion and $6.3 billion at December 31, 2000 and 1999, respectively. The decrease of $213 million, or 3.4%, during 2000 was principally due to the Company’s planned balance sheet contraction.

Stock Repurchase Plan

In April 2000, the Company adopted a common stock repurchase program providing for the systematic repurchase of up to 5 million shares of the Company’s common stock. In addition, during August 2000, the Company adopted an additional common stock repurchase program providing for the repurchase of up to an additional 5 million shares. Under each program, the shares are to be purchased primarily on the open market, with timing depending upon market conditions. Adoption of the two programs provide the Company with an alternative opportunity for capital utilization. In addition, the shares acquired can be used for the issuance of common stock upon exercise of stock options, under the Company’s compensation plans and for other purposes, including business combinations. As of December 31, 2000, the Company had repurchased 8 million shares of common stock under these plans, at prices ranging form $15.25 to $18.82. During 2000, the Company repurchased 8.8 million shares of common stock, including 385,000 shares under a previously approved program and 400,000 shares in conjunction with an executive officer employment agreement, in addition to the 8 million shares under the two programs approved in 2000.

            Results of Operations

Net Interest Income
The principal source of the Company’s earnings is net interest income, the difference between total interest income on earning assets such as loans and investments and interest paid on deposits and other interest-bearing liabilities. The net interest margin is net interest income, on a tax-equivalent basis, expressed as a percentage of average earning assets. The margin is affected by volume and mix of earning assets and interest-bearing liabilities, the level of interest free funding sources, interest rate environment, and income tax rates. As discussed later, management actively monitors its interest rate sensitivity and seeks to balance assets and liabilities to minimize the impact of changes in the interest rate environment.

            The following table presents the Company’s average balance sheets, interest earned or paid and the related yields and rates on major categories of the Company’s earning assets and interest-bearing liabilities on a tax-equivalent basis for the periods indicated:

Years Ended December 31	2000			1999			1998
(Dollars in thousands)	Average Balance	Interest	Interest Yields and Rates	Average Balance	Interest	Interest Yields and Rates	Average Balance	Interest	InterestYields andRates
Assets
Loans (1) (2)	$3,706,144	$357,034	9.63%	$3,573,060	$336,229	9.41%	$3,383,724	$340,168	10.05%
Investment securities (2)	1,909,479	128,490	6.73%	2,104,661	136,775	6.50%	2,003,076	130,088	6.49%
Other earning assets	12,375	628	5.07%	24,886	1,277	5.13%	95,360	5,193	5.45%
Total earning assets	5,627,998	486,152	8.64%	5,702,607	474,281	8.32%	5,482,160	475,449	8.67%
Noninterest-earning assets	551,194			542,687			552,961
Total assets	$6,179,192			$6,245,294			$6,035,121
Liabilities and Shareholders’ Equity
Interest-bearing checking	845,079	13,437	1.59%	920,521	13,345	1.45%	851,217	14,558	1.71%
Savings deposits	1,059,736	35,673	3.37%	1,091,228	31,558	2.89%	1,116,214	34,550	3.10%
Time deposits	2,132,327	120,171	5.64%	2,099,426	106,235	5.06%	2,167,904	117,765	5.43%
Short-term borrowings	568,540	34,303	6.03%	557,920	28,052	5.03%	345,060	19,576	5.67%
Long-term borrowings	95,814	6,697	6.99%	97,732	6,628	6.78%	122,117	8,338	6.83%
Total interest-bearing liabilities	4,701,496	210,281	4.47%	4,766,827	185,818	3.90%	4,602,512	194,787	4.23%
Demand deposits	931,556			880,484			840,983
Noninterest-bearing liabilities	66,138			63,339			59,516
Trust owned preferred securities	120,000			120,000			120,000
Preferred shareholders’ equity	0			0			0
Common shareholders’ equity	360,002			414,644			412,110
	1,477,696			1,478,467			1,432,609
Total liabilities and shareholders’ equity	$6,179,192			$6,245,294			$6,035,121
Net interest income		$275,871			$288,463			$280,662
Net interest spread			4.17%			4.42%			4.44%
Net interest margin			4.90%			5.06%			5.12%

(1)        Includes nonaccrual loans and loan fees.
(2)        Interest yields on loans and investments are presented on a tax-equivalent basis to reflect the tax-exempt nature of certain assets. The incremental tax rate applied was 35%.

The following table presents the components of changes in net interest income by volume and rate on a tax-equivalent basis. The net change attributable to the combined impact of volume and rate has been allocated solely to the change in volume:

	2000 compared to 1999			1999 compared to 1998
(In thousands)	Volume	Rate	Total	Volume	Rate	Total
Interest income:
Loans (1)	$12,523	$8,282	$20,805	$19,034	$(22,973)	$(3,939)
Investment securities (1)	(12,684)	4,399	(8,285)	6,597	90	6,687
Other earning assets	(642)	(7)	(649)	(3,838)	(78)	(3,916)
Total interest income	$(803)	$12,674	$11,871	$21,793	$(22,961)	$(1,168)
Interest expense:
Savings deposits and interest-bearing checking	(2,004)	6,211	4,207	412	(4,617)	(4,205)
Time deposits	1,665	12,271	13,936	(3,720)	(7,810)	(11,530)
Short-term borrowings	534	5,717	6,251	12,076	(3,600)	8,476
Long-term borrowings	(130)	199	69	(1,665)	(45)	(1,710)
Total interest  expense	65	24,398	24,463	7,103	(16,072)	(8,969)
Increase (decrease) in net interest income	$(868)	$(11,724)	$(12,592)	$14,690	$(6,889)	$7,801

(1)        Fees on loans have been included in interest on loans. Interest income is reported on a tax-equivalent basis.

           Net interest income on a tax-equivalent basis in 2000 was $275.9 million, a $12.6 million decrease from 1999. The decrease was primarily due to a 1.3% decrease in earning assets and a 16 basis point reduction in the net interest margin. The decrease in earning assets is the result of the Company’s planned balance sheet contraction, principally in the reduction of average investment securities, offset by an increase in average loans. Average investment securities in 2000 were $195 million less than in 1999. Average loans in 2000 increased $133 million from the 1999 average. Net interest income on a tax-equivalent basis in 1999 was $288.5 million, a $7.8 million increase from 1998. The increase was primarily due to a 4.0% increase in earning assets partially offset by a 6 basis point reduction in the net interest margin. The increase in earning assets was due to loan growth in existing markets.
           The net interest margin was 4.90%, 5.06% and 5.12% in 2000, 1999 and 1998, respectively. This decrease in margin was due to a 25 basis point decrease in the yield spread between 1999 and 2000, and a change in the mix of earning assets to lower-yielding assets. Average loans to average earning assets was 65.9% in 2000 compared to 62.7% in 1999 and 61.7% in 1998.

Provision for Loan Losses
Annual fluctuations in the provision for loan losses result from management’s regular assessment of the adequacy of the allowance for loan losses. The provision for loan losses for 2000 was $15.8 million, a decrease of $4.4 million or 21.8%, from the $20.2 million provision during 1999. The decrease in the loan loss provision was principally due to the Company’s credit experience as reflected in a reduction in the level of net charge-offs. The amount of the loan loss provision to be recorded in future periods will depend on management’s assessment of the adequacy of the allowance for loan losses in relation to the entire loan portfolio. The provision for loan losses for 1999 was $20.2 million, a decrease of $2.9 million, or 12.6% from the 1998 provision of $23.1 million. The decrease was primarily due to the operation and disposal of the Company’s sub-prime lending affiliates in 1999 and 1998.

Noninterest Income
The Company continues to expand noninterest income associated with the Company’s community banking operations. The primary sources of noninterest income consist of service charges on deposit accounts, service fees on checking accounts, insurance commissions, fees from the sale of investment products and fees for trust services. Management is working to increase the contribution of noninterest income to operating results by increasing the delivery of financial products and services, including trust services, insurance policy sales and security sales through a third party provider of standardized securities products.
            Noninterest income for 2000 was $75.2 million, an increase of $2.7 million, or 3.7%, from the $72.5 million earned in 1999. The increase was principally due to an increase in service charges on deposit accounts in 2000 to $39.5 million from the $37.0 million in 1999, an increase of $2.5 million, or 6.8%. Insurance commissions increased to $10.6 million in 2000, from $8.8 million in 1999, an increase of $1.8 million, or 20.4%. Commissions from the sale of investment securities increased to $6.8 million in 2000, from $5.3 million in 1999, an increase of $1.5 million, or 28.3%. Trust revenue increased to $5.8 million in 2000, from $5.1 million in 1999, an increase of $663,000 or 12.9%. Net gains on the sale of investment securities were $2.1 million less in 2000 than in 1999.
            Noninterest income for 1999 was $72.5 million, an increase of $9.2 million, or 14.5%, from the $63.3 million earned in 1998. The increase was principally due to an increase in service charges on deposit accounts in 1999 from $31.9 million earned during 1998 to $37.0 million earned in 1999, an increase of $5.1 million, or 16.0%.

Noninterest Expense
Noninterest expenses consist of salaries and benefits, occupancy, equipment and other expenses such as legal and postage necessary for the operation of the Company. Management is committed to improving the quality of service while controlling such costs through improved efficiency and consolidation of certain activities to achieve economies of scale.
            The following table presents the components of noninterest expense for the periods indicated:

Years Ended December 31 (In thousands)	2000	1999	1998
Salaries and employee benefits	$110,024	$106,542	$119,250
Net occupancy	31,941	32,726	33,929
FDIC insurance	1,039	625	771
Legal and accounting	3,874	3,651	4,237
Other professional services	4,415	5,168	6,014
Acquisition, integration and conforming	—	3,053	3,721
Data processing and loan servicing fees	4,545	4,116	5,209
Company-obligated mandatorily redeemable preferred securities of CFB Capital I & II	10,245	10,245	10,218
Amortization of intangibles	10,481	10,500	10,366
Other	42,755	41,601	46,933
Total noninterest expense	$219,319	$218,227	$240,648

            Noninterest expense increased $1.1 million to $219.3 million in 2000. The increase was principally due to an increase in salaries and employee benefits, offset in part by a reduction in acquisition and related expenses. Salaries and employee benefits increased to $110.0 million in 2000, from $106.5 million in 1999, an increase of $3.5 million, or 3.3%. The increase was attributed to annual merit increases, as the number of employees remained stable during 2000. FDIC insurance increased to $1.0 million in 2000, from $625,000 in 1999, an increase of $414,000, or 66.2%, as a result of an industry-wide increase in the 2000 premium rate assessed by regulatory authorities. The Company recorded $3.1 million in acquisition, integration and conforming expenses in 1999, related to the acquisition through merger of Valley National and River Bancorp. Other noninterest expense was $42.8 million, an increase of $1.2 million, or 2.9%, from $41.6 million in 1999.
            Noninterest expense decreased $22.4 million to $218.2 million in 1999. The decrease was principally due to a decrease in salaries and employee benefits, net occupancy expense and acquisition and related expenses, including legal and accounting and other professional services. The $12.8 million decrease in salaries and employee benefits and the $1.2 million decrease in net occupancy expense are due principally to certain expense control and operating efficiency initiatives announced by the Company during the fourth quarter of 1998 and implemented during 1999. The $586,000 decrease in legal and accounting, the decrease of $846,000 in other professional services, and the decrease of $668,000 in acquisition, integration and conforming expenses are principally due to a reduction in the volume of acquisition activity during 1999. The Company incurred acquisition expenses of $3.1 million during 1999 in connection with the 1999 acquisitions.

Provision for Income Taxes
The Company records a provision for income taxes currently payable and for taxes payable in the future because of differences in the timing of recognition of certain items for financial statement and income tax purposes. The effective income tax rate differs from the statutory rate primarily due to tax-exempt income from loans and investments and state income taxes. The 2000 effective tax rate is similar to the Company’s anticipated effective tax rates in future periods. The effective tax rate was 33.3%, 34.0% and 31.4% for 2000, 1999 and 1998, respectively. As a result of effective tax strategies, the Company’s effective tax rate was lower than
historical effective rates during 1998.

            Financial Condition

Investment of Funds

Loans
At December 31, 2000, total loans were $3.7 billion, an increase of $48 million, or 1.3%, from the December 31, 1999, level. The increase is principally the net result of a $160 million increase in in-market loan growth in the Company’s existing markets, offset by the amortization of $133 million in discounted lease receivables which were permitted to run off during 2000.
            During 2000, the Company elected to discontinue active solicitation of purchased loans. Many of these assets have been originated by selected Midwestern regional banks and national leasing and finance companies, with which the Company has had ongoing relationships. The Company’s portfolio of purchased loan assets was $188 million at December 31, 2000, compared to $301 million at December 31, 1999. These assets are subject to the Company’s standard credit guidelines, as well as specific requirements for such assets, and bear the credit risks attendant to commercial loans. It is anticipated that the purchased loan asset volume will decrease during 2001, in that the Company has elected to discontinue active solicitation of purchased loans.
            The following table presents the Company’s balance of each major category of loans at the dates indicated:

	2000		1999		1998		1997		1996
(Dollars in thousands)	Amount	Percent of Total Loans	Amount	Percent of Total Loans	Amount	Percent of Total Loans	Amount	Percentof Total Loans	Amount	Percentof TotalLoans
Loan category:
Real estate	$1,458,494	39.02%	$1,319,678	35.76%	$1,291,287	36.51%	$1,213,272	38.39%	$951,737	37.85%
Real estate construction	466,616	12.48%	434,924	11.79%	366,277	10.35%	253,385	8.02%	183,891	7.31%
Commercial	872,824	23.35%	994,624	26.95%	966,404	27.32%	834,653	26.41%	736,831	29.30%
Consumer and other	686,064	18.35%	681,423	18.46%	618,530	17.48%	565,833	17.90%	402,296	16.00%
Agricultural	254,204	6.80%	259,704	7.04%	295,039	8.34%	293,358	9.28%	239,818	9.54%
Total loans	$3,738,202	100.00%	$3,690,353	100.00%	$3,537,537	100.00%	$3,160,501	100.00%	$2,514,573	100.00%
Less allowance for loan losses	(52,168)		(48,878)		(51,860)		(41,387)		(31,354)
Total	$3,686,034		$3,641,475		$3,485,677		$3,119,114		$2,483,219

General. The Company’s loan mix remained relatively constant from 1999 to 2000. Real estate loans continued to be the largest category of loans, representing 51.5% of the total loan portfolio.

Real Estate and Real Estate Construction Loans. A significant portion of the Company’s real estate loan portfolio consists of residential real estate first mortgages that have been underwritten and documented to meet secondary mortgage requirements. Substantially all of the Company’s real estate loans are based in the Company’s primary market area. As of December 31, 2000, $713 million, or 37.0%, of the Company’s real estate loan portfolio consisted of residential real estate loans, $154 million, or 8.0%, were secured by farmland, $591 million, or 30.7%, represented commercial and other real estate loans and $467 million, or 24.3%, represented construction loans.

Commercial Loans. Loans in this category include loans to retail, wholesale, manufacturing and service businesses, including agricultural service businesses and the Company’s purchased loan asset portfolio. Commercial loans are underwritten based on the financial strength and repayment ability of the borrower, as well as the collateral securing the loans.

Consumer and Other Loans. Loans classified as consumer and other loans include automobile, personal loans, consumer lines of credit and overdrafts. The consumer loan portfolio also includes dealer-generated installment contracts for consumer goods, including automobiles and major home appliances. The majority of these indirect loans are installment loans with fixed interest rates.

Agricultural Loans. Agricultural loans are made principally to farmers and ranchers. The Company provides short-term credit for operating loans and intermediate-term loans for machinery purchases and other improvements.

Investments
The Company augments the quality of its loan portfolio by maintaining a high quality investment portfolio oriented toward U.S. Treasury, U.S. Government agency and government guaranteed mortgage-backed securities. The investment portfolio also provides the opportunity to structure maturities and repricing timetables in a flexible manner and to meet applicable requirements for pledging securities, which are principally adjustable rate and collateralized mortgage obligations, which are primarily floating rate securities, as tools in managing its interest rate exposure and enhancing its net interest margin.

            The following table sets forth the composition of the Company’s held-to-maturity securities portfolio at amortized cost as of the dates indicated:

	Book Value at December 31,
(In thousands)	2000	1999	1998
U.S. Treasury	$—	$—	$—
U.S. Government agencies	—	—	7,499
Mortgage-backed securities	—	—	—
Collateralized mortgage obligations	—	—	—
State and political securities	—	—	14,986
Other	73,222	74,248	70,374
Total	$73,222	$74,248	$92,859

            The following table sets forth the composition of the Company’s available-for-sale securities portfolio at estimated fair value as of the dates indicated:

	Book Value at December 31,
(In thousands)	2000	1999	1998
U.S. Treasury	$77,951	$114,798	$134,957
U.S. Government agencies	435,255	438,608	364,680
Mortgage-backed securities	993,939	1,113,818	1,219,056
Collateralized mortgage obligations	9,635	25,978	62,050
State and political securities	115,400	148,502	145,761
Other	82,330	95,813	78,080
Total	$1,714,510	$1,937,517	$2,004,584

Held-to-Maturity Securities	At December 31, 2000, Maturing in
	One Year or Less		Over One Year Through 5 Years		Over 5 Years Through 10 Years		Over 10 Years			Total
(Dollars in thousands)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)
Other	—	—	—	—	—	—	$73,222	7.34%	$73,222	7.34%
Total	—	—	—	—	—	—	$73,222	7.34%	$73,222	7.34%

(1)        Interest yields on investments are presented on a tax-equivalent basis to reflect the tax-exempt nature of certain assets. Yields are based on a 35% incremental tax rate and a 3.79% cost of funds.

Available-for-Sale Securities	At December 31, 2000, Maturing in
	One Year or Less		Over One YearThrough 5 Years		Over 5 YearsThrough 10 Years		Over 10 Years			Total
(Dollars in thousands)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)	Amount	Weighted Yield(1)	Amount	WeightedYield(1)
U.S. Treasury	$11,038	6.19%	$66,913	5.95%	$—	—	$—	—	$77,951	5.98%
U.S. Government agencies	8,180	5.84%	255,944	5.98%	169,214	6.34%	1,917	7.01%	435,255	6.12%
Mortgage-backed securities	207	8.71%	14,016	6.93%	17,974	6.65%	961,742	6.58%	993,939	6.59%
Collateralized mortgage obligations	—	—	—	—	3,605	6.84%	6,030	6.55%	9,635	6.66%
Municipal bonds	7,756	7.30%	19,270	7.22%	20,108	7.47%	68,266	7.11%	115,400	7.20%
Other	1,495	7.07%	297	5.61%	648	5.29%	79,890	6.79%	82,330	6.78%
Total	$28,676	6.45%	$356,440	6.08%	$211,549	6.48%	$1,117,845	6.63%	$1,714,510	6.49%

(1)        Interest yields on investments are presented on a tax equivalent basis to reflect the tax exempt nature of certain assets. Yields are based on a 35% incremental tax rate and a 3.79% cost of funds

            The Company’s investments, including available-for-sale and held-to-maturity securities, decreased $224 million, or 11.1%, to $1.8 billion at December 31, 2000, from $2.0 billion at December 31, 1999. At December 31, 2000, the Company’s investments represented 29.4% of total assets, compared to 31.9% at December 31, 1999.

Credit Policy
The Company’s lending activities are guided by the general loan policy established by the Board of Directors. The Senior Credit Committee of the Company has established loan approval limits for each region of the Company and each subsidiary bank. The limits established for each bank range from $50,000 to $500,000 per borrower (except for the Fargo office, which has a $750,000 limit per borrower). Renewals of any criticized or classified loans have a limit of $25,000. Amounts in excess of the individual bank lending authority are presented to the regional credit officers. The regional credit officers for Arizona, California, Colorado, Iowa, Minnesota, Nebraska, New Mexico, Utah, Wisconsin, Wyoming and the Dakotas have lending authority up to $750,000 per nonclassified borrower with concurrence of a second regional credit officer or the respective regional managing officer. Loans above $1,500,000 per pass rated borrower, $1,000,000 per watch rated borrower and $250,000 per classified borrower are presented to the Senior Credit Committee for approval.
            Although the Company has a diversified loan portfolio, the economic health of significant portions of the Company’s primary trade area and the ability of many of the bank’s borrowers to repay their loans (including real estate and commercial loans, as well as agricultural loans) is dependent to a large extent on the health of their local sector of the economy. The Company has identified and implemented strategies to deal with these factors, including an emphasis on quality local loan growth and the diversification and performance of its earning asset portfolios.

Nonperforming Assets
The Company follows regulatory guidelines with respect to classifying loans on a nonaccrual basis. Loans are placed on nonaccrual when they become past due over 90 days or when the collection of interest or principal is considered unlikely. The Company does not return a loan to accrual status until it is brought current with respect to both principal and interest and future principal payments are no longer in doubt. When a loan is placed on nonaccrual status, any previously accrued and uncollected interest is reversed. Interest income of $4,693,000 on nonaccrual loans would have been recorded during 2000 if the loans had been current in accordance with their original terms. During 2000, the Company recorded interest income of $955,000 related to loans that were on nonaccrual status as of December 31, 2000.
            The Company considers nonperforming assets to include all nonaccrual loans, restructured loans defined as troubled debt restructurings under SFAS No. 15 and other real estate owned (“OREO”).
            Nonperforming assets of the Company are summarized in the following table:

December 31 (Dollars in thousands)	2000	1999	1998	1997	1996
Loans:
Nonaccrual loans	$23,426	$25,764	$22,609	$15,151	$15,902
Restructured loans	224	284	162	140	1,425
Nonperforming loans	23,650	26,048	22,771	15,291	17,327
OREO	2,437	6,525	4,763	5,433	4,238
Nonperforming assets	$26,087	$32,573	$27,534	$20,724	$21,565
Loans 90 days or more past due but still accruing	$2,482	$1,949	$3,525	$4,292	$2,690
Nonperforming loans as a percentage of total loans	0.63%	0.71%	0.64%	0.48%	0.69%
Nonperforming assets as a percentage of total assets	0.43%	0.52%	0.44%	0.37%	0.57%
Nonperforming assets as a percentage of total loans and OREO	0.70%	0.88%	0.78%	0.65%	0.86%
Total loans	$3,738,202	$3,690,353	$3,537,537	$3,160,501	$2,514,573
Total assets	$6,089,729	$6,302,235	$6,239,772	$5,660,218	$3,789,855

            Nonperforming assets were $26.1 million at December 31, 2000, a decrease of $6.5 million, or 19.9%, from $32.6 million at December 31, 1999. Nonperforming loans decreased by $2.4 million during the same period. OREO decreased $4.1 million, or 63.1%, from $6.5 million at December 31, 1999 to $2.4 million at December 31, 2000. The ratio of nonperforming assets to total assets at December 31, 2000, was .43%, compared to .52% at December 31, 1999.

            Nonperforming assets were $32.6 million at December 31, 1999, an increase of $5.1 million, or 18.5% from $27.5 million at December 31, 1998. Nonperforming loans increased by $3.3 million due principally to an increase in nonaccrual loans in the remaining specialty lending area. OREO increased $1.8 million, or 37.0%, from $4.8 million at December 31, 1998 to $6.5 million at December 31, 1999. The increase in OREO is attributed principally to assets in the Company’s remaining specialty lending portfolio. The ratio of nonperforming assets to total assets at December 31, 1999 was .52% , compared to .44% at December 31, 1998.

Allowance for Loan Losses
The current level of the allowance for loan losses is a result of management’s assessment of the risks within the portfolio based on the information revealed in credit reporting processes.  The Company utilizes a risk-rating system on all loans, including purchased loans, and a monthly credit review and reporting process that results in the calculation of the guidelines reserves based on the risk within the portfolio. This assessment of risk takes into account the composition of the loan portfolio, previous loan experience, current economic conditions and other factors that, in management’s judgment, deserve recognition.

            The allowance is allocated to individual loan categories based on the relative risk characteristics of the loan portfolios. Commercial and agricultural allocations are based on a quarterly review of the individual loans outstanding, including outstanding commitments to lend. Real estate and consumer allocations are based on a quarterly analysis of the performance of the respective portfolios, including historical and expected delinquency and charge-off statistics. The allowance allocated to real estate loans, including real estate construction, increased $2.2 million from $10.5 million at December 31, 1999 to $12.7 million at December 31, 2000. The allowance allocated to the consumer loan portfolio decreased $510,000, from $4.7 million to $4.1 million at December 31, 1999 and 2000, respectively.
            The Company also maintains an unallocated allowance to recognize its exposure to inherent, but undetected losses within the loan portfolio. This exposure is caused by inherent delays in obtaining information regarding an individual borrower’s financial condition or change in their specific business condition; the judgmental nature of individual loan evaluations, collateral assessments and the interpretation of economic trends; the volatility of general economic or specific customer conditions affecting the identification and quantification of losses for large individual credits; and the sensitivity of assumptions used in establishing allocated allowances for general categories of loans. The unallocated allowance also addresses risk in concentration of credit to specific borrowers, products or industries. The unallocated portion of the allowance increased from $22.4 million at December 31, 1999 to $25.1 million at December 31, 2000. The allocated allowance as a percentage of loans outstanding was .72% at December 31, 1999 and December 31, 2000. The unallocated portion increased from .60% to .68% at December 31, 1999 and 2000, respectively. The accompanying table shows the allocated and unallocated portions of the allowance for the various loan classifications.
            The Company’s experience in the consumer loan and real estate loan portfolios of its sub-prime lending subsidiaries during 1999 and 1998 resulted in increased allowance levels in these loan classifications. Management has reviewed the allocations in the various classifications of loans and believes the allowance was adequate at all times during the five-year period ended December 31, 2000. The analysis methodology has been consistently applied during this five-year period.
            The following table sets forth the Company’s allowance for loan losses as of the dates indicated:

December 31 (Dollars in thousands)	2000	1999	1998	1997	1996
Balance at beginning of year	$48,878	$51,860	$41,387	$31,354	$27,104
Allowance of acquired companies and other	—	270	1,950	10,065	784
Charge-offs:
Real estate	1,176	2,181	2,340	802	1,166
Real estate construction	408	2,965	36	635	—
Commercial	6,644	8,349	2,771	1,863	2,233
Consumer and other	7,893	13,802	11,806	5,326	2,836
Agricultural	996	553	1,381	726	443
Total charge-offs	17,117	27,850	18,334	9,352	6,678
Recoveries:
Real estate	155	928	237	306	297
Real estate construction	4	—	—	—	4
Commercial	1,565	468	972	650	707
Consumer and other	2,648	2,537	2,113	1,113	513
Agricultural	254	481	399	647	78
Total recoveries	4,626	4,414	3,721	2,716	1,599
Net charge-offs	12,491	23,436	14,613	6,636	5,079
Provision charged to operations	15,781	20,184	23,136	6,604	8,545
Balance at end of year	$52,168	$48,878	$51,860	$41,387	$31,354
Allowance as a percentage of total loans	1.40%	1.32%	1.47%	1.31%	1.25%
Net charge-offs to average loans outstanding	0.34%	0.66%	0.43%	0.24%	0.22%
Total loans	$3,738,202	$3,690,353	$3,537,537	$3,160,501	$2,514,573
Average loans	$3,706,144	$3,573,060	$3,383,724	$2,747,123	$2,296,345

            At December 31, 2000, the allowance for loan losses was $52.2 million, an increase of $3.3 million from the December 31, 1999, level of $48.9 million. At December 31, 2000, the allowance for loan losses as a percentage of total loans was 1.40%, as compared to 1.32% at December 31, 1999. This increase was attributed to the Company’s analysis of the loan portfolio credit quality at the Company’s bank subsidiaries.
            At December 31, 1999, the allowance for loan losses was $48.9 million, a decrease of $3.0 million from the December 31, 1998, level of $51.9 million. This decrease was the result of an increase in 1999 net charge-offs and the Company’s analysis of the loan portfolio credit quality at the Company’s bank subsidiaries. At December 31, 1999, the allowance for loan losses as a percentage of total loans was 1.32%, as compared to 1.47% at December 31, 1998.
            During 2000, net charge-offs were $12.5 million, a decrease of $10.9 million from the $23.4 million during 1999. The decrease is principally attributed to losses recorded in the Company’s sub-prime specialty lending operation during 1999. The Company’s provision for loan loss decreased from $20.2 million in 1999 to $15.8 million in 2000. The provision for loan loss is recorded to bring the allowance for loan losses to the level deemed appropriate by management.

            During 1999, net charge-offs were $23.4 million, an increase of $8.8 million from the net charge-offs of $14.6 million in 1998. The principal causes for the increase were the increase in real estate construction loan net charge-offs of $2.9 million; the increase in commercial loan net charge-offs of $6.1 million; and an increase in consumer loan and other loan net charge-offs of $1.6 million. These increases are substantially the result of isolated credit determination and not a systemic deterioration in a broader component of the loan portfolio. The Company’s provision for loan loss was $20.2 million in 1999 and $23.1 million in 1998.
            The following table sets forth the allocation of the allowance for loan losses to various loan categories, as well as the allocation as a percentage of loans outstanding in each category, as of the dates indicated:

	Allowance for Loan Losses at December 31,					Allowance as a Percent of Loans Outstanding by Category at December 31,
(Dollars in thousands)	2000	1999	1998	1997	1996	2000	1999	1998	1997	1996
Real estate	$12,234	$10,329	$9,844	$7,457	$5,481	0.84%	0.78%	0.76%	0.61%	0.58%
Real estate construction	515	218	190	135	103	0.11%	0.05%	0.05%	0.05%	0.06%
Commercial	7,117	8,673	7,705	6,582	5,675	0.82%	0.87%	0.80%	0.79%	0.77%
Consumer and other	4,147	4,657	8,405	4,257	2,558	0.60%	0.68%	1.36%	0.75%	0.64%
Agricultural	3,016	2,643	3,077	2,487	2,312	1.19%	1.02%	1.04%	0.85%	0.96%
Total allocated allowance	27,029	26,520	29,221	20,918	16,129	0.72%	0.72%	0.83%	0.66%	0.64%
Total unallocated allowance	25,139	22,358	22,639	20,469	15,225	0.68%	0.60%	0.64%	0.65%	0.61%
Total allowance	$52,168	$48,878	$51,860	$41,387	$31,354	1.40%	1.32%	1.47%	1.31%	1.25%

Source of Funds

Deposits
The Company’s major source of funds is provided by core deposits from individuals, businesses and local government units. Core deposits consist of all in-market noninterest-bearing deposits, interest-bearing savings and checking accounts and time deposits of less than $100,000.
            The following table sets forth a summary of the deposits of the Company at the dates indicated:

December 31(in thousands)	2000	1999	1998
Noninterest-bearing	$500,834	$616,861	$591,718
Interest-bearing:
Savings and checking accounts	2,349,606	2,276,705	2,369,945
Time accounts less than $100,000	1,496,483	1,436,783	1,515,996
Time accounts greater than $100,000	672,968	579,514	623,406
Total deposits	$5,019,891	$4,909,863	$5,101,065

Total deposits at December 31, 2000, were $5.0 billion, an increase of $110 million, or 2.2%, from $4.9 billion at December 31, 1999. The Company’s core deposits as a percentage of total deposits were 84.0% and 86.7% as of December 31, 2000 and December 31, 1999, respectively.
            At December 31, 2000, $673 million, or 13.4% of total deposits were in time accounts greater than $100,000, an increase of $93 million, or 16.0%, from $580 million at December 31, 1999. Management believes virtually all the deposits in excess of $100,000 are with persons or entities that hold other deposit relationships with the banks. Maturities of deposits in excess of $100,000 at December 31, 2000 were (in thousands):

Maturing in less than three months	$246,954
Maturing in three to six months	161,144
Maturing in six to twelve months	174,529
Maturing in over twelve months	90,341
Total deposits in excess of $100,000	$672,968

            At December 31, 2000, the Company had $131 million in deposits obtained through a brokered deposit relationship. In addition to the availability of core deposits, management has determined it may continue to employ a brokered deposit program in an effort to attract lower cost sources of funds.

Short-Term Borrowings
Short-term borrowings include securities sold under agreements to repurchase, commercial paper, Federal Home Loan Bank advances and federal funds purchased. These funds are used to fund the growth in loans and securities and manage the Company’s rate sensitivity risk. They are subject to short-term price swings as the Company’s needs change or the overall market rates for short-term investment funds change.
            The Company’s subsidiary banks have arrangements with the Federal Home Loan Bank that provide for borrowing up to $313 million. As of December 31, 2000, $155.0 million in advances were outstanding. The Company also had a $29.0 million balance outstanding on its $35 million short-term commercial paper arrangement at December 31, 2000. The $314 million decrease in short-term borrowings from December 31, 1999 is due to the Company’s planned balance sheet contraction and its decision to rely less upon short term borrowings to fund asset growth.

The following table sets forth a summary of the short-term borrowings of the Company during 2000, 1999 and 1998, and as of the end of each such period:

(Dollars in thousands)	Outstanding at Year-End	Average Daily Amount Outstanding	Maximum Outstanding  at any Month-End	Weighted Average Interest Rate	Average InterestRate  atYear-End
2000
Federal funds purchased and securities sold under agreements to repurchase	$205,758	$226,791	$274,577	5.31%	5.33%
Commercial paper	28,952	25,488	32,078	6.74%	7.31%
FHLB advances	155,000	258,935	364,000	6.41%	6.55%
Other	20,000	57,326	88,000	6.80%	7.37%
Total	$409,710	$568,540	$739,564	6.03%	6.03%
1999
Federal funds purchased and securities sold under agreements to repurchase	$252,760	$186,267	$261,191	4.48%	5.04%
Commercial paper	19,412	18,403	22,546	5.60%	6.03%
FHLB advances	383,500	289,859	383,500	5.29%	5.43%
Other	68,753	63,391	119,806	5.30%	5.77%
Total	$724,425	$557,920	$724,425	5.03%	5.35%
1998
Federal funds purchased and securities sold under agreements to repurchase	$143,057	$87,094	$152,748	4.92%	4.13%
Commercial paper	14,310	23,998	34,570	5.87%	5.87%
FHLB advances	210,000	200,902	304,000	5.95%	5.18%
Other	68,359	33,066	68,359	5.70%	5.29%
Total	$435,726	$345,060	$466,763	5.67%	4.87%

Long-Term Debt
Long-term debt of the Company was $124 million as of December 31, 2000, and $76 million as of December 31, 1999.

Company-Obligated Mandatorily Redeemable Preferred Securities
Company-obligated mandatorily redeemable preferred securities of the Company was $120 million as of December 31, 2000 and 1999, which consisted of $60 million of 8.20% Cumulative Capital Securities issued December 10, 1997 through CFB Capital II and $60 million of 8.875% Cumulative Capital Securities issued February 5, 1997 through CFB Capital I. The proceeds of both offerings were invested by CFB Capital II and CFB Capital I, respectively, in Junior Subordinated Debentures of the Company. The debentures mature not earlier than February 1, 2002 and not later than December 15, 2027.

Shareholders’ Equity
Total shareholders’ equity decreased $61.9 million, or 15.2%, to $345.4 million at December 31, 2000, from $407.3 million at December 31, 1999, due principally to an increase of $136.2 million in treasury stock as a result of the Company’s common stock repurchase program. This was offset in part through the retention of a majority of earnings and a $35.4 million reduction in unrealized gains on available-for-sale securities, net of tax.
            On April 10, 2000, the Company announced its intention to repurchase up to 5 million shares of the Company’s common stock. On August 9, 2000, the Company announced its intention to repurchase up to an additional 5 million shares of the Company’s common stock. As of December 31, 2000 the Company had repurchased 8,000,000 shares of common stock at prices ranging form $15.25 to $18.82.
            In April 1998, in conjunction with the Company’s shareholder approval of a charter amendment that facilitated a two-for-one split of the Company’s common stock in the form of a 100 percent dividend paid to holders of record as of May 1, 1998, the Company increased the number of authorized common shares from 30,000,000 to 80,000,000. The number of authorized preferred shares remained at 2,000,000. The increases are expected to provide the Company greater ability to utilize common and preferred stock in connection with raising additional capital, expanding its business through acquisitions and other general purposes.
            On February 28, 1997, the Company issued notice of redemption to the holders of its Depositary Shares, which represented ownership of shares of 7% Cumulative Convertible Preferred Stock (approximately $23 million in stated value). Virtually all of such holders elected to convert to common stock prior to redemption, which resulted in the issuance of approximately 2,886,000 shares of Common Stock.

            Asset/Liability Management

Liquidity Management
Liquidity management is an effort of management to provide a continuing flow of funds to meet its financial commitments, customer borrowing needs and deposit withdrawal requirements. The liquidity position of the Company and its subsidiary banks is monitored by the Asset/Liability Management Committee of the Company. The largest category of assets representing a ready source of liquidity for the Company is its short-term financial instruments, which include federal funds sold, interest-bearing deposits at other financial institutions, U.S. Treasury securities and other securities maturing within one year. Liquidity is also provided through the regularly scheduled maturities of assets. The investment portfolio contains a number of high quality issues with varying maturities and regular principal payments. Maturities in the loan portfolio also provide a steady flow of funds, and strict adherence to the credit policies of the Company helps ensure the collectibility of these loans. The liquidity position of the Company is also greatly enhanced by its significant base of core deposits.
            The liquidity ratio is one measure of a bank’s ability to meet its current obligations and is defined as the percentage of liquid assets to deposits. Liquid assets include cash and due from banks, unpledged investment securities with maturities of less than one year and federal funds sold. At year-end 2000, 1999 and 1998, the liquidity ratio was 5.21%, 5.39% and 5.93%, respectively. The level of loans maturing within one year greatly added to the Company’s liquidity position in 2000. Including loans maturing within one year, the liquidity ratio was 24.98%, 27.15% and 26.94%, respectively, for the same periods.
            The Company has revolving lines of credit with its primary lenders, which provide for borrowing up to $30 million. This line would be utilized to finance stock repurchase activity which may be completed in 2001. There was an outstanding balance of $20 million on this line of credit at December 31, 2000.
            The Company also maintains available lines of federal funds borrowings, as well as seasonal borrowing privileges, at the Federal Reserve Bank of Minneapolis. The Company’s subsidiary banks have the ability to borrow an aggregate of $203 million in federal funds from seven nonaffiliated financial institutions.
            Additionally, all the Company’s subsidiary banks are members of the Federal Home Loan Bank (“FHLB”) System. As part of membership, the Company’s subsidiary banks purchased a modest amount of stock of FHLB and obtained advance lines of credit which represent an aggregate of $313 million in additional funding capacity.

Interest Rate Sensitivity
Interest rate sensitivity indicates the exposure of a financial institution’s earnings to future fluctuations in interest rates. Management of interest rate sensitivity is accomplished through the composition of loans and investments and by adjusting the maturities on earning assets and interest-bearing liabilities. Rate sensitivity and liquidity are related since both are affected by maturing assets and liabilities. However, interest rate sensitivity also takes into consideration those assets and liabilities with interest rates that are subject to change prior to maturity.
            The Company’s Asset and Liability Management Committee (“ALCO”) attempts to structure the Company’s balance sheet to provide for an approximately equal amount of rate sensitive assets and rate sensitive liabilities. In addition to facilitating liquidity needs, this strategy assists management in maintaining relative stability in net interest income despite unexpected fluctuations in interest rates. ALCO uses three methods for measuring and managing interest rate risk: Repricing Mismatch Analysis, Balance Sheet Simulation Modeling and Equity Fair Value Modeling.

Repricing Mismatch Analysis
Management performs a Repricing Mismatch Analysis (“Gap Analysis”) which represents a point in time net position of assets, liabilities and off-balance sheet instruments subject to repricing in specified time periods. Guidelines established by ALCO, and approved by the Company’s Board of Directors, limit the impact on net interest income to five percent given a 100 basis point change in interest rates over one year. However, management believes Gap Analysis alone does not accurately measure the magnitude of changes in net interest income since changes in interest rate do not impact all categories of assets, liabilities and off-balance sheet instruments equally or simultaneously. A summary of the Gap Analysis is presented at the end of this section.

Balance Sheet Simulation Modeling
Balance Sheet Simulation Modeling allows management to analyze the impact of short-term (less than 12 months) interest rate fluctuations using projected balance sheet information. The balance sheet changes are based on forecasted repayments of loans and securities, growth in loans and deposits, and historical pricing spreads.
            Management uses the model to simulate the impact of immediate and longer-term shifts in the yield curve. The results of these models are reviewed by ALCO and used to develop the Company’s strategies. Guidelines established by ALCO limit the impact on net interest income to five percent given a 100 basis point change in interest rates. As of December 31, 2000, the impact of such a change in interest rates would be approximately 3.02 percent of net interest income.

Equity Fair Value Modeling
Because Balance Sheet Simulation Modeling is dependent on accurate forecasts, its usefulness is limited to periods of one year or less. As a result, the Company uses the Equity Fair Value Modeling to measure long-term interest rate exposure. The method estimates the impact of interest rate changes on the estimated discounted future cash flows of the Company’s current assets, liabilities and off-balance sheet instruments. Guidelines established by ALCO limit the change in fair value to 15 percent given a 100 basis point change in interest rates. As of December 31, 2000, the impact of such a change in interest rates would be approximately 6.37 percent of equity fair value.
            Based on each of these methods of measuring interest rate risk, management believes the Company was liability sensitive as of December 31, 2000.
            The Company does not engage in the speculative use of derivative financial instruments.

The following table sets forth the Company’s interest rate sensitivity analysis by contractual repricing or maturity at December 31, 2000:

	Repricing or Maturing in
(In thousands)	1 Year or Less	Over 1 to -5 Years	Over 5 Years	Total
Rate sensitive assets:
Loans	$1,486,421	$1,737,825	$513,956	$3,738,202
Held-to-maturity securities	—	—	73,222	73,222
Available-for-sale securities	117,721	501,260	1,095,529	1,714,510
Other interest-bearing assets	1,110	—	—	1,110
Total rate sensitive assets	$1,605,252	$2,239,085	$1,682,707	$5,527,044
Rate sensitive liabilities:
Savings deposits and interest-
bearing checking	$2,349,606	$—	$—	$2,349,606
Time deposits	1,801,050	366,804	1,597	2,169,451
Short-term borrowings	409,575	135	—	409,710
Long-term borrowings	25,506	35,479	64,986	125,971
Total rate sensitive liabilities	$4,585,737	$402,418	$66,583	$5,054,738
Rate sensitive gap	$(2,980,485)	$1,836,667	$1,616,124	$472,306
Cumulative rate sensitive gap	(2,980,485)	(1,143,818)	472,306	472,306

            The following sets forth the Company’s interest rate sensitivity analysis at December 31, 2000, with respect to the individual categories of loans and provides separate analyses with respect to fixed interest rate loans and floating interest rate loans:

	Repricing or Maturing in
(In thousands)	1 Year or Less	Over 1 to 5 Years	Over 5 Years	Total
Loan category:
Real estate	$351,196	$839,823	$267,475	$1,458,494
Real estate construction	466,616	—	—	466,616
Agriculture	183,540	60,693	9,971	254,204
Commercial	417,600	336,632	118,592	872,824
Consumer and other	67,469	500,677	117,918	686,064
Total loans	$1,486,421	$1,737,825	$513,956	$3,738,202
Floating interest rate loans	$1,079,123	$378,525	$75,214	$1,532,862
Fixed interest rate loans	407,298	1,359,300	438,742	2,205,340
Total loans	$1,486,421	$1,737,825	$513,956	$3,738,202

Capital Management
Risk-based guidelines established by regulatory agencies require the Company to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets.
    As of December 31, 2000, the Company is considered well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table.

	Regulatory Capital Requirements:
(Dollars in thousands)	Tier 1 Capital	Total Risk- Based Capital	Leverage	Total Risk- Based Assets
Minimum	4.00%	8.00%	3.00%	N/A
Well Capitalized	6.00%	10.00%	5.00%	N/A
Community First Bankshares, Inc.
December 31, 2000	8.13%	10.73%	5.94%	$4,408,524
December 31, 1999	10.01%	12.45%	7.16%	$4,452,587

            Due to the Company’s level of Tier 1 capital and substantial level of earning assets invested in low risk government agency and mortgage-backed securities, the Company’s risk-based capital ratios significantly exceed the regulatory minimums. The Company conducts an ongoing assessment of its capital needs in order to maintain an adequate level of capital to support business growth, to ensure depositor protection and to facilitate corporate expansion. Management continues to explore steps to increase its capital levels to permit it to make future acquisitions. Portions of the subordinated debt financing referred to under “Borrowings,” above, are treated as Tier 2 capital.

This Annual Report contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to: risks related to the Company’s acquisition strategy, including risks of adversely changing results of operations and possible factors affecting the Company’s ability to consummate further acquisitions; risks of loans and investments, including dependence on local economic conditions; competition for the Company’s customers from other providers of financial services; possible adverse effects of changes in interest rates; balance sheet and critical ratio risks related to the share repurchase program; and other risks detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company.

consolidated statements of financial condition

Years ended December 31 (Dollars in thousands, except per share data)	2000	1999
Assets
Cash and due from banks	$256,136	$247,051
Federal funds sold and securities purchased under agreements to resell	—	4,775
Interest-bearing deposits	1,110	4,648
Available-for-sale securities	1,714,510	1,937,517
Held-to-maturity securities (Fair Value: 2000 – $73,222; 1999 – $74,248)	73,222	74,248
Loans	3,738,202	3,690,353
Less: Allowance for loan losses	(52,168)	(48,878)
Net loans	3,686,034	3,641,475
Bank premises and equipment, net	121,675	125,457
Accrued interest receivable	52,494	51,030
Intangibles	114,971	126,378
Other assets	69,577	89,656
Total assets	$6,089,729	$6,302,235
Liabilities and shareholders’ equity
Deposits:
Noninterest-bearing	$500,834	$616,861
Interest-bearing:
Savings and NOW accounts	2,349,606	2,276,705
Time accounts over $100,000	672,968	579,514
Other time accounts	1,496,483	1,436,783
Total deposits	5,019,891	4,909,863
Federal funds purchased and securities sold under agreements to repurchase	205,758	252,760
Other short-term borrowings	203,952	471,665
Long-term debt	123,957	75,622
Accrued interest payable	45,489	31,949
Other liabilities	25,251	33,107
Total liabilities	5,624,298	5,774,966
Company-obligated mandatorily redeemable preferred securities of CFB Capital I and II	120,000	120,000
Shareholders’ equity:
Common stock, par value $.01 per share: Authorized Shares – 80,000,000 Issued Shares – 51,021,896	510	510
Capital surplus	192,368	192,071
Retained earnings	315,091	276,502
Unrealized loss on available-for-sale securities, net of tax	(9,486)	(44,896)
Less cost of common stock in treasury – 2000 – 9,155,144 shares; 1999 – 885,964 shares	(153,052)	(16,918)
Total shareholders’ equity	345,431	407,269
Total liabilities and shareholders’ equity	$6,089,729	$6,302,235

See accompanying notes.

consolidated statements of income

Years ended December 31 (Dollars in thousands, except per share data)	2000	1999	1998
Interest income:
Loans	$353,405	$332,974	$337,771
Investment securities	123,525	130,955	124,306
Interest-bearing deposits	184	463	1,017
Federal funds sold and resale agreements	444	814	4,176
Total interest income	477,558	465,206	467,270
Interest expense:
Deposits	169,281	151,138	166,873
Short-term and other borrowings	34,303	28,052	19,576
Long-term debt	6,697	6,628	8,338
Total interest expense	210,281	185,818	194,787
Net interest income	267,277	279,388	272,483
Provision for loan losses	15,781	20,184	23,136
Net interest income after provision for loan losses	251,496	259,204	249,347
Noninterest income:
Service charges on deposit accounts	39,537	37,013	31,880
Insurance commissions	10,550	8,791	7,197
Security sales commissions	6,805	5,258	4,249
Fees from fiduciary activities	5,811	5,148	4,944
Net gains on sales of securities	65	2,175	1,801
Other	12,437	14,124	13,196
Total noninterest income	75,205	72,509	63,267
Noninterest expense:
Salaries and employee benefits	110,024	106,542	119,250
Net occupancy	31,941	32,726	33,929
FDIC insurance	1,039	625	771
Legal and accounting	3,874	3,651	4,237
Other professional services	4,415	5,168	6,014
Acquisition, integration and conforming	—	3,053	3,721
Data processing	4,545	4,116	5,209
Company-obligated mandatorily redeemable preferred securities of CFB Capital I & II	10,245	10,245	10,218
Amortization of intangibles	10,481	10,500	10,366
Other	42,755	41,601	46,933
Total noninterest expense	219,319	218,227	240,648
Income from continuing operations before income taxes	107,382	113,486	71,966
Provision for income taxes	35,748	38,573	22,595
Income from continuing operations	71,634	74,913	49,371
Discontinued operations:
Income from operations of discontinued operations (less applicable income taxes)	—	—	(2,232)
Loss on disposal of discontinued operations, including provision for operating losses during phase-out period (less applicable income taxes)	—	—	(1,676)
Net income	$71,634	$74,913	$45,463
Earnings per common and common equivalent share:
Basic income per share from continuing operations	$1.55	$1.50	$0.98
Discontinued operations	0.00	0.00	(0.08)
Basic net income	$1.55	$1.50	$0.90
Diluted income per share from continuing operations	$1.54	$1.48	$0.97
Discontinued operations	0.00	0.00	(0.08)
Diluted net income	$1.54	$1.48	$0.89
Average common and common equivalent shares outstanding:
Basic	46,219,120	50,061,972	50,272,551
Diluted	46,578,750	50,670,559	51,114,703

See accompanying notes.

consolidated statements of comprehensive income

Years ended December 31 (Dollars in thousands, except per share data)
Net income	$71,634	$74,913	$45,463
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	35,449	(56,879)	8,746
Less:  Reclassification adjustment for gains included in net income	(39)	(1,305)	(1,156)
Other comprehensive income	35,410	(58,184)	7,590
Comprehensive income	$107,044	$16,729	$53,053

consolidated statements of shareholders’ equity

	Common Stock		Capital	Retained	Unrealized	Treasury Stock
Years ended December 31, 2000, 1999, 1998 (Dollars in thousands, except per share data)	Shares	Amount	Surplus	Earnings	Gain(Loss)	Shares	Amount	Total
Balance at December 31, 1997	50,044,104	$501	$183,443	$216,780	$5,698	72,510	$(1,383)	$405,039
Net income	—	—	—	45,463	—	—	—	45,463
Common stock dividends ($0.44 per share)	—	—	—	(20,044)	—	—	—	(20,044)
Common stock dividends	134,689	1	1,793	(1,794)	—	—	—	—
Cash in lieu of stock dividend	—	—	—	(15)	—	—	—	(15)
Issuance of common stock	320,090	3	1,381	—	—	—	—	1,384
Purchases of common stock for treasury, at cost	—	—	—	—	—	731,000	(16,314)	(16,314)
Exercise of options, net of stock tendered in payment	58,654	1	271	(4,307)	—	(238,922)	5,588	1,553
Change in unrealized gain on available-for-sale securities, net of income taxes of $4,788	—	—	—	—	7,590	—	—	7,590
Balance at December 31, 1998	50,557,537	$506	$186,888	$236,083	$13,288	564,588	$(12,109)	$424,656
Net income	—	—	—	74,913	—	—	—	74,913
Common stock dividends ($0.56 per share)	—	—	—	(27,041)	—	—	—	(27,041)
Common stock dividends	143,566	1	2,217	(2,218)	—	—	—	—
Cash in lieu of stock dividend	—	—	—	(34)	—	—	—	(34)
Issuance of common stock	3,198,079	32	2,645	(414)	—	—	—	2,263
Retirement of common stock	(2,877,286)	(29)	—	—	—	—	—	(29)
Purchases of common stock for treasury, at cost	—	—	—	—	—	625,457	(11,844)	(11,844)
Exercise of options, net of stock
tendered in payment	—	—	321	(4,787)	—	(304,081)	7,035	2,569
Change in unrealized loss on available-for-sale securities, net of income taxes of $35,508	—	—	—	—	(58,184)	—	—	(58,184)
Balance at December 31, 1999	51,021,896	$510	$192,071	$276,502	$(44,896)	885,964	$(16,918)	$407,269
Net income	—	—	—	71,634	—	—	—	71,634
Common stock dividends ($0.60 per share)	—	—	—	(27,601)	—	—	—	(27,601)
Purchases of common stock for treasury, at cost	—	—	—	—	—	8,760,278	(145,725)	(145,725)
Sales of treasury stock to employee benefit plans	—	—	—	(793)	—	(127,136)	2,573	1,780
Exercise of options, net of stock tendered in payment	—	—	297	(4,651)	—	(363,962)	7,018	2,664
Change in unrealized loss on available-for-sale securities, net of income taxes of $21,576	—	—	—	—	35,410	—	—	35,410
Balance at December 31, 2000	51,021,896	$510	$192,368	$315,091	$(9,486)	9,155,144	$(153,052)	$345,431

See accompanying notes.

consolidated statements of cash flows

Years ended December 31 (In thousands)	2000	1999	1998
Cash flows from operating activities
Net income	$71,634	$74,913	$49,371
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	15,781	20,184	23,136
Depreciation	14,307	15,186	16,277
Amortization of intangibles	10,481	10,500	10,366
Net amortization of premiums and discounts on securities	188	1,067	(685)
Deferred income tax benefit	(2,077)	(1,088)	(6,978)
(Increase) decrease in interest receivable	(1,464)	2,230	(6,225)
Increase in interest payable	13,540	4,876	3,912
Other, net	(6,350)	(5,501)	(59,980)
Net cash provided by operating activities	116,040	122,367	29,194
Cash flows from investing activities
Acquisitions, net of cash paid	—	(1,956)	—
Net decrease in interest-bearing deposits	3,538	6,815	5,167
Purchases of available-for-sale securities	(129,097)	(649,177)	(2,964,003)
Maturities of available-for-sale securities	258,584	497,314	2,202,777
Sales of securities, net of gains	150,318	151,635	145,125
Purchases of held-to-maturity securities	(3,431)	(4,710)	(19,588)
Maturities of held-to-maturity securities	4,457	291	10,413
Net increase in loans	(60,340)	(147,967)	(318,163)
Net increase in bank premises and equipment	(10,525)	(11,205)	(22,652)
Net cash provided by (used in) investing activities	213,504	(158,960)	(960,924)
Cash flows from financing activities
Net (decrease) increase in demand deposits, NOW accounts and savings accounts	(43,126)	(83,965)	533,588
Net increase (decrease) in time accounts	153,154	(137,804)	226,412
Net (decrease) increase in short-term and other borrowings	(314,715)	287,549	160,487
Net increase (decrease) in long-term debt	48,335	(17,902)	(31,088)
Net proceeds from issuance of common stock	—	2,234	1,384
Purchase of common stock held in treasury	(145,725)	(11,844)	(16,314)
Sale of common stock held in treasury	4,444	2,569	1,553
Cash dividends	(27,601)	(27,075)	(20,059)
Net cash (used in) provided by financing activities	(325,234)	13,762	855,963
Net increase (decrease) in cash and cash equivalents	4,310	(22,831)	(75,767)
Cash and cash equivalents at beginning of year	251,826	274,657	350,424
Cash and cash equivalents at end of year	$256,136	$251,826	$274,657

See accompanying notes.

notes to consolidated financial statements

          1. Significant Accounting Policies

Community First Bankshares, Inc. (the “Company”) is a multi-bank holding company which, at the end of 2000, served 155 communities in Arizona, California, Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota, Utah, Wisconsin and Wyoming. The Company’s community banks provide a full range of banking services, primarily in small and medium-sized communities and the surrounding communities. In addition to its primary emphasis on commercial and consumer banking services, the Company offers trust, insurance and nondeposit investment products and services.

Basis of Presentation

The consolidated financial statements include the accounts of Community First Bankshares, Inc., its wholly-owned data processing, credit origination and insurance agency subsidiaries and its two wholly-owned subsidiary banks. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in prior periods have been reclassified to conform to the current presentation.
            As discussed in Note 2, the Company acquired Valley National Corporation (“Valley National”) on October 7, 1999; Community Bancorp, Inc. (“CBI”) on April 3, 1998; Pioneer Bank of Longmont (“Longmont”) on April 30, 1998; FNB, Inc. (“FNB”) on May 7, 1998; Western Bancshares of Las Cruces, Inc. (“Western”) on July 1, 1998; and Guardian Bancorp (“Guardian”) on August 7, 1998. These acquisitions were accounted for using the pooling of interests method. The 1999 Valley National acquisition was material to the Company’s financial condition and operating results. While none of the 1998 transactions, individually, were material to the Company’s financial condition or operating results, the aggregation of these business combinations does have a material effect on the Company’s financial condition and operating results. Accordingly, the consolidated financial information has been restated to reflect the results of operations of the six companies on a combined basis for all periods presented.
            On April 28, 1998, the Company effected a two-for-one split of the Company’s common stock in the form of a 100 percent dividend payable to shareholders of record on May 1, 1998 and distributed on May 15, 1998. Accordingly, the historical consolidated information has been restated to reflect the impact of the two-for-one split on the common share, weighted average common share and basic and diluted earnings per share data.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Held-to-Maturity and Available-for-Sale Securities

Management determines the classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost.
            Debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported within comprehensive income in shareholders’ equity.
            The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity or, in the case of mortgage-backed securities, over the estimated life of the security. Such amortization and accretion is included as an adjustment to interest income from investments. Realized gains and losses and declines in value judged to be other than temporary are included in net securities gains (losses). The cost of securities sold is based on the specific identification method.

Loans

Loans are stated at their principal balance outstanding, less the allowance for loan losses. Interest on loans is recognized on an accrual basis. Loans are placed on nonaccrual when they become past due over 90 days, or earlier, if the collection of interest or principal is considered unlikely. Thereafter, no interest income is recognized unless received in cash and until such time as the borrower demonstrates the ability to pay interest and principal.

Loan Fee Income

The Company recognizes loan fees and certain direct origination costs as a yield adjustment over the estimated life of the loan, utilizing a method that results in a constant rate of return.

Allowance for Loan Losses

The allowance for loan losses is maintained through charges to expense at an amount that will provide for estimated loan losses. The current level of the allowance for loan losses is a result of management’s assessment of the risks within the portfolio based on the information revealed in credit reporting processes. This assessment of risk takes into account the composition of the loan portfolio, previous loan experience, current economic conditions and other factors that, in management’s judgment, deserve recognition. An allowance is recorded for individual loan categories based on the relative risk characteristics of the loan portfolios. Commercial and agricultural amounts are based on a quarterly review of the individual loans outstanding, including outstanding commitments to lend. Real estate and consumer amounts are based on a quarterly analysis of the performance of the respective portfolios, including historical and expected delinquency and charge-off statistics.
            Ultimate losses may vary from current estimates, and as adjustments become necessary, the allowance for loan losses is adjusted in the periods in which such losses become known or fail to occur. Actual loan charge-offs and subsequent recoveries are deducted from and added to the allowance, respectively.

Bank Premises and Equipment

Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation for financial reporting purposes is provided on the straight-line method over the estimated lives of the assets and includes amortization of assets recorded under capital leases. Estimated lives range from three to twenty and twenty-five to forty years for equipment and premises, respectively. Accelerated depreciation methods are used for income tax reporting purposes.

Intangible Assets

Goodwill, the excess cost over net assets acquired, of subsidiaries is amortized over a period of fifteen years. At December 31, 2000, goodwill totaled $68,813,000, net of accumulated amortization of $30,138,000. Other intangible assets, principally deposit based intangibles, unexpired premium lists and noncompetition agreements, totaled $46,158,000, net of accumulated amortization of $12,621,000, and are amortized over their estimated useful lives ranging from three to twenty-five years. The Company assesses the recoverability of goodwill and other intangibles on an annual basis to determine whether any impairment exists. This ongoing assessment includes understanding and evaluating qualitative factors that would indicate the potential for impairment. If the Company believes a potential impairment exists, the Company estimates the relative market value of the corresponding business activity to determine whether a permanent impairment exists.

Income Taxes

The Company provides for income taxes based on income reported for financial statement purposes, rather than amounts currently payable under statutory tax laws. Deferred taxes are recorded to reflect the tax consequences on future years’ differences between the tax bases of assets and liabilities and the financial reporting of amounts at each year-end.

Earnings Per Share

Basic earnings per common share is calculated by dividing net income applicable to common equity by the weighted-average number of shares of common stock outstanding.
            Diluted earnings per common share is calculated by adjusting net income, and the weighted-average number of shares of common stock outstanding for shares that would be issued assuming the exercise of stock options and warrants during each period. Such adjustments to the weighted-average number of shares of common stock outstanding are made only when such adjustments dilute earnings per share.

Cash and Cash Equivalents

Cash and cash equivalents is defined as cash and due from banks, federal funds sold and securities purchased under agreements to resell.

Stock-Based Compensation

The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for stock option grants in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and, accordingly, recognizes no compensation expense for the stock option grants. See Footnote 14.

            2.  Business Combinations and Divestitures

On November 20, 2000, the Company completed the sale of its office in Fairplay, Colorado. The Fairplay office was acquired on December 18, 1996 as part of the Company’s merger with Mountain Parks Financial Corporation. The transaction included the disposition of approximately $12 million in deposits.
            On February 11, 2000, the Company completed the sale of its office in Richfield, Utah. The Richfield office was acquired on January 23, 1998 as part of the Company’s purchase and assumption of 37 offices of Banc One Corporation located in Arizona, Colorado and Utah. The transaction included the disposition of approximately $16 million in deposits.
            On January 14, 2000, the Company completed the sale of its office in Nephi, Utah. The Nephi office was acquired on January 23, 1998 as part of the Company’s purchase and assumption of 37 offices of Banc One Corporation located in Arizona, Colorado and Utah. The transaction included the disposition of approximately $17 million in deposits.
            On December 21, 1999, the Company issued approximately 317,000 shares of common stock to acquire River Bancorp, Inc. (“River Bancorp”), and the holding company for Northland Security Bank, Ramsey, Minnesota. At acquisition, River Bancorp had approximately $35 million in assets and $31 million in deposits. The Company used the pooling of interests method to account for the transaction. This merger was not material to the Company’s consolidated financial information or operating results. Accordingly, the Company’s consolidated financial information has not been restated to reflect this merger. The operating results are included in the Company’s consolidated statements from the date of the merger.
            On October 7, 1999, the Company issued approximately 3,022,000 shares of common stock to acquire Valley National Corporation (“Valley National”), the holding company for Valle de Oro Bank, El Cajon, California. At acquisition, Valley National had approximately $252 million in assets and $237 million in deposits. The Company used the pooling of interests method to account for the transaction. The Company’s consolidated financial information has been restated to reflect this merger. The operating results are included in the Company’s consolidated statements for all periods presented.
            On August 7, 1998, the Company issued approximately 1,526,000 shares of common stock to acquire Guardian Bancorp (“Guardian”), the holding company for Guardian State Bank, Salt Lake City, Utah, with offices in Salt Lake City and Sandy, Utah. At acquisition, Guardian had approximately $99 million in assets and $89 million in deposits. The Company used the pooling of interests method to account for the transaction. The Company’s consolidated financial information has been restated to reflect this merger. The operating results are included in the Company’s consolidated statements for all periods presented.

            On July 1, 1998, the Company issued approximately 1,932,000 shares of common stock to acquire Western Bancshares of Las Cruces, Inc. (“Western”), the holding company for Western Bank, Las Cruces, New Mexico, with offices in Anthony, Hatch and Las Cruces, New Mexico. At acquisition, Western had approximately $159 million in assets and $136 million in deposits. The Company used the pooling of interests method to account for the transaction. The Company’s consolidated financial information has been restated to reflect this merger. The operating results are included in the Company’s consolidated statements for all periods presented.
            On May 7, 1998, the Company issued approximately 1,135,000 shares of common stock to acquire FNB, Inc. (“FNB”) a bank holding company with banks in Greeley and Fort Collins, Colorado. At acquisition, FNB had approximately $120 million in assets and $109 million in deposits. The Company used the pooling of interests method to account for the transaction. The Company’s consolidated financial information has been restated to reflect this merger. The operating results are included in the Company’s consolidated statements for all periods presented.
            On April 30, 1998, the Company issued approximately 1,432,000 shares of common stock to acquire Pioneer Bank of Longmont (“Longmont”), Longmont, Colorado, with offices in Berthoud, Longmont, Lyons and Niwot, Colorado. At acquisition, Longmont had approximately $138 million in assets and $128 million in deposits. The Company used the pooling of interests method to account for the transaction. The Company’s consolidated financial information has been restated to reflect this merger. The operating results are included in the Company’s consolidated statements for all periods presented.
            On April 3, 1998, the Company issued approximately 853,000 shares of common stock to acquire Community Bancorp, Inc. (“CBI”), the parent company of Community First National Bank, Thornton, Colorado, with two offices in Thornton, Colorado. At acquisition, CBI had approximately $78 million in assets and $72 million in deposits. The Company used the pooling of interests method to account for the transaction. The Company’s consolidated financial information has been restated to reflect this merger. The operating results are included in the Company’s consolidated statements for all periods presented.
            On June 12, 1998, the Company, through its Colorado subsidiary, completed the sale of its office in Ault, Colorado. The Ault office was acquired on January 23, 1998 as part of the Company’s purchase and assumption of 37 offices of Banc One Corporation located in Arizona, Colorado and Utah. The transaction included the disposition of approximately $9 million in deposits.
            In July 1998, the Company sold the operating assets of its two sub-prime lending subsidiaries. Seven loan production offices of Equity Lending, Inc. (“Equity Lending”) were sold to FIRSTPLUS Financial Group, Inc., in a cash transaction on July 27, 1998. Servicing rights to the portfolio of automobile installment contracts originated by Mountain Parks Financial Services, Inc. (“MPFS”) were acquired by Cygnet Financial Services, Inc. on July 31, 1998. In addition to a fourth quarter 1998 charge of $10 million in anticipation of liquidating these companies, the Company recorded a $3.9 million loss on these companies during the first and second quarters of 1998, when the companies were classified as discontinued operations. Losses on the discontinued operations included a $2.2 million operating loss and $1.7 million expected loss on disposal. Equity Lending, which originated residential non-conforming mortgages, and MPFS, which purchased sub-prime auto installment contracts, was acquired in December 1996, as a result of the Company’s merger with Mountain Parks Financial Corporation. The two companies were classified as discontinued operations on the Company’s 1997 financial statements. As of December 31, 2000 the Company had approximately $6 million in sub-prime mortgages and $49,000 in sub-prime automobile contracts remaining.
            On January 23, 1998, the Company completed the purchase and assumption of approximately $730 million in assets and liabilities of 37 offices of Banc One Corporation located in Arizona, Colorado and Utah. The 25 Arizona and four Utah offices were merged into the Company’s Arizona affiliate. The eight Colorado offices were merged into one of the Company’s Colorado affiliates. The transaction was accounted for as a purchase of certain assets and assumption of certain liabilities and resulted in the recognition of a deposit based intangible of approximately $44 million.
            The operating results of all of the companies acquired in purchase transactions subsequent to the dates of acquisition are included in the Company’s consolidated financial statements for the years ended December 31, 2000, 1999 and 1998.

            3. Accounting Changes

SFAS No. 133—Accounting for Derivative Instruments and Hedging Activities—In June 1998, the Financial Accounting Standards Board issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which was amended by SFAS No. 137 and 138. The statement, as amended, was adopted by the Company on January 1, 2001. Because of the Company’s minimal use of derivatives, management has concluded that the adoption of the new Statement did not have a significant effect on earnings or the financial position of the Company.
            SFAS No. 140—Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—In September 2000, the Financial Accounting Standards Board issued Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities that replaces, in its entirety, FASB Statement No. 125. Although Statement 140 has changed many of the rules regarding securitizations, it continues to require an entity to recognize the financial and servicing assets it controls and the liabilities it has incurred and to derecognize financial assets when control has been surrendered in accordance with the criteria provided in the Statement. The Statement is applicable prospectively to transactions beginning in the second quarter 2001. Because the Company does not currently use securitizations or other transfers of financial assets as a form of financing, management believes the application of the new rules will not have a material impact on its consolidated financial statements.

            4. Securities

The following is a summary of available-for-sale securities and held-to-maturity securities at December 31, 2000 (in thousands):

	Available-for-Sale Securities
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
United States Treasury	$76,939	$1,040	$28	$77,951
United States Government agencies	436,975	1,351	3,071	435,255
Mortgage-backed securities	998,147	2,524	6,732	993,939
Collateralized mortgage obligations	9,649	38	52	9,635
State and political securities	115,177	974	751	115,400
Other securities	93,334	1,215	12,219	82,330
Total	$1,730,221	$7,142	$22,853	$1,714,510

	Held-to-Maturity Securities
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Other securities	$73,222	—	—	$73,222
Total	$73,222	—	—	$73,222

            The following is a summary of available-for-sale securities and held-to-maturity securities at December 31, 1999 (in thousands):

	Available-for-Sale Securities
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
United States Treasury	$115,810	$85	$1,097	$114,798
United States Government agencies	457,468	4	18,864	438,608
Mortgage-backed securities	1,153,122	504	39,808	1,113,818
Collateralized mortgage obligations	26,036	63	121	25,978
State and political securities	153,682	574	5,754	148,502
Other securities	104,096	266	8,549	95,813
Total	$2,010,214	$1,496	$74,193	$1,937,517

	Held-to-Maturity Securities
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
Other securities	$74,248	—	—	$74,248
Total	$74,248	—	—	$74,248

            Proceeds from the sale of available-for-sale securities during the years ended December 31, 2000, 1999 and 1998, were $150,383,000, $153,810,000 and $146,926,000, respectively. Gross gains of $880,000, $2,175,000 and $1,870,000 and gross losses of $815,000, $0 and $69,000 were realized on those sales during 2000, 1999 and 1998, respectively. The tax effect on the net gains during 2000, 1999 and 1998 was approximately $23,000, $761,000 and $630,000, respectively. There were no sales of held-to-maturity securities during 2000, 1999 or 1998.
            The amortized cost and estimated fair value of debt securities at December 31, 2000, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Estimated
Available-for-Sale (In thousands)	Cost	Fair Value
Due in one year or less	$28,367	$28,469
Due after one year through five years	340,769	342,424
Due after five years through ten years	192,037	189,970
Due after ten years	161,252	150,073
	722,425	710,936
Mortgage-backed securities	998,147	993,939
Collateralized mortgage obligations	9,649	9,635
Total	$1,730,221	$1,714,510

	Amortized	Estimated
Held-to-Maturity (In thousands)	Cost	Fair Value
Due after ten years	$73,222	$73,222
Total	$73,222	$73,222

            At December 31, 2000, available-for-sale securities included no commitments to purchase specific investment securities at a future date.
            Available-for-sale and held-to-maturity securities carried at $1,301,674,000 and $1,274,663,000 at December 31, 2000 and 1999, respectively, were pledged to secure borrowings, public and trust deposits and for other purposes required by law. Securities sold under agreement to repurchase were collateralized by available-for-sale and held-to-maturity securities with an aggregate carrying value of $205,758,000 and $155,490,000 at December 31, 2000 and 1999, respectively.

            5. Loans

The composition of the loan portfolio at December 31 was as follows (in thousands):

	2000	1999
Real estate	$1,458,494	$1,319,678
Real estate construction	466,616	434,924
Commercial	872,824	994,624
Consumer and other	686,064	681,423
Agriculture	254,204	259,704
	3,738,202	3,690,353
Less : Allowance for loan losses	(52,168)	(48,878)
Net loans	$3,686,034	$3,641,475

            At December 31, 2000, real estate loans totaling $358,430,000 were pledged to secure borrowings.

            6. Allowance for Loan Losses

Activity in the allowance was as follows (in thousands):

	2000	1999	1998
Balance at beginning of year	$48,878	$51,860	$41,387
Allowance of acquired companies/other (1)	—	270	1,950
Provision charged to operating expense	15,781	20,184	23,136
Loans charged off	(17,117)	(27,850)	(18,334)
Recoveries of loans charged off	4,626	4,414	3,721
Balance at end of year	$52,168	$48,878	$51,860

(1)        Includes only acquisitions of companies accounted for as purchases.

Nonaccrual loans totaled $23,426,000, $25,764,000 and $22,609,000 at December 31, 2000, 1999 and 1998, respectively. The Company includes all loans considered impaired under SFAS No. 114 in nonaccrual loans. Interest income of $4,693,000 on nonaccrual loans would have been recorded during 2000 if the loans had been current in accordance with their original terms. During 2000, the Company recorded interest income of $955,000 related to loans that were on nonaccrual status as of December 31, 2000.

7. Fair Value of Financial Instruments

Due to the nature of its business and the financing needs of its customers, the Company has a financial interest in a large number of financial instruments, the majority for which an active market does not exist. Accordingly, the Company has used various valuation techniques to estimate the fair value of its financial instruments. These techniques are significantly affected by the assumptions used, including the discount rate, the estimated timing and amount of cash flows and the aggregation methods used to value similar instruments. In this regard, the resulting fair value estimates cannot be substantiated by comparison to independent markets and, in a majority of cases, could not be realized by the immediate sale or settlement of the instrument. Also, the estimates reflect a point in time valuation that could change significantly based on changes in outside economic factors, such as the general level of interest rates. The required disclosures exclude the estimated values of nonfinancial instrument cash flows and are not intended to provide or estimate a market value of the Company. The following assumptions were used by the Company in estimating the fair value of the specific financial instruments.

Cash and Cash Equivalents

The carrying amounts reported in the statement of financial condition approximate fair values for these items that have no interest rate or credit risk.

Federal Funds Sold and Resale Agreements

The carrying amount approximates fair value due to the short maturity of the instruments and floating interest rates which are tied to market conditions.

Available-for-Sale and Held-to-Maturity Securities

Fair values for these items are based on available market quotes. If market quotes are not available, fair values are based on market quotes of comparable securities.

Interest-Bearing Deposits

The fair value of interest-bearing deposits is estimated using a discounted cash flow analysis using current market rates of interest-bearing deposits with similar maturities to discount the future cash flows.

Loans

The loan portfolio consists of both variable and fixed rate loans. The carrying amounts of variable rate loans, a majority of which reprice within the next three months and for which there has been no significant change in credit risk, are assumed to approximate fair values. The fair values for fixed rate loans are estimated using discounted cash flow analyses. The discount rates applied are based on the current interest rates for loans with similar terms to borrowers of similar credit quality.

Deposit Liabilities

The fair value of demand deposits, savings accounts and certain money market deposits is defined by SFAS No. 107 to be equal to the amount payable on demand at the date of the financial statements. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow analysis that uses the interest rates currently being offered on certificates of deposit to discount the aggregated expected monthly maturities.

Short-Term Borrowings

Federal funds purchased, borrowings under repurchase agreements and other short-term borrowings are at variable rates or have short-term maturities, and their fair value is assumed to approximate their carrying amount.

Long-Term Debt

The fair value of long-term debt is estimated using a discounted cash flow analysis using current market rates of debt with similar maturities to discount the future cash flows.

Loan Commitments and Letters of Credit

The majority of the Company’s commitments have variable rates and do not expose the Company to interest rate risk. The Company’s commitments for fixed rate loans are evaluated, and it is estimated the probability of additional loans being issued under these commitments is not significant and there is not a fair value liability.
            The estimated fair values of the Company’s financial instruments at December 31 are shown in the table below (in thousands):

	2000		1999
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Financial assets:
Cash and due from banks	$256,136	$256,136	$247,051	$247,051
Federal funds sold and resale agreements	—	—	4,775	4,775
Interest-bearing deposits	1,110	1,110	4,648	4,648
Available-for-sale securities	1,714,510	1,714,510	1,937,517	1,937,517
Held-to-maturity securities	73,222	73,222	74,248	74,248
Loans	3,738,202	3,734,251	3,690,353	3,661,969
Allowance for loan losses	(52,168)	(52,168)	(48,878)	(48,878)
Net loans	3,686,034	3,682,083	3,641,475	3,613,091
Financial liabilities:
Deposits:
Noninterest-bearing	$500,834	$500,834	$616,861	$616,861
Interest-bearing:
Savings and NOW	2,349,606	2,349,606	2,276,705	2,276,705
Time accounts over $100,000	672,968	674,343	579,514	578,847
Other time accounts	1,496,483	1,496,266	1,436,783	1,428,348
Total deposits	5,019,891	5,021,049	4,909,863	4,900,761
Federal funds purchased and repurchase agreements	205,758	205,758	252,760	252,760
Other short-term borrowings	203,952	203,952	471,665	471,665
Long-term debt	123,957	117,293	75,622	73,585

            8.         Financial Instruments with Off-Balance-Sheet Risk and Concentrations of Credit Risk

In the normal course of business, the Company is party to financial instruments with off-balance-sheet risk. These transactions enable customers to meet their financing needs and enable the Company to manage its interest rate risk. These financial instruments include commitments to extend credit and letters of credit. The contract or notional amounts of these financial instruments at December 31, 2000 and 1999, were as follows (in thousands):

	2000	1999
Commitments to extend credit	$678,401	$686,689
Standby letters of credit	19,108	22,397
Commercial letters of credit	5,602	6,147

            Commitments to extend credit are legally binding and have fixed expiration dates or other termination clauses. The Company’s exposure to credit loss on commitments to extend credit, in the event of nonperformance by the counterparty, is represented by the contractual amounts of the commitments. The Company monitors its credit risk for commitments to extend credit by applying the same credit policies in making commitments as it does for loans and by obtaining collateral to secure commitments based on management’s credit assessment of the counterparty. Collateral held by the Company may include marketable securities, receivables, inventory, agricultural commodities, equipment and real estate. Because many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent the Company’s future liquidity requirements. In addition, the Company also offers various consumer credit line products to its customers that are cancelable upon notification by the Company, which are included above in commitments to extend credit.
            Standby letters of credit are conditional commitments issued by the Company to guarantee the financial performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements.  Commercial letters of credit are issued by the Company on behalf of customers to ensure payments of amounts owed or collection of amounts receivable in connection with trade transactions. The Company’s exposure to credit loss in the event of nonperformance by the counterparty is the contractual amount of the letter of credit and represents the same exposure as that involved in extending loans.
            The amount of collateral obtained to support letters of credit is based on a credit assessment of the counterparty. Collateral held may include marketable securities, receivables, inventory, agricultural commodities, equipment and real estate. Because the conditions under which the Company is required to fund letters of credit may not materialize, the liquidity requirements of letters of credit are expected to be less than the total outstanding commitments.
            The Company’s bank subsidiaries grant real estate, agricultural, commercial, consumer and other loans and commitments and letters of credit to customers throughout Arizona, California, Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota, Utah, Wisconsin and Wyoming. Although the Company has a diversified loan portfolio, the ability of a significant portion of its debtors to honor their contracts is dependent upon their local economic sector. The maximum exposure to accounting loss that could occur, if the borrowers fail to perform according to the loan agreements and the underlying collateral proved to be of no value, is the total loan portfolio balances and commitments and letters of credit.

            9. Bank Premises and Equipment

Bank premises and equipment at December 31 consisted of the following (in thousands):

	2000	1999
Land	$22,271	$22,217
Buildings	130,137	126,754
Furniture, fixtures and equipment	84,966	91,556
Leased property under capital lease obligations	10,177	10,586
	247,551	251,113
Less accumulated depreciation	125,876	125,656
	$121,675	$125,457

            10. Short-Term Borrowings

As of December 31, 2000, the Company’s subsidiary banks had $155,000,000 in Federal Home Loan Bank (“FHLB”) borrowings, which are collateralized by various investment securities and real estate loans. The interest rates on FHLB borrowings are variable rates based on short-term market conditions and the term of the advance, ranging from 6.29% to 6.66% at December 31, 2000. The Company’s subsidiaries had no additional short-term borrowings outstanding at December 31, 2000.
            The Company has a short-term line of credit bearing interest at the Federal Funds rate plus 1.25% that provides for borrowing up to $5,000,000 through April 30, 2001, with no commitment fee. As of December 31, 2000, the Company had no balance outstanding under this line of credit. The Company also has a short-term line of credit bearing interest at a variable rate of LIBOR plus .75% that provides for borrowing up to $25,000,000 through October 27, 2001, with a commitment fee of .25% of the revolving commitment amount. As of December 31, 2000, the Company had a balance of $20,000,000 outstanding under this line of credit. The Company has entered into an agreement that allows for its designated agent to underwrite up to $35,000,000 in commercial paper and has obtained lines of credit to support these borrowings. As of December 31, 2000, there was a $28,952,000 commercial paper balance outstanding with a blended rate of 7.31%. The terms of the lines of credit include certain covenants with which the Company must comply. At December 31, 2000, the Company was in compliance with all covenants pertaining to the lines of credit.

    11. Long-Term Debt

Long-term debt consisted of the following at December 31 (in thousands):

	2000	1999
Parent Company:
Subordinated notes payable, interest at 7.30%, payable semi-annually, maturing June 30, 2004, unsecured	$60,000	$60,000
Term note payable to bank, interest at 6.19% until February 1, 2008, then at .50% over One Year, Three Year, or Five Year U.S. Treasury rate, payable semi-annually, maturing February 1, 2013, secured by real property	2,773	2,987
Subsidiaries:
Federal Home Loan Bank advances, interest rates ranging from 4.72% to 8.33%, payable quarterly, with maturities ranging from April 1, 2003 to March 10, 2010	34,834	10,653
Subordinated term note payable to bank, interest of LIBOR plus 140 basis points, payable quarterly, maturing December 22, 2007, unsecured	25,000	—
Term note payable to bank, interest at 5.19% payable monthly, principal payments ranging from $45,700 to $54,700, per schedule due monthly through March 31, 2003	1,350	1,874
Other Notes Payable	—	108
	$123,957	$75,622

            The Company has a long-term line of credit bearing interest at the Federal Funds rate plus 1.25% that provides for borrowing up to $10,000,000 through January 23, 2006, with a .20% fee on the unfunded amount. As of December 31, 2000, the Company had no balance outstanding.
            The 7.30% subordinated notes payable are not redeemable, in whole or in part, by the Company. These notes, of which 60% of the balance qualifies as Tier II capital as of December 31, 2000, under the Federal Reserve Board guidelines, are direct obligations of the Company and are subordinated to all other indebtedness of the Company. The terms of the subordinated notes payable include certain covenants with which the Company must comply. At December 31, 2000, the Company was in compliance with all covenants pertaining to the subordinated notes payable.
            The subsidiary bank $25 million subordinated term note payable, qualifies as Tier II capital under the Federal Reserve Board guidelines.

            Maturities of long-term debt outstanding, at December 31, 2000, were (in thousands):

2001	$2,198
2002	2,351
2003	1,135
2004	60,492
2005	30,336
Thereafter	27,445
	$123,957

            12.       Company-Obligated Mandatorily Redeemable Preferred Securities

On December 10, 1997, the Company issued $60 million of 8.20% Cumulative Capital Securities, through CFB Capital II, a business trust subsidiary organized in December 1997. The proceeds of the offering were invested by CFB Capital II in Junior Subordinated Debentures of the Company. The Company used the net proceeds in part to capitalize its bank subsidiaries in Colorado and Arizona, which acquired branches of Banc One, in their respective states. The debentures will mature not earlier than December 15, 2002, and not later than December 15, 2027.
            On February 5, 1997, the Company issued $60 million of 8.875% Cumulative Capital Securities, through CFB Capital I, a business trust subsidiary organized in January 1997. The proceeds of the offering were invested by CFB Capital I in Junior Subordinated Debentures of the Company. The Company used a portion of the net proceeds to redeem $23 million in aggregate principal amount of 7.75% Subordinated Notes. The remainder of the proceeds of the offering were used for general corporate purposes, including in part, the purchase of KeyBank Wyoming. The debentures will mature not earlier than February 1, 2002 and not later than February 1, 2027.
            At December 31, 2000, $118 million in Capital Securities qualified as Tier I capital under capital guidelines of the Federal Reserve.

            13. Shareholders’ Equity

Common Stock

In April 2000, the Company adopted a common stock repurchase program providing for the systematic repurchase of up to 5 million shares of the Company’s common stock. In addition, during August 2000, the Company adopted an additional common stock repurchase program providing for the repurchase of up to an additional 5 million shares. Under each program, the shares were to be purchased primarily on the open market, with timing depending upon market conditions. Adoption of the two programs provided the Company with an alternative opportunity for capital utilization. In addition, the shares acquired can be used for the issuance of common stock upon exercise of stock options, under the Company’s compensation plans and for other purposes, including business combinations. As of December 31, 2000, the Company had repurchased 8 million shares of common stock under these programs, at prices ranging from $15.25 to $18.82. During 2000, the Company repurchased 8.8 million shares of common stock, including 385,000 shares under a previously approved program and 400,000 shares in conjunction with an executive officer employment agreement, in addition to the 8 million shares under the two programs approved in 2000.
            In 1995, the Company extended the common stock repurchase program established in 1992, which provided for the systematic acquisition of up to 1,200,000 shares of the Company’s common stock. In addition, it adopted a new common stock repurchase program that provided for the acquisition of an additional 1,200,000 shares of common stock. During 2000, the repurchase of 385,000 shares under the 1992 program and its 1995 extensions completed these programs, thus, as of December 31, 2000, no shares are available under the 1992 and 1995 programs.
            On April 3, 1998, the Company filed a shelf registration statement with the Securities and Exchange Commission for the purpose of issuing up to 3,500,000 shares of its common stock. The shares may be offered in acquisition transactions in exchange for shares of capital stock, partnership interests or other assets representing an interest, direct or indirect, in other companies or entities, or in exchange for assets used in or related to the business of such entities. Amendment No. 1, effective June 11, 1998, increased the shares under this registration statement to 7,000,000 shares, to reflect the effect of the shares remaining as of May 15, 1998, when the shareholders approved a charter amendment to facilitate a two-for-one split of the Company’s common stock, in the form of a 100 percent stock dividend. Subsequently, two additional acquisitions, totaling 1,843,447 shares, were completed under this registration statement. At December 31, 2000, there remain 5,156,553 shares to be issued under the registration statement.
            On December 31, 1997, the Company filed a shelf registration statement with the Securities and Exchange Commission for the purpose of issuing up to 3,000,000 shares of its common stock. The shares may be offered in acquisition transactions in exchange for shares of capital stock, partnership interests or other assets representing an interest, direct or indirect, in other companies or entities, or in exchange for assets used in or related to the business of such entities. Amendment No. 2, effective June 22, 1998 increased the shares under this registration statement to 4,438,207 shares, to reflect the effect of the shares remaining as of May 15, 1998, when the shareholders approved a charter amendment to facilitate a two-for-one split of the Company’s common stock, in the form of a 100 percent stock dividend. As of June 22, 1998, two acquisitions were completed under the registration statement, totaling 1,561,793 shares, resulting in a pre-split remaining authorized shares of 1,438,207. Subsequently, two additional acquisitions, totaling 2,016,218 shares, were completed under the December 31, 1997 registration statement. At December 31, 2000, there remain 860,196 shares to be issued under the registration statement.
            On April 1, 1999, prior to being acquired by the Company, Valley National was formed as a one-bank holding company through a reorganization of its affiliate bank, Valle de Oro Bank. In the reorganization, former Valle de Oro Bank shareholders received two shares of Valley National common stock for each share of bank stock owned. Equity records of Valley National and subsequently, the Company, have been restated to reflect the reorganization.

The former Valley National Corporation and its predecessor, Valle de Oro Bank, declared and paid a common stock dividend equal to 5% of its common stock outstanding as of May 3, 1999, April 24, 1998 and April 25, 1997.

Preferred Stock
Shareholders’ Rights Plan

The Company adopted a shareholders’ rights plan in January 1995 that attached one right to each share of common stock outstanding on January 19, 1995. Each right entitles the holder to purchase one one-hundredth of a share of a new series of junior participating preferred stock of the Company, which has an initial exercise price of $31.50. The rights become exercisable only upon the acquisition of 15 percent or more of the Company’s voting stock, or an announcement of a tender offer or exchange offer to acquire an interest of 15 percent or more by a person or group, without the prior consent of the Company. If exercised, or if the Company is acquired, the rights entitle the holders (not including the person or persons acquiring or proposing to acquire an amount of common stock equal to 15 percent or more of the Company) to purchase, at the exercise price, common stock with a market value equal to two times the exercise price. The rights, which may be redeemed by the Company in certain circumstances, expire January 5, 2005.

Capital Requirements

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
            Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets.
            As of December 31, 2000, the Company is considered well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table.

	At December 31, 2000
	Tier 1 Capital	Total Risk- Based Capital	Leverage	Total Risk-Based Assets
Regulatory Capital Requirements: (Dollars in thousands)
Minimum	4.00%	8.00%	3.00%	N/A
Well-Capitalized	6.00%	10.00%	5.00%	N/A
Bank Subsidiaries:
Community First National Bank, Fargo	9.74%	11.53%	7.17%	$4,162,469
Community First State Bank, Vermillion	10.19%	11.44%	8.02%	205,071
Community First Bankshares, Inc.	8.13%	10.73%	5.94%	$4,408,524

	At December 31, 1999
	Tier 1 Capital	Total Risk- Based Capital	Leverage	Total Risk-Based Assets
Regulatory Capital Requirements: (Dollars in thousands)
Minimum	4.00%	8.00%	3.00%	N/A
Well-Capitalized	6.00%	10.00%	5.00%	N/A
Bank Subsidiaries:
Community First National Bank, Fergus Falls (1)	9.68%	10.89%	7.79%	$698,442
Community First National Bank, Fargo	9.55%	10.64%	7.32%	441,573
Community First State Bank, Vermillion	9.67%	10.51%	7.56%	222,510
Community First National Bank, Decorah  (1)	10.01%	11.26%	7.75%	130,185
Community First National Bank, Alliance  (1)	11.99%	13.24%	9.11%	225,235
Community First National Bank, Spooner  (1)	10.08%	11.33%	7.46%	84,590
Community First National Bank, Fort Morgan  (1)	9.78%	10.82%	7.21%	1,239,790
Community First National Bank, Cheyenne  (1)	13.32%	14.36%	8.89%	680,650
Community First National Bank, Phoenix  (1)	14.89%	15.64%	7.22%	315,105
Community First National Bank, Las Cruces ((1)	11.82%	13.08%	9.33%	122,261
Community First National Bank, Salt Lake City  (1)	10.72%	11.97%	8.11%	82,629
Valle de Oro Bank, El Cajon  (1)	11.17%	12.30%	7.97%	185,098
Northland Security, Ramsey  (1)	10.94%	11.82%	9.46%	30,289
Community First Bankshares, Inc.	10.01%	12.45%	7.16%	$4,452,587

 (1)       Merged into Community First National Bank, Fargo in August 2000.

            14. Employee Benefit Plans

Stock Option Plan

During 1996, the Company approved the 1996 Stock Option Plan under which an additional 4,000,000 shares of the Company’s common stock were reserved for granting of future stock options. Similar to the 1987 Stock Option Plan, the Company may grant key employees incentive or nonqualified options to purchase common stock of the Company. Incentive stock options must have an exercise price of at least fair market value on the date of the grant, as determined by the Company. The options generally vest ratably over a three-year period and are exercisable over five- or ten-year terms.

Stock options outstanding under the plans are as follows:

	2000		1999
		Weighted		Weighted
		Average		Average
	Options	Price Per	Options	Price Per
	Outstanding	Share	Outstanding	Share
Beginning of Year	2,220,344	$15.53	2,053,978	$13.67
Options Granted	759,800	14.08	608,795	19.10
Options Exercised	(385,317)	14.41	(333,961)	7.92
Options Forfeited	(152,965)	15.68	(108,468)	21.49
End of Year	2,441,862	$16.32	2,220,344	$15.53
Exercisable at end of year	1,223,586	$16.06	1,150,217	$12.05
	2000		1999
Weighted average fair value of options granted	$5.04		$5.62

            The range of exercise prices and the weighted-average remaining contractual life of the options outstanding at December 31, 2000 were as follows:

	Options	Weighted	Weighted
	Outstanding at	Average	Average
Range of Exercise	December 31,	Exercise Price	Remaining
Prices Per Share	2000	Per Share	Contractual Life
$24.6875 to $24.8750	442,000	$24.86	2.10
$17.2500 to $21.5000	554,200	$19.51	7.82
$10.6250 to $15.8750	1,256,301	$13.58	6.02
$4.5100 to $6.1600	189,361	$5.21	4.55

            At December 31, 2000, a total of 3,942,952 shares of authorized common stock was reserved for exercise of options granted under the 1996 and 1987 Stock Option Plans.
            As described in Note 1, the Company has elected to measure compensation costs as prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees” and, accordingly, does not recognize compensation expense. SFAS No. 123 requires the Company to disclose pro forma information reflecting net income and earnings per share had the Company elected to record compensation expense based on the fair market value method described in SFAS 123. The fair value of the options was estimated at the grant date using a Black-Sholes option pricing model. Option valuation models require the input of highly subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
            The following weighted-average assumptions were used in the valuation model: risk-free interest rates of 6.67 percent and 4.60 percent in 2000 and 1999, respectively; dividend yield of  3.18 percent and 3.56 percent in 2000 and 1999, respectively; stock price volatility factors of .362 and .336 in 2000 and 1999, respectively; and expected life of options of 7.5 years.
            The pro forma disclosures include options granted in 2000 and 1999 and are not likely to be representative of the pro forma disclosures for future years. The estimated fair value of the options is amortized to expense over the options’ vesting period.

(Dollars in thousands, except per share data)

	2000	1999
Pro forma net income	$69,711	$73,417
Pro forma net income (diluted)	69,711	73,417
Pro forma earnings per share:
Basic	$1.51	$1.47
Diluted	1.50	1.45

Employee Stock Ownership Plan

The Company has an employee stock ownership plan (“ESOP”) that is a defined contribution plan covering all employees who are 21 years of age with more than one year of service. Contributions are calculated using a formula based on the Company’s return on average assets on a yearly basis. The contribution expense was $0, $1,335,000 and $1,890,000 in 2000, 1999 and 1998, respectively. In 2001, the Company approved a plan which will merge the ESOP into the Company’s Profit Sharing Plan, thus, the Company anticipates no contribution expense during 2001.

Profit-Sharing Plan

The Company offers a contributory profit-sharing and thrift plan that qualifies under section 401(k) of the Internal Revenue Code. The plan covers all employees who are 21 years of age with more than one year of service. The plan provides for an employer-matching contribution of 50% based on each participant’s eligible contribution for each plan year, subject to a limitation of the lesser of 6% of the participant’s annual compensation or the maximum amount prescribed by the Internal Revenue Code. The Company’s contribution was $1,456,000, $1,639,000 and $1,630,000 in 2000, 1999 and 1998, respectively. In 2001, the Company adopted a plan which merges the Company’s ESOP into the Profit Sharing Plan and increases the employer-matching contribution to 100% of the first 3% and 50% of the next 3% of each participants eligible contribution, subject to a limitation of the lesser of the participants contribution or the maximum amount prescribed by the Internal Revenue Code. The Company anticipates an increase in the Company contribution in future periods as a result of these changes.

            15.       Restrictions on Cash and Due From Banks

Bank subsidiaries are required to maintain average reserve balances with the Federal Reserve Bank. Balances of $42,659,000 and $37,859,000 at December 31, 2000 and 1999, respectively, exceeded required amounts.

            16. Income Taxes

The components of the provision for income taxes were (in thousands):

	2000	1999	1998
Federal:
Current	$34,443	$36,509	$26,636
Deferred	(1,741)	(742)	(6,177)
	32,702	35,767	20,459
State:
Current	3,382	3,152	2,937
Deferred	(336)	(346)	(801)
	3,046	2,806	2,136
Provision for income taxes	$35,748	$38,573	$22,595

            The reconciliation between the provision for income taxes and the amount computed by applying the statutory federal income tax rate was as follows (in thousands):

	2000	1999	1998
Tax at statutory rate (35%)	$37,584	$39,720	$25,188
State income tax, net of federal tax benefit	1,980	1,830	1,283
Tax-exempt interest	(3,726)	(3,756)	(3,171)
Amortization of goodwill	918	919	892
Other	(1,008)	(140)	(1,597)
Provision for income taxes	$35,748	$38,573	$22,595

            Deferred income tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2000 and 1999, are as follows (in thousands):

	2000	1999
Deferred tax assets:
Unrealized net losses	$6,225	$27,801
Loan loss reserves	19,209	16,332
Depreciation	329	1,665
Other reserves	718	2,385
Deferred compensation	868	1,965
Deferred loan fees	54	130
Other	2,987	2,398
	30,390	52,676
Deferred tax liabilities:
Purchase accounting	188	(233)
Other	2,716	1,486
	2,904	1,253
Net deferred tax assets	$27,486	$51,423

            The realization of the Company’s deferred tax assets is dependent upon the Company’s ability to generate taxable income in future periods and the reversal of deferred tax liabilities during the same period. The Company has evaluated the available evidence supporting the realization of its deferred tax assets and determined it is more likely than not that the assets will be realized.

            17.       Commitments and Contingent Liabilities

Total rent expense was $5,704,000, $5,507,000 and $5,030,000 in 2000, 1999 and 1998, respectively.

            Future minimum payments, by year and in the aggregate, under noncancelable leases with initial or remaining terms of one year or more, consisted of the following at December 31, 2000:

(In thousands)	Operating	Capital
2001	$3,347	$1,141
2002	3,010	394
2003	2,609	117
2004	1,238	108
2005	520	108
Thereafter	2,229	407
	$12,953	$2,275
Executory costs (taxes)		—
Net minimum lease payments		2,275
Less:
Amount representing interest		(261)
Present value of net minimum lease payments		$2,014

            In the normal course of business, there are various outstanding legal proceedings, claims, commitments and contingent liabilities. In the opinion of management, the Company and its subsidiaries will not be materially affected by the outcome of such matters.

            18.       Community First Bankshares, Inc.

            (Parent Company Only)

Condensed Statements of Financial Condition
December 31 (In thousands)	2000	1999
Assets
Cash and due from subsidiary banks	$2,994	$2,425
Interest-bearing deposits	2	16
Available-for-sale securities	10,628	2,120
Investment in subsidiaries	538,437	575,568
Furniture and equipment	6,697	6,632
Receivable from subsidiaries	12,919	21,864
Other assets	17,027	18,076
Total assets	$588,704	$626,701
Liabilities and shareholders’ equity
Short-term borrowings	$48,952	$25,607
Long-term debt	186,485	186,699
Other liabilities	7,836	7,126
Shareholders’ equity	345,431	407,269
Total liabilities and shareholders’ equity	$588,704	$626,701

Condensed Statements of Income
Years ended December 31 (In thousands)	2000	1999	1998
Income:
Dividends from subsidiaries	$58,067	$73,242	$76,728
Service fees from subsidiaries	411	5,022	5,647
Interest income	971	991	1,049
Other	1,559	1,357	1,641
Total income	61,008	80,612	85,065
Expense:
Interest expense	18,462	16,895	17,565
Other expense	22,186	20,596	29,511
Total expense	40,648	37,491	47,076
Income before income tax benefit, equity in undistributed income of subsidiaries	20,360	43,121	37,989
Income tax benefit	13,120	9,955	13,606
Income before undistributed income of subsidiaries	33,480	53,076	51,595
Equity in undistributed income (loss) of subsidiaries	38,154	21,837	(6,132)
Net income	$71,634	$74,913	$45,463

Condensed Statements of Cash Flows
Years ended December 31 (In thousands)	2000	1999	1998
Cash flows from operating activities:
Net income	$71,634	$74,913	$49,371
Adjustments to reconcile net income to net cash used in operating activities:
Equity in undistributed income (loss) of subsidiaries	(38,154)	(21,837)	6,132
Depreciation	867	992	1,076
Increase (decrease) in interest payable	2,176	(13)	—
Other, net	(417)	5,120	(12,369)
Net cash provided by operating activities	36,106	59,175	44,210
Cash flows from investing activities:
Purchases of stock in subsidiaries	—	(4,878)	(88,938)
Equity distribution from subsidiaries	110,021	—	—
Net loans to subsidiaries	8,945	(10,808)	216
Purchases of available-for-sale securities	(32,473)	(27,877)	—
Sales of available-for-sale securities, net of gains	1,630	1,573	62,941
Maturities of investment securities	23,009	25,038	—
Net increase in furniture and equipment	(932)	(580)	(1,910)
Net decrease in interest-bearing deposits	14	94	395
Net cash provided by (used in) investing activities	110,214	(17,438)	(27,296)
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings	23,345	(9,928)	24,368
Proceeds from issuance of long-term debt	—	—	29,450
Common stock dividends paid	(27,601)	(27,075)	(20,059)
Repayment of long-term debt	(214)	(212)	(38,625)
Sale of common stock held in treasury	4,444	2,569	1,553
Purchase of common stock held in treasury	(145,725)	(11,844)	(16,314)
Net proceeds from issuance of common stock	—	2,234	1,384
Net cash used in financing activities	(145,751)	(44,256)	(18,243)
Net increase (decrease) in cash and cash equivalents	569	(2,519)	(1,329)
Cash and cash equivalents at beginning of year	2,425	4,944	6,273
Cash and cash equivalents at end of year	$2,994	$2,425	$4,944

            Certain restrictions exist regarding the extent to which bank subsidiaries may transfer funds to the Company in the form of dividends, loans or advances. Federal law prevents the Company from borrowing from bank subsidiaries unless the loans are secured by specified U.S. obligations. Secured loans to the Company or any individual affiliate are generally limited in amount to 10% of the banks’ equity. Further, loans to the Company and all affiliates in total are limited to 20% of the banks’ equity. As of December 31, 2000 and 1999, $52,633,000 and $56,348,000, respectively, of individual subsidiary banks’ capital was available for credit extension to the parent company. At December 31, 2000 and 1999, bank subsidiaries had no credit extended to the Company.
            Payment of dividends to the Company by its subsidiary banks is subject to various limitations by bank regulatory agencies. Undistributed earnings of the bank subsidiaries available for distribution as dividends under these limitations were $45,687,000 and $36,801,000 as of December 31, 2000 and 1999, respectively.

            19. Related Party Transactions

Certain directors and executive officers of the Company and its subsidiaries, including their immediate families, companies in which they are principal owners and trusts in which they are involved, are loan customers of the bank subsidiaries. The aggregate dollar amounts of these loans did not exceed five percent of stockholders equity at December 31, 2000, 1999 and 1998.

            20. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share data):

Years ended December 31	2000	1999	1998(1)
Numerator:
Income from continuing operations	$71,634	$74,913	$49,371
Numerator for basic earnings per share income available to common stockholders	71,634	74,913	49,371
Denominator:
Denominator for basic earnings per share weighted-average share	46,219,120	50,061,972	50,272,551
Effect of dilutive securities:
Employee stock options	359,630	608,587	842,152
Dilutive potential common shares	359,630	608,587	842,152
Denominator for diluted earnings per share adjusted weighted-average shares and assumed conversions	46,578,750	50,670,559	51,114,703
Basic earnings per share	$1.55	$1.50	$0.98
Diluted earnings per share	$1.54	$1.48	$0.97

(1)        Inclusive of the effect of discontinued operations as follows: Net loss of $3.9 million in 1998; diluted earnings per share of $(0.08) in 1998.

            21.       Supplemental Disclosures to Consolidated Statements of Cash Flows

Years ended December 31 (In thousands)	2000	1999	1998
Noncash transfers of held-to-maturity securities to available-for-sale securities	$—	$22,974	$154,264
Unrealized (loss) gain on available-for-sale securities	56,986	(93,922)	12,379
Income taxes paid	35,149	40,378	20,258
Interest paid	287,719	241,590	244,521
Commitments to purchase investment securities	—	386	1,529

Independent Auditor’s Letter

The Board of Directors and Shareholders
Community First Bankshares, Inc.

We have audited the accompanying consolidated statements of financial condition of Community First Bankshares, Inc., and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Community First Bankshares, Inc., and subsidiaries at December 31, 2000 and 1999 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.

/s/  Ernst & Young LLP

Minneapolis, Minnesota

January 17, 2001

consolidated statement of condition—five year summary

December 31 (In thousands)	2000	1999	1998	1997	1996
Assets
Cash and due from banks	$256,136	$247,051	$262,667	$265,238	$215,712
Federal funds sold and securities purchased under agreement to resell	—	4,775	11,990	85,186	40,119
Interest-bearing deposits	1,110	4,648	11,463	16,630	11,390
Available-for-sale securities	1,714,510	1,937,517	2,004,584	1,561,515	570,999
Held-to-maturity securities	73,222	74,248	92,859	238,046	268,070
Total securities	1,787,732	2,011,765	2,097,443	1,799,561	839,069
Loans	3,738,202	3,690,353	3,537,537	3,160,501	2,514,573
Less: Allowance for loan losses	52,168	48,878	51,860	41,387	31,354
Net loans	3,686,034	3,641,475	3,485,677	3,119,114	2,483,219
Other assets	358,717	392,521	370,532	374,489	200,346
Total assets	$6,089,729	$6,302,235	$6,239,772	$5,660,218	$3,789,855
Liabilities and shareholders’ equity
Deposits:
Noninterest-bearing	$500,834	$616,861	$591,718	$740,425	$561,665
Interest-bearing	4,519,057	4,293,002	4,509,347	3,600,640	2,578,138
Total deposits	5,019,891	4,909,863	5,101,065	4,341,065	3,139,803
Short-term borrowings	409,710	724,425	435,726	275,239	248,906
Long-term debt	123,957	75,622	93,524	124,612	54,870
Other liabilities	70,740	65,056	64,801	394,263	46,486
Total liabilities	5,624,298	5,774,966	5,695,116	5,135,179	3,490,065
Company-obligated mandatorily redeemable preferred securities of CFB Capital I and II	120,000	120,000	120,000	120,000	—
Shareholders’ equity	345,431	407,269	424,656	405,039	299,790
Total liabilities and shareholders’ equity	$6,089,729	$6,302,235	$6,239,772	$5,660,218	$3,789,855

consolidated statement of income—five year summary

Years Ended December 31 (In thousands)	2000	1999	1998	1997	1996
Interest income:
Loans	$353,405	$332,974	$337,771	$271,912	$230,599
Investment securities	123,525	130,955	124,306	66,316	50,675
Other	628	1,277	5,193	4,561	3,789
Total interest income	477,558	465,206	467,270	342,789	285,063
Interest expense:
Deposits	169,281	151,138	166,873	124,964	99,838
Short-term and other borrowings	34,303	28,052	19,576	9,465	9,359
Long-term debt	6,697	6,628	8,338	6,059	4,891
Total interest expense	210,281	185,818	194,787	140,488	114,088
Net interest income	267,277	279,388	272,483	202,301	170,975
Provision for loan losses	15,781	20,184	23,136	6,604	8,545
Net interest income after provision for loan losses	251,496	259,204	249,347	195,697	162,430
Noninterest income:
Service charges on deposit accounts	39,537	37,013	31,880	22,701	17,526
Insurance commissions	10,550	8,791	7,197	5,375	5,213
Securities sales commission	6,805	5,258	4,249	2,576	1,304
Fees from fiduciary activities	5,811	5,148	4,944	3,805	3,332
Net gains on sales of securities	65	2,175	1,801	466	97
Other	12,437	14,124	13,196	15,024	11,723
Total noninterest income	75,205	72,509	63,267	49,947	39,195
Noninterest expense:
Salaries and employee benefits	110,024	106,542	119,250	83,331	70,657
Net occupancy	31,941	32,726	33,929	25,000	20,216
FDIC insurance	1,039	625	771	458	729
Professional service fees	8,289	8,819	10,251	5,702	5,291
Amortization of intangibles	10,481	10,500	10,366	5,550	3,433
Data processing	4,545	4,116	5,209	2,262	2,270
Company-obligated mandatorily redeemable preferred securities of CFB Capital I & II	10,245	10,245	10,218	5,108	—
Other	42,755	44,654	50,654	32,222	31,915
Total noninterest expense	219,319	218,227	240,648	159,633	134,511
Income from continuing operations before income taxes, and extraordinary item	107,382	113,486	71,966	86,011	67,114
Provision for income taxes	35,748	38,573	22,595	25,848	24,189
Income from continuing operations before extraordinary item	71,634	74,913	49,371	60,163	42,925
Discontinued operations	—	—	(2,232)	967	—
Disposal of discontinued operations	—	—	(1,676)	—	—
Extraordinary item	—	—	—	(265)	—
Net income	$71,634	$74,913	$45,463	$60,865	$42,925
Preferred dividend	—	—	—	—	1,610
Net income applicable to common equity	$71,634	$74,913	$45,463	$60,865	$41,315
Earnings per common and common equivalent share:
Basic	$1.55	$1.50	$0.90	$1.31	$0.98
Diluted	$1.54	$1.48	$0.89	$1.27	$0.94
Average common shares outstanding:
Basic	46,219,120	50,061,972	50,272,551	46,416,814	42,374,295
Diluted	46,578,750	50,670,559	51,114,703	47,831,402	45,724,109

quarterly results of operations (unaudited)

    The following is a summary of the quarterly results of operations for the years ended December 31, 2000 and 1999 (in thousands, except per share data):

	First Quarter	Second Quarter	Third Quarter	FourthQuarter
Year ended December 31, 2000
Interest income	$117,430	$120,192	$120,955	$118,981
Interest expense	48,935	52,871	54,842	53,633
Net interest income	68,495	67,321	66,113	65,348
Provision for loan losses	4,990	3,811	2,976	4,004
Net interest income after provision for loan losses	63,505	63,510	63,137	61,344
Net gains (losses) on sales of securities	4	144	(87)	4
Noninterest income	18,481	18,826	19,247	18,586
Noninterest expense	54,147	55,069	55,431	54,672
Income before income taxes	27,843	27,411	26,866	25,262
Provision for income taxes	9,180	9,150	9,115	8,303
Net income	$18,663	$18,261	$17,751	$16,959
Earnings per common and common equivalent shares:
Basic net income	$0.37	$0.38	$0.40	$0.40
Diluted net income	$0.37	$0.38	$0.40	$0.40
Average common and common equivalent shares:
Basic	50,312,866	48,060,322	44,399,867	42,167,936
Diluted	50,613,345	48,437,386	44,810,942	42,517,836
	First Quarter	Second Quarter	ThirdQuarter	FourthQuarter
Year ended December 31, 1999
Interest income	$114,729	$116,046	$117,075	$117,356
Interest expense	45,556	45,923	46,933	47,406
Net interest income	69,173	70,123	70,142	69,950
Provision for loan losses	4,881	6,348	4,283	4,672
Net interest income after provision for loan losses	64,292	63,775	65,859	65,278
Net gains on sales of securities	530	1,254	229	162
Noninterest income	15,950	17,647	18,063	18,674
Noninterest expense	52,987	54,021	53,791	57,428
Income before income taxes	27,785	28,655	30,360	26,686
Provision for income taxes	9,530	9,452	10,433	9,158
Net income	$18,255	$19,203	$19,927	$17,528
Earnings per common and common equivalent shares:
Basic net income	$0.36	$0.38	$0.40	$0.35
Diluted net income	$0.36	$0.38	$0.39	$0.35
Average common and common equivalent shares:
Basic	50,161,750	50,110,945	50,004,710	49,980,084
Diluted	50,770,799	50,752,010	50,643,031	50,525,998

EX-21.1

EXHIBIT 21.1

COMMUNITY FIRST BANKSHARES, INC.
SUBSIDIARIES

Subsidiary Bank:	Location	Ownership Percentage
Community First National Bank	Fargo, ND	100.00%
Nonbank Subsidiaries:
Community First Financial, Inc.	Fargo, ND	100.00%
Community First Service Corporation	Fargo, ND	100.00%
Community First Properties, Inc.	Fargo, ND	100.00%
CFB Capital I	Fargo, ND	100.00%
CFB Capital II	Fargo, ND	100.00%
Subsidiaries of Subsidiaries (100% Owned):
Community First Insurance, Inc.	Fargo, ND	(Subsidiary of Community First National Bank)
CFIN, Inc.	Las Vegas, NV	(Subsidiary of Community First National Bank)
Equity Lending, Inc.	Fargo, ND	(Subsidiary of Community First National Bank)
Mountain Parks Financial Services, Inc.	Denver, CO	(Subsidiary of Community First National Bank)
Community First Holdings, Inc.	Georgetown, British Cayman Islands	(Subsidiary of Community First National Bank)
CFIRE, Inc.	Fargo, ND	(Subsidiary of Community First Holdings, Inc.)
CFB Community Development Corporation	Fargo, ND	(Subsidiary of Community First National Bank)

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in this Annual Report (Form 10-K) of Community First Bankshares, Inc. of our report dated January 17, 2001, included in the 2000 Annual Report to Shareholders of Community First Bankshares, Inc.

We also consent to the incorporation by reference in the following Registration Statements and related Prospectuses of Community First Bankshares, Inc. of our report dated January 17, 2001, with respect to the consolidated financial statements of Community First Bankshares, Inc. incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 2000.

Form	Registration Statement No.	Purpose
S-8	33-44921	1987 Stock Option Plan
S-8	33-48160	401(k) Retirement Plan
S-8	333-52071	1996 Stock Option Plan and 401(k) Plan
S-8	333-74909	Board of Directors Deferred Compensation Plan and Supplemental Executive Retirement Plan
S-3	333-37527	Registration of $150,000,000 of Common Stock, Preferred Stock and Debt Securities
S-4	333-40071	Shelf registration of 4,438,207 shares of Common Stock
S-4	333-49367	Shelf registration of 7,000,000 shares of Common Stock

/s/ Ernst & Young LLP

Minneapolis, Minnesota
March 23, 2001