---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 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 number 0-19368

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

Delaware(State or other jurisdiction of incorporation or organization)

46-0391436(IRS Employer Identification No.)520 Main Avenue, Fargo, ND(Address of principal executive offices)

58124(zip code)


(701) 298-5600(Registrant's telephone number, including area code)

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Indicated
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 / /

At
November 7, 2000, 42,097,823 shares of Common Stock were outstanding.

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COMMUNITY FIRST BANKSHARES, INC.

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2000

INDEX

|                               |  |                                                                                         |  | Page 
|------------------------------ |  | --------------------------------------------------------------------------------------- |  | -----
|PART I.  FINANCIAL INFORMATION
|Item 1.                        |  | Condensed Consolidated Financial Statements and Notes                                   |  | 3-9  
|Item 2.                        |  | Management's Discussion and Analysis of Financial
  Condition and Results of Operations |  | 10-15
|Item 3.                        |  | Quantitative and Qualitative Disclosure About Market Risk                               |  | 15   
|PART II.  OTHER INFORMATION   
|Item 1.                        |  | Legal Proceedings                                                                       |  | 16   
|Item 2.                        |  | Changes in Securities                                                                   |  | 16   
|Item 3.                        |  | Defaults Upon Senior Securities                                                         |  | 16   
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                     |  | 16   
|Item 5.                        |  | Other Information                                                                       |  | 16   
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                        |  | 16   
|SIGNATURES                     |  |                                                                                         |  | 17   

2

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COMMUNITY FIRST BANKSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                      |                                                              | September 30,
2000                  |           | December 31,
1999 |         
|------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------- | --------- | ----------------- | --------
|
|
|ASSETS                                                                                |                                                             
|Cash and due from banks                                                               |                                                              | $                                   | 214,754   |                   | $       
|Federal funds sold and securities purchased under agreements to
  resell              |                                                              |                                     | 2,365     |                   |         
|Interest-bearing deposits                                                             |                                                              |                                     | 1,243     |                   |         
|Available-for-sale securities                                                         |                                                              |                                     | 1,754,548 |                   |         
|Held-to-maturity securities (fair value: 9/30/00$72,357,
  12/31/99$74,248)         |                                                              |                                     | 72,357    |                   |         
|Loans                                                                                 |                                                              |                                     | 3,717,311 |                   |         
|                                                                                      | Less: Allowance for loan losses                              |                                     |           | (51,983           | )       
|                                                                                      |                                                              |                                     |           |                   |         
|Net loans                                                                             |                                                              |                                     | 3,665,328 |                   |         
|Bank premises and equipment, net                                                      |                                                              |                                     | 120,010   |                   |         
|Accrued interest receivable                                                           |                                                              |                                     | 57,084    |                   |         
|Intangible assets                                                                     |                                                              |                                     | 117,526   |                   |         
|Other assets                                                                          |                                                              |                                     | 87,720    |                   |         
|                                                                                      |                                                              |                                     |           |                   |         
|Total assets                                                                          |                                                              | $                                   | 6,092,935 |                   | $       
|                                                                                      |                                                              |                                     |           |                   |         
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                  |                                                             
|Deposits:                                                                             |                                                              |                                     |           |                   |         
|                                                                                      | Noninterest-bearing                                          |                                     | $         | 492,444           |         
|                                                                                      | Interest-bearing:                                            |                                     |           |                   |         
|                                                                                      | Savings and NOW accounts                                     |                                     |           | 2,311,854         |         
|                                                                                      | Time accounts over $100,000                                  |                                     |           | 645,014           |         
|                                                                                      | Other time accounts                                          |                                     |           | 1,581,602         |         
|                                                                                      |                                                              |                                     |           |                   |         
|Total deposits                                                                        |                                                              |                                     | 5,030,914 |                   |         
|Federal funds purchased and securities sold under agreements to
  repurchase          |                                                              |                                     | 195,444   |                   |         
|Other short-term borrowings                                                           |                                                              |                                     | 244,142   |                   |         
|Long-term debt                                                                        |                                                              |                                     | 99,422    |                   |         
|Accrued interest payable                                                              |                                                              |                                     | 40,452    |                   |         
|Other liabilities                                                                     |                                                              |                                     | 30,480    |                   |         
|                                                                                      |                                                              |                                     |           |                   |         
|Total liabilities                                                                     |                                                              |                                     | 5,640,854 |                   |         
|Company-obligated mandatorily redeemable preferred securities
  of CFB Capital I & II |                                                              |                                     | 120,000   |                   |         
|Shareholders' equity:                                                                 |                                                              |                                     |           |                   |         
|                                                                                      | Common stock, par value $.01 per share:                      |                                     |           |                   |         
|                                                                                      |                                                              | Authorized Shares80,000,000        |           |                   |         
|                                                                                      |                                                              | Issued Shares51,021,896            |           |                   | 510     
|                                                                                      | Capital surplus                                              |                                     |           | 192,071           |         
|                                                                                      | Retained earnings                                            |                                     |           | 304,906           |         
|                                                                                      | Unrealized loss on available-for-sale securities, net of tax |                                     |           | (33,060           | )       
|                                                                                      | Less cost of common stock in treasury                       |                                     |           |                   |         
|                                                                                      |                                                              | September 30, 20007,935,908 shares |           |                   |         
|                                                                                      |                                                              | December 31, 1999885,964 shares    |           |                   | (132,346
|                                                                                      |                                                              |                                     |           |                   |         
|Total shareholders' equity                                                            |                                                              |                                     | 332,081   |                   |         
|                                                                                      |                                                              |                                     |           |                   |         
|Total liabilities and shareholders' equity                                            |                                                              | $                                   | 6,092,935 |                   | $       
|                                                                                      |                                                              |                                     |           |                   |         

See
accompanying notes.

3

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## 

COMMUNITY FIRST BANKSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

|                                                    |                                                                                       | For the Three Months
Ended September 30, |                           | For the Nine Months
Ended September 30,
|--------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------- | ---------------------------------------
|
|
|Interest income:                                    |                                                                                       |                                          |                           |                                        
|                                                    | Loans                                                                                 |                                          | $                         | 90,276                                 
|                                                    | Investment securities                                                                 |                                          |                           | 30,557                                 
|                                                    | Interest-bearing deposits                                                             |                                          |                           | 43                                     
|                                                    | Federal funds sold and resale agreements                                              |                                          |                           | 79                                     
|                                                    |                                                                                       |                                          |                           |                                        
|                                                    |                                                                                       |                                          | Total interest income     |                                        
|Interest expense:                                   |                                                                                       |                                          |                           |                                        
|                                                    | Deposits                                                                              |                                          |                           | 45,072                                 
|                                                    | Short-term and other borrowings                                                       |                                          |                           | 7,965                                  
|                                                    | Long-term debt                                                                        |                                          |                           | 1,805                                  
|                                                    |                                                                                       |                                          |                           |                                        
|                                                    |                                                                                       |                                          | Total interest expense    |                                        
|                                                    |                                                                                       |                                          |                           |                                        
|Net interest income                                 |                                                                                       |                                          | 66,113                    |                                        
|Provision for loan losses                           |                                                                                       |                                          | 2,976                     |                                        
|                                                    |                                                                                       |                                          |                           |                                        
|Net interest income after provision for loan losses |                                                                                       |                                          | 63,137                    |                                        
|                                                    |                                                                                       |                                          |                           |                                        
|Noninterest income:                                 |                                                                                       |                                          |                           |                                        
|                                                    | Service charges on deposit accounts                                                   |                                          |                           | 9,898                                  
|                                                    | Insurance commissions                                                                 |                                          |                           | 3,030                                  
|                                                    | Fees from fiduciary activities                                                        |                                          |                           | 1,404                                  
|                                                    | Security sales commissions                                                            |                                          |                           | 1,402                                  
|                                                    | Net (loss) gain on sales of securities                                                |                                          |                           | (87                                    
|                                                    | Other                                                                                 |                                          |                           | 3,513                                  
|                                                    |                                                                                       |                                          |                           |                                        
|                                                    |                                                                                       |                                          | Total noninterest income  |                                        
|                                                    |                                                                                       |                                          |                           |                                        
|Noninterest expense:                                |                                                                                       |                                          |                           |                                        
|                                                    | Salaries and employee benefits                                                        |                                          |                           | 27,889                                 
|                                                    | Net occupancy                                                                         |                                          |                           | 7,909                                  
|                                                    | FDIC insurance                                                                        |                                          |                           | 248                                    
|                                                    | Legal and accounting                                                                  |                                          |                           | 886                                    
|                                                    | Other professional service                                                            |                                          |                           | 1,028                                  
|                                                    | Data processing                                                                       |                                          |                           | 1,173                                  
|                                                    | Other real estate and repossessed personal property                                   |                                          |                           | 351                                    
|                                                    | Company-obligated mandatorily redeemable preferred
  securities of CFB Capital I & II |                                          |                           | 2,561                                  
|                                                    | Amortization of intangibles                                                           |                                          |                           | 2,623                                  
|                                                    | Other                                                                                 |                                          |                           | 10,763                                 
|                                                    |                                                                                       |                                          |                           |                                        
|                                                    |                                                                                       |                                          | Total noninterest expense |                                        
|Income before income taxes                          |                                                                                       |                                          | 26,866                    |                                        
|Provision for income taxes                          |                                                                                       |                                          | 9,115                     |                                        
|                                                    |                                                                                       |                                          |                           |                                        
|Net income                                          |                                                                                       | $                                        | 17,751                    |                                        
|                                                    |                                                                                       |                                          |                           |                                        

4

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|                                                   |         | For the Three Months
Ended September 30, |      | For the Nine Months
Ended September 30,
|-------------------------------------------------- | ------- | ---------------------------------------- | ---- | ---------------------------------------
|
|
|Earnings per common and common equivalent
  share: |         |                                          |      |                                        
|Basic net income                                   |         | $                                        | 0.40 |                                        
|                                                   |         |                                          |      |                                        
|Diluted net income                                 |         | $                                        | 0.40 |                                        
|                                                   |         |                                          |      |                                        
|Average common shares outstanding:                 |         |                                          |      |                                        
|                                                   | Basic   |                                          |      | 44,399,867                             
|                                                   | Diluted |                                          |      | 44,810,942                             
|                                                   |         |                                          |      |                                        

STATEMENTS OF COMPREHENSIVE INCOME

|                                        |                                          | For the Three Months
Ended September 30,                                      |        | For the Nine Months
Ended September 30, |       
|--------------------------------------- | ---------------------------------------- | ----------------------------------------------------------------------------- | ------ | --------------------------------------- | ------
|
|
|Net income                              |                                          | $                                                                             | 17,751 |                                         | $     
|Other comprehensive income, net of tax: |                                          |                                                                               |        |                                         |       
|                                        | Unrealized gains (losses) on securities: |                                                                               |        |                                         |       
|                                        |                                          | Unrealized holding gains (losses) arising during period                       |        |                                         | 14,781
|                                        |                                          | Less: Reclassification adjustment for losses (gains)
  included in net income |        |                                         | 52    
|                                        |                                          |                                                                               |        |                                         |       
|Other comprehensive income              |                                          |                                                                               | 14,833 |                                         |       
|                                        |                                          |                                                                               |        |                                         |       
|Comprehensive income                    |                                          | $                                                                             | 32,584 |                                         | $     
|                                        |                                          |                                                                               |        |                                         |       

5

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COMMUNITY FIRST BANKSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                    |                                             | For the Nine Months Ended
September 30,                |         
|----------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------------------ | --------
|
|
|Cash flows from operating activities:                                               |                                             |                                                        |         
|Net income                                                                          |                                             | $                                                      | 54,675  
|Adjustments to reconcile net income to net cash provided by operating
  activities: |                                             |                                                        |         
|                                                                                    |                                             | Provision for loan losses                              |         
|                                                                                    |                                             | Depreciation                                           |         
|                                                                                    |                                             | Amortization of intangibles                            |         
|                                                                                    |                                             | Net amortization of premiums & discounts on securities |         
|                                                                                    |                                             | Increase in interest receivable                        |         
|                                                                                    |                                             | Increase in interest payable                           |         
|                                                                                    |                                             | Othernet                                              |         
|                                                                                    |                                             |                                                        |         
|Net cash provided by operating activities                                           |                                             |                                                        | 81,856  
|Cash flows from investing activities:                                               |                                             |                                                        |         
|                                                                                    | Net decrease in interest-bearing deposits   |                                                        |         
|                                                                                    | Purchases of available-for-sale securities  |                                                        |         
|                                                                                    | Maturities of available-for-sale securities |                                                        |         
|                                                                                    | Sales of securities, net of gains (losses)  |                                                        |         
|                                                                                    | Purchases of held-to-maturity securities    |                                                        |         
|                                                                                    | Maturities of held-to-maturity securities   |                                                        |         
|                                                                                    | Net increase in loans                       |                                                        |         
|                                                                                    | Net increase in bank premises and equipment |                                                        |         
|                                                                                    |                                             |                                                        |         
|Net cash provided by (used in) investing activities                                 |                                             |                                                        | 165,124 
|Cash flows from financing activities:                                               |                                             |                                                        |         
|Net decrease in demand deposits, NOW accounts and savings accounts                  |                                             |                                                        | (89,268 
|Net increase (decrease) in time accounts                                            |                                             |                                                        | 210,319 
|Net (decrease) increase in short-term & other borrowings                            |                                             |                                                        | (284,839
|Net increase (decrease) in long-term debt                                           |                                             |                                                        | 23,800  
|Net proceeds from issuance of common stock                                          |                                             |                                                        |        
|Purchase of common stock held in treasury                                           |                                             |                                                        | (124,311
|Sale of common stock held in treasury                                               |                                             |                                                        | 3,894   
|Common stock dividends paid                                                         |                                             |                                                        | (21,282 
|                                                                                    |                                             |                                                        |         
|Net cash (used in) provided by financing activities                                 |                                             |                                                        | (281,687
|                                                                                    |                                             |                                                        |         
|Net decrease in cash and cash equivalents                                           |                                             |                                                        | (34,707 
|Cash and cash equivalents at beginning of period                                    |                                             |                                                        | 251,826 
|                                                                                    |                                             |                                                        |         
|Cash and cash equivalents at end of period                                          |                                             | $                                                      | 217,119 
|                                                                                    |                                             |                                                        |         

6

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COMMUNITY FIRST BANKSHARES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2000

Note ABASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements, which include the accounts of Community First Bankshares, Inc. (the "Company'), its
wholly-owned data processing, credit origination, insurance agency and properties subsidiaries, and its two wholly-owned subsidiary banks, have been prepared in accordance with generally accepted
accounting principles for interim financial
information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments considered necessary for fair presentation have been included.



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 dividing net income applicable to common equity by the weighted average number of shares of common stock outstanding. The weighted
average number of shares of common stock outstanding is increased by the number of shares of common stock 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.

Note BBUSINESS DIVESTITURES

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
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
June 28, 2000, the Company announced an agreement to sell its Fairplay, Colorado branch to Commercial Bank of Leadville, Colorado. The Fairplay branch has approximately $12 million
in assets. The transaction is subject to regulatory approval and is expected to close in the fourth quarter 2000.

7

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Note CINVESTMENTS

The following is a summary of available-for-sale and held-to-maturity securities at September 30, 2000 (in thousands):

|                                    |  | Available-for-Sale Securities
|----------------------------------- |  | -----------------------------
|
|United States Treasury              |  | $                            
|United States Government agencies   |  |                              
|Mortgage-backed securities          |  |                              
|Collateralized mortgage obligations |  |                              
|State and political securities      |  |                              
|Other securities                    |  |                              
|                                    |  |                              
|                                    |  | $                            
|                                    |  |                              

|                 |  | Held-to-Maturity Securities
|---------------- |  | ---------------------------
|
|Other securities |  | $                          
|                 |  |                            
|                 |  | $                          
|                 |  |                            

Proceeds
from the sale of available-for-sale securities during the three months ended September 30, 2000 and 1999 were $103,531,000 and $19,364,000, respectively. Gross gains of
$406,000 and $229,000 were realized on sales during the third quarters of 2000 and 1999, respectively. Gross losses of $493,000 were realized on these sales during the third quarter of 2000. Gains and
losses on disposition of these securities were computed using the specific identification method.

Note DLOANS

The composition of the loan portfolio at September 30, 2000 was as follows (in thousands):

Real estate

$
1,438,033Real estate construction


448,771Commercial


880,816Consumer and other


696,593Agriculture


253,0983,717,311Less allowance for loan losses


(51,983
)Net loans

$
3,665,328


8

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Note EFINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, the Company is party to financial instruments with off-balance sheet risk to meet the financing needs of its customers and 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 September 30,
2000 were as follows (in thousands):

Commitments to extend credit

$
707,055Letters of credit


24,074


Note FSUBORDINATED NOTES

Long-term debt at September 30, 2000 included $60 million of 7.30% Subordinated Notes issued in June 1997. These notes are due June 30, 2004, with interest
payable semi-annually. At September 30, 2000, $36 million qualified as Tier 2 capital.

Note GINCOME TAXES

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):

For the Nine Months Ended
September 30, 200035% of pretax income

$
28,742State income tax, net of federal tax benefit


1,641Tax-exempt interest


(3,383
)Amortization of goodwill


689Other


(244
)Provision for income taxes

$
27,445


Note HSUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

|Nine months ended September 30 (in thousands)           |  | 2000 |        | 1999 |   
|------------------------------------------------------- |  | ---- | ------ | ---- | --
|Unrealized gain (loss) on available-for-sale securities |  | $    | 18,013 |      | ($

9

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## 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Basis of Presentation

The following is a discussion of the Company's financial condition as of September 30, 2000 and December 31, 1999, and its results of operations
for the three and nine month periods ended September 30, 2000 and 1999.

Merger and Acquisition Activity

The Company has made two 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 TransactionsDate of
Acquisition

Location and/or
Name of Main Office
of Acquired Entity

Number of
Locations at
Date of Acquisition

Total Assets at
Date of Acquisition(in millions)December 1999

Ramsey, Minnesota

1

$
35October 1999

El Cajon, California

6


252


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, River Bancorp 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.

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. The acquisition was accounted for
using the pooling of interests method. The Company's consolidated financial information has been restated to reflect this merger.

Overview

For the three months ended September 30, 2000 net income was $17.8 million, a decrease of $2.1 million, or 10.6%, from the
$19.9 million earned during the 1999 period. The Company's basic earnings per
common share for the third quarter of 2000 were $0.40, the same as the third quarter in 1999. Diluted earnings per common share for the third quarter of 2000 were $0.40, compared to $0.39 for the 1999
period.

Return
on average assets was 1.14% for the third quarter of 2000, compared to 1.26% for the 1999 period. Return on average common shareholders' equity for the 2000 period was 21.03%,
compared to 19.55% in the 1999 period.

For
the nine months ended September 30, 2000, net income was $54.7 million, a decrease of $2.7 million or 4.7% from the $57.4 million during the 1999 period.
Basic earnings per common share for the nine months ended September 30, 2000 were $1.15, the same as in 1999. Diluted earnings per share for the nine months ended September 30, 2000 were
$1.14, compared to $1.13 for the 1999 period.

Return
on average assets and return on common equity for the nine months ended September 30, 2000 were 1.17% and 19.60%, respectively, as compared to the 1999 ratios of 1.23%
and 18.38%. The decrease in return on assets is principally due to a reduction in net income, while the increase in return

10

---

on equity is principally due to a reduction in total stockholder's equity as a result of the Company's stock repurchase initiative.

Results of Operations



Net interest income for the three months ended September 30, 2000 was $66.1 million, a decrease of $4.0 million, or 5.7%, from the net
interest income of $70.1 million earned during the 1999 period. Net interest income for the nine months ended September 30, 2000 was $201.9 million, a decrease of
$7.5 million or 3.6% from the $209.4 million during the 1999 period. The decreases were principally due to the increase in interest expense associated with a rising interest rate
environment. The net interest margin of 4.85% for the period ended September 30, 2000 was down from 5.03% for the 1999 period.



The provision for loan losses for the three months ended September 30, 2000 was $3.0 million, a decrease of $1.3 million, or 30.2%, from
the $4.3 million provision during the 1999 period. This decrease is a result of improvements in the quality of the loan portfolio.



Noninterest income for the three months ended September 30, 2000 was $19.2 million, an increase of $868,000, or 4.7% from the third quarter of
1999. Deposit service charges increased $188,000, insurance commissions increased $670,000, and trust fees increased $208,000 from the prior year. The third quarter of 1999 included $229,000 in net
gains on the sale of available-for-sale securities.

Noninterest
income for the nine months ended September 30, 2000, was $56.6 million, an increase of $2.9 million, or 5.4% from the 1999 level of
$53.7 million. The increase was principally due to a $3.3 million increase in service charges on deposits, a $1.6 million increase in insurance commissions, and a
$1.7 million increase in security sales commissions during the 2000 period. Gains on the sale of available-for-sale securities decreased $2.0 million from the first nine months of 1999.



Noninterest expense for the three months ended September 30, 2000 was $55.4 million, an increase of $1.6 million, or 3.0%, from the level
of $53.8 million during the 1999 period. The increase was limited in part due to the Company's continued emphasis on cost reduction initiatives implemented during 1999. As a result, for the
three months ended September 30, 2000 salary and benefits increased $1.3 million, net occupancy decreased $366,000, other professional services decreased $286,000, and legal and
accounting expenses decreased $230,000.

Noninterest
expense for the nine months ended September 30, 1999 was $164.6 million, an increase of $3.8 million, or 2.4% from the $160.8 during the 1999 period.
The increase was principally due to a
$3.5 million increase in salary and employee benefit expense. The increase was limited in part as a result of cost reduction initiatives implemented during 1999.



The provision for income taxes for the three months ended September 30, 2000 was $9.1 million, a decrease of $1.3 million, or 12.5%, from
the 1999 level of $10.4 million, due primarily to the decrease in pre-tax income during the current period.

11

---

The provision for income taxes for the nine months ended September 30, 2000 was $27.4 million, a decrease of $2.0 million from the $29.4 million during the
1999 period. The decrease is principally due to the reduction in pre-tax income.

Financial Condition



Total loans were $3.7 billion at September 30, 2000 and at December 31, 1999.

The
following table presents the Company's balance of each major category of loans:

September 30, 2000

December 31, 1999Amount

Percent of
Total Loans

Amount

Percent of
Total LoansLoan category:Real estate

$
1,438,033

38.68
%
$
1,319,678

35.76
%Real estate construction


448,771

12.07
%

434,924

11.79
%Commercial


880,816

23.70
%

994,624

26.95
%Consumer and other


696,593

18.74
%

681,423

18.46
%Agricultural


253,098

6.81
%

259,704

7.04
%Total loans


3,717,311

100.00
%

3,690,353

100.00
%Less allowance for loan losses


(51,983
)



(48,878
)Total

$
3,665,328



$
3,641,475


Nonperforming Assets

At September 30, 2000, nonperforming assets were $27.7 million, a decrease of $4.9 million or 15.0% from the $32.6 million level at
December 31, 1999. The decrease was principally due to a decrease of $2.9 million in other real estate owned, and a decrease of $1.9 million in nonaccrual loans. At
September 30, 2000, nonperforming loans as a percent of total loans were .65%, down from the December 31, 1999 level of .71%. Other real estate owned was $3.7 million at
September 30, 2000, down from $6.5 million at December 31, 1999.

Nonperforming
assets of the Company are summarized in the following table:

September 30, 2000

December 31, 1999Loans:Nonaccrual loans

$
23,828

$
25,764Restructured loans


241


284Nonperforming loans


24,069


26,048Other real estate owned


3,656


6,525Nonperforming assets

$
27,725

$
32,573Loans 90 days or more past due but still accruing

$
2,180

$
1,949Nonperforming loans as a percentage of total loans


.65
%

.71
%Nonperforming assets as a percentage of total assets


.46
%

.52
%Nonperforming assets as a percentage of loans andOther real estate owned


.75
%

.88
%Total Loans


3,717,311


3,690,353Total Assets


6,092,935


6,302,235


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Allowance for Loan Losses

At September 30, 2000 the allowance for loan losses was $52.0 million, an increase of $3.1 million from the December 31, 1999 balance of
$48.9 million. Net charge-offs during the three months ended September 30, 2000 were $231,000 less than those incurred during the three months ended September 30, 1999.

At
September 30, 2000 the allowance for loan losses as a percentage of total loans was 1.40%, a slight increase from the September 30, 1999 level of 1.38%. During the three
months ended September 30, 2000, net charge-offs decreased to $2.5 million. These charge-offs reflect the Company's continued periodic review of the existing loan portfolios.

The
following table sets forth the Company's allowance for loan losses:

For the Nine Months Ended
September 30,2000

1999(Dollars in thousands)Balance at beginning of period

$
48,878

$
51,860Charge-offs:Real estate


1,024


1,872Real estate construction


44


2,635Commercial


4,839


3,780Consumer and other


5,435


12,023Agricultural


632


406Total charge-offs


11,974


20,716Recoveries:Real estate


98


860Real estate construction


4


Commercial


1,041


355Consumer and other


1,963


2,122Agricultural


196


373Total recoveries


3,302


3,710Net charge-offs


8,672


17,006Provision charged to operations


11,777


15,512Balance at end of period

$
51,983

$
50,366Allowance as a percentage of total loans


1.40
%

1.38
%Annualized net charge-offs to average loans outstanding


0.31
%

0.64
%Total Loans


3,717,311


3,655,580Average Loans


3,704,736


3,548,089




The investment portfolio, including available-for-sale securities and held-to-maturity securities, was $1.8 billion at September 30, 2000, a
decrease of $184.9 million, or 9.2% from December 31, 1999. At September 30, 2000, the investment portfolio represented 30.0% of total assets, compared with 31.9% at
December 31, 1999. In addition to investment securities, the Company had investments in interest-bearing deposits of $1 million at September 30, 2000, a $4 million decrease from
the $5 million at December 31, 1999.

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Total deposits were $5.0 billion at September 30, 2000, an increase of $121 million, or 2.5% from the $4.9 billion at December 31,
1999. Noninterest-bearing deposits at September 30, 2000 were $492 million, a decrease of $125 million, or 20.3%, from $617 million at December 31, 1999. The
Company's core
deposits as a percentage of total deposits were 83.1% and 86.7% as of September 30, 2000 and December 31, 1999, respectively. Interest-bearing deposits were $4.5 billion at
September 30, 2000, an increase of $245 million from the $4.3 billion at December 31, 1999.



Short-term borrowings of the Company were $244 million as of September 30, 2000, and $472 million as of December 31, 1999. The
$228 million decrease was due to the Company's planned balance sheet contraction, principally through proceeds from the sale of investment securities and the $110 million reduction in
capital at the bank level, authorized at the time of the consolidation of the Company's eleven nationally chartered banks into one national bank.

Long-term
debt of the Company was $99 million as of September 30, 2000, an increase of $23 million, or 31.4%, from the $76 million as of December 31, 1999.



Shareholders' equity decreased $75 million to $332 million at September 30, 2000, from $407 million at December 31, 1999.
The decrease was principally due to the Company's common stock repurchase activity during the second and third quarters. At September 30, 2000, the Company's Tier 1 capital, total
risk-based capital and leverage ratios were 8.34%, 10.34%, and 6.10%, respectively, compared to minimum required levels of 4%, 8% and 3%, respectively (subject to change and the discretion of
regulatory authorities to impose higher standards in individual cases). At September 30, 2000, the Company had risk-weighted assets of $4.4 billion.



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 October 23, 2000, the Company has repurchased
7,700,000 shares of common stock at prices ranging from $15.25 to $17.94.

Other Information

Through its financial service affiliates, the Company has an account base of approximately 355,000 customers, maintaining approximately 1 million
individual accounts. Included in the account base are approximately 39,000 insurance customers, 16,000 investment product customers and 4,000 trust customers. The Company's
customer base is approximately 90% retail and 10% commercial. Through aggressive customer directed initiatives, including proactive account management, segmented market strategies and analysis of
customer feedback, the Company is pursuing the objective of increasing the number of accounts per household. The short-term objective is to increase the number of accounts from the present level of
three per household, to four, with an ultimate objective of 10 accounts per household.



This document 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

14

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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 factors
affecting the company's ability to consummate further acquisitions including a challenging acquisition market; risk of loans and investments, including dependence on local economic conditions;
competition of 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.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

There have been no material changes in market risk exposures that affect the quantitative and qualitative disclosures presented as of December 31, 1999
in the Company's Form 10-K and Annual Report.

15

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## 

PART IIOTHER INFORMATION

Item 1.  Legal Proceedings:

None.

Item 2.  Changes in Securities and Use of Proceeds:

None.

Item 3.  Defaults upon Senior Securities:

None.

Item 4.  Submission of Matters to a Vote of Security Holders:

None.

Item 5.  Other Information:

None.

Item 6.  Exhibits and Reports on Form 8-K:



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## 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                       | COMMUNITY FIRST BANKSHARES, INC.                                           
|---------------------- | ---------------------------------------------------------------------------
|Date: November 8, 2000 | /s/MARK A. ANDERSONMark A. Anderson
  President and Chief Executive Officer
|Date: November 8, 2000 | /s/CRAIG A. WEISSCraig A. Weiss
  Chief Financial Officer                  

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