<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THIS PROSPECTUS SUPPLEMENT IS DELIVERED IN FINAL FORM. THIS PROSPECTUS
SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to completion, dated November 24, 1997
PROSPECTUS SUPPLEMENT Rule 424(b)(2)
DATED , 1997 SEC FILE NO. 333-37527
TO PROSPECTUS DATED NOVEMBER 21, 1997
1,055,000 SHARES
[LOGO]
COMMON STOCK
All of the 1,055,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering") are being issued and sold by
Community First Bankshares, Inc. ("CFB" or the "Company"). The Common Stock is
listed on the Nasdaq National Market ("Nasdaq") under the symbol "CFBX". On
November 20, 1997, the last reported sales price of the Common Stock on the
Nasdaq was $47.875 per share.
This Prospectus Supplement is qualified in its entirety by reference to the more
detailed information and the consolidated financial statements of the Company,
including the notes thereto, appearing or incorporated by reference herein or in
the accompanying Prospectus dated November 21, 1997. All capitalized terms used
in this Prospectus Supplement are defined as set forth elsewhere herein or in
the accompanying Prospectus. All references in this Prospectus Supplement to the
"Prospectus" are to the Company's Prospectus dated November 21, 1997
accompanying this Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discount (1) Company (2)
<S> <C> <C> <C>
Per Share.............................. $ $ $
Total (3)(4)........................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the Underwriters named herein against
certain liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting."
(2) Before deducting estimated expenses of $200,000 relating to the offering
payable by the Company. See "Use of Proceeds; Purpose of Offering."
(3) The Company has granted the Underwriters a 30-day option to purchase up to
158,250 additional shares of Common Stock solely to cover over-allotments,
if any, at the Price to Public, less Underwriting Discount shown above. If
the Underwriters exercise this option in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ , and
$ , respectively. See "Underwriting."
(4) The anticipated number of shares to be sold in the Offering has been
calculated to result in gross proceeds of approximately $50 million, based
upon an assumed offering price of $47.375 per share (the last reported bid
price of the Common Stock on the Nasdaq on November 20, 1997). At the time
the offering price per share has been established, the actual number of
shares to be sold in the Offering will be adjusted to result in gross
proceeds of approximately $50 million (excluding the over-allotment option),
with a proportionate adjustment in the shares subject to the Underwriters'
over-allotment option.
The shares of Common Stock are being offered by the Underwriters subject to
prior sale when, as and if delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the certificates for the shares of Common Stock will be made at the
offices of Piper Jaffray Inc. in Minneapolis, Minnesota on or about December ,
1997.
PIPER JAFFRAY INC. KEEFE, BRUYETTE & WOODS, INC.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF THE
COMPANY, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS
IN SUCH SECURITIES AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. IN ADDITION, IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS
(AND SELLING GROUP MEMBERS) ALSO MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET, IN ACCORDANCE
WITH RULE 103 OF REGULATION M. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-2
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL INFORMATION APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS.
UNLESS THE CONTEXT CLEARLY SUGGESTS OTHERWISE, REFERENCES TO THE COMPANY INCLUDE
THE COMPANY AND ITS SUBSIDIARIES. EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION
IN THIS PROSPECTUS SUPPLEMENT ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION. SEE "UNDERWRITING."
THE COMPANY
Community First Bankshares, Inc., a Delaware corporation (the "Company"), is
a multi-bank holding company that as of September 30, 1997 operated banks and
bank branches (the "Banks") in 103 communities in Colorado, Iowa, Minnesota,
Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming and had total assets
of approximately $4.2 billion. The Company operates community banks primarily in
small and medium-sized communities and the surrounding market areas. The Company
provides a full range of financial products and services to individuals and
businesses, including commercial and consumer banking, trust, insurance and
investment services.
The Company's strategy is to operate and continue to acquire banks and bank
branches in communities which generally have populations between 3,000 and
50,000 and are located in the Company's key target acquisition states of
Arizona, Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, North Dakota,
South Dakota, Wisconsin and Wyoming, and additionally in the adjacent states of
Idaho, Illinois, Missouri, New Mexico, Oklahoma and Utah (this seventeen state
area is collectively referred to as the "Acquisition Area"). Such communities
are believed to provide the Company with the opportunity for a stable,
relatively low-cost deposit base. The individual banks and bank branches sought
to be acquired by the Company generally have approximately $20 million to $150
million in assets.
The Company has entered into the following agreements relating to pending
acquisitions, consummation of which is subject to certain conditions in each
case (see "Recent Developments -- Pending Acquisitions"):
- On November 6, 1997, the Company entered into an agreement to acquire
Pioneer Bank of Longmont, Longmont, Colorado ("Pioneer"), in a merger
expected to be completed during the first quarter of 1998 and expected to
be accounted for as a pooling of interests. As of September 30, 1997,
Pioneer had total assets of approximately $119 million, deposits of
approximately $110 million and five banking offices in four Colorado
communities.
- On September 10, 1997, the Company entered into an agreement with three
subsidiary banks of Banc One Corporation (the "Bank One Banks") to acquire
37 banking offices located in Arizona, Colorado and Utah (the "Bank One
Branches") through an assumption of liabilities and an acquisition of
selected assets. The acquisition is expected to be completed during the
first quarter of 1998. As of October 24, 1997, the Bank One Banks reported
that the Bank One Branches had total deposits of approximately $760
million and loans of approximately $56 million.
- On August 28, 1997, the Company entered into an agreement to acquire
Republic National Bancorp, Inc., Phoenix, Arizona ("Republic"), in a
merger expected to be completed during the fourth quarter of 1997 and
expected to be accounted for as a pooling of interests. As of September
30, 1997, Republic had total assets of approximately $52 million, deposits
of approximately $46 million and one banking office in Phoenix, Arizona.
- On August 22, 1997, the Company entered into an agreement to acquire First
National Summit Bankshares, Inc., Gunnison, Colorado ("Summit"), in a
merger expected to be completed during the fourth quarter of 1997 and
expected to be accounted for as a pooling of interests. As of September
30, 1997, Summit had total assets of approximately $94 million, deposits
of approximately $86 million and banking offices in five Colorado
communities.
S-3
<PAGE>
In 1997 and 1996, the Company completed the following significant
acquisitions (see "Recent Developments--Significant Acquisitions"):
- On July 14, 1997, the Company acquired KeyBank National Association,
Cheyenne, Wyoming ("KeyBank Wyoming"), a subsidiary of KeyCorp, for a cash
purchase price of approximately $135 million. As of June 30, 1997, KeyBank
Wyoming had total assets of approximately $1.1 billion and banking offices
in 24 communities in Wyoming. The transaction was accounted for as a
business combination using the purchase method of accounting and resulted
in the recognition of goodwill by the Company of approximately $60
million.
- On December 18, 1996, the Company acquired Mountain Parks Financial Corp.
("Mountain Parks"), a bank holding company that operated a state chartered
bank with full service commercial banking facilities in 17 Colorado
communities, in a merger that was accounted for as a pooling of interests.
At September 30, 1996, Mountain Parks had total assets of approximately
$581.8 million.
The Company provides the Banks with the advantages of affiliation with a
multi-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, while granting 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 to
serve their communities.
The Company's principal executive offices are located at 520 Main Avenue,
Fargo, North Dakota 58124-0001 and its telephone number is (701) 298-5600. The
Company also maintains a web site at
http://www.cfbx.com.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the
Company (1)...................... 1,055,000 shares
Common Stock outstanding after the
offering (1)(2).................. 19,685,022 shares
Nasdaq symbol..................... CFBX
Use of proceeds by the Company.... The Company intends to use the net proceeds from the
Offering, along with the proceeds of a proposed offering
of $60 million of capital securities of CFB Capital II,
a business trust subsidiary of the Company (the "Capital
Securities Offering"), to capitalize its bank
subsidiaries that are acquiring the Bank One Branches.
The purpose of the offering is to increase the Company's
Tier 1 capital under the capital guidelines of the
Federal Reserve in connection with the acquisition of
the Bank One Branches. See "Use of Proceeds ; Purpose of
Offering."
</TABLE>
- ------------------------
(1) The anticipated number of shares to be sold in the Offering has been
calculated to result in gross proceeds of approximately $50 million, based
upon an assumed offering price of $47.375 per share (the last reported bid
price of the Common Stock on the Nasdaq on November 20, 1997). At the time
the offering price per share has been established, the actual number of
shares to be sold in the Offering will be adjusted to result in gross
proceeds of approximately $50 million (excluding the over-allotment option).
(2) Based upon the number of shares outstanding on September 30, 1997. Does not
include (i) an aggregate of approximately 1.4 million shares of Common Stock
anticipated to be issued in connection
S-4
<PAGE>
with the pending acquisitions of Pioneer, Republic and Summit, (ii) 690,257
shares of Common Stock reserved for issuance as of September 30, 1997
pursuant to options outstanding under the Company's stock option plans, and
(iii) 1,793,305 shares of Common Stock reserved for issuance as of September
30, 1997 pursuant to options which may be granted under the Company's stock
option plans.
S-5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth certain consolidated financial data
concerning the Company. The summary financial data for each of the five years
ended December 31, 1996 is derived from the audited consolidated financial
statements of the Company, and related notes thereto, incorporated herein by
reference. The summary financial data as of and for the nine months ended
September 30, 1997 and 1996 have been derived from the Company's unaudited
consolidated financial statements. The unaudited consolidated financial
statements reflect, in the opinion of management, all adjustments of a normal
recurring nature necessary for a fair presentation of financial condition and
results of operations. The results for the nine months ended September 30, 1997
are not necessarily indicative of the results to be expected for the entire
year. The summary financial data should be read in conjunction with the
consolidated financial statements of the Company, and the related notes thereto,
and management's discussion and analysis of financial condition and results of
operations incorporated by reference herein.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Interest income.......................... $ 209,706 $ 167,912 $ 229,426 $ 192,868 $ 143,237 $ 121,146 $ 115,309
Interest expense......................... 86,221 69,524 95,234 82,891 53,468 47,271 50,870
--------- --------- --------- --------- --------- --------- ---------
Net interest income...................... 123,485 98,388 134,192 109,977 89,769 73,875 64,439
Provision for loan losses................ 7,817 4,572 6,757 2,711 1,839 2,149 2,433
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for
loan losses............................ 115,668 93,816 127,435 107,266 87,930 71,726 62,006
Noninterest income....................... 30,849 19,132 27,370 22,488 18,992 18,158 14,640
Noninterest expense...................... 95,610 72,491 104,288 82,593 70,241 60,854 52,992
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes, extraordinary
item and cumulative effect of
accounting change...................... 50,907 40,457 50,517 47,161 36,681 29,030 23,654
Provision for income taxes............... 16,676 13,995 18,007 17,208 13,952 10,775 8,546
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item and
cumulative effect of accounting
change................................. 34,231 26,462 32,510 29,953 22,729 18,255 15,108
Extraordinary item, net of tax (1)....... (265) -- -- -- -- -- --
Cumulative effect of accounting change... -- -- -- -- -- 359 --
--------- --------- --------- --------- --------- --------- ---------
Net income............................... 33,966 26,462 32,510 29,953 22,729 18,614 15,108
Dividends on preferred stock (2)......... -- 1,208 1,610 1,610 1,091 -- --
--------- --------- --------- --------- --------- --------- ---------
Net income applicable to common equity... $ 33,966 $ 25,254 $ 30,900 $ 28,343 $ 21,638 $ 18,614 $ 15,108
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings per common and common equivalent
share:
Primary earnings per share before
extraordinary item and cumulative
effect of accounting change.......... $ 1.84 $ 1.53 $ 1.85 $ 1.82 $ 1.48 $ 1.29 $ 1.07
Extraordinary item, net of tax (1)..... (0.01) -- -- -- -- -- --
Cumulative effect of accounting
change............................... -- -- -- -- -- 0.03 --
--------- --------- --------- --------- --------- --------- ---------
Primary earnings per share............. $ 1.83 $ 1.53 $ 1.85 $ 1.82 $ 1.48 $ 1.32 $ 1.07
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Fully diluted earnings per share before
extraordinary item and cumulative
effect of accounting change.......... $ 1.79 $ 1.47 $ 1.79 $ 1.74 $ 1.42 $ 1.27 $ 1.07
Extraordinary item, net of tax (1)..... (0.01) -- -- -- -- -- --
Cumulative effect of accounting
change............................... -- -- -- -- -- 0.03 --
--------- --------- --------- --------- --------- --------- ---------
Fully diluted earnings per share....... $ 1.78 $ 1.47 $ 1.79 $ 1.74 $ 1.42 $ 1.30 $ 1.07
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Average common shares outstanding:
Primary................................ 18,561,630 16,532,714 16,699,021 15,543,129 14,580,309 14,098,585 14,080,526
Fully diluted.......................... 19,046,963 17,992,255 18,154,966 17,276,050 16,136,433 14,396,532 14,087,606
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RATIOS AND OTHER DATA:
Return on average assets (3)............. 1.32% 1.26% 1.13% 1.24% 1.13% 1.10% 1.04%
Return on average common stockholders'
equity (3)............................. 18.35% 17.73% 15.69% 18.19% 16.77% 16.64% 15.10%
Net interest margin (3).................. 5.46% 5.32% 5.32% 5.06% 4.95% 4.74% 4.85%
Net charge-offs to average loans (3)..... 0.31% 0.15% 0.22% 0.17% 0.00% 0.08% 0.33%
FINANCIAL CONDITION DATA (END OF PERIOD):
Assets................................... $4,248,258 $2,999,736 $3,116,398 $2,769,976 $2,130,619 $1,883,794 $1,576,275
Loans.................................... 2,617,085 1,976,592 2,064,108 1,767,193 1,330,146 1,037,666 813,550
Investment securities (4)................ 1,148,069 736,270 729,236 717,342 613,239.. 653,722 579,078
Deposits................................. 3,457,537 2,424,315 2,537,440 2,359,716 1,794,565 1,627,989 1,374,859
Long-term debt........................... 120,988 38,898 46,750 81,288 38,092 48,354 18,015
Preferred securities of subsidiary (5)... 60,000 -- -- -- -- -- --
Preferred stockholders' equity (2)....... -- 22,997 22,988 23,000 23,000 -- --
Common stockholders' equity.............. 271,427 203,782 221,583 181,004 134,701 125,071 103,911
Book value per common share.............. 14.57 12.39 12.92 11.25 9.23 8.78 7.64
Tangible book value per common share..... 9.38 9.98 10.63 9.08 8.09 7.93 7.01
FINANCIAL CONDITION RATIOS (END OF
PERIOD):
Nonperforming assets to total loans and
OREO................................... 0.80% 0.42% 0.70% 0.31% 0.34% 0.62% 1.13%
Allowance for loan losses to total
loans.................................. 1.43% 1.30% 1.27% 1.29% 1.30% 1.38% 1.38%
Allowance for loan losses to
nonperforming loans.................... 216% 416% 201% 608% 537% 296%..... 224%
REGULATORY CAPITAL RATIOS (END OF
PERIOD):
Tier 1 capital........................... 7.72% 8.48% 8.88% 8.51% 10.64% 10.16% 10.97%
Total capital............................ 11.36% 10.77% 11.10% 11.18% 13.46% 13.44% 12.47%
Leverage ratio........................... 5.50% 6.35% 6.62% 6.10% 7.12% 6.12% 6.40%
NET INCOME AND RATIOS EXCLUDING GOODWILL
AND OTHER INTANGIBLE ASSETS
AMORTIZATION AND BALANCES:
Net income applicable to common equity... $ 36,877 $ 27,216 $ 33,714 $ 30,522 $ 23,194 $ 19,948 $ 15,896
Fully diluted earnings per share......... $ 1.94 $ 1.58 $ 1.95 $ 1.86 $ 1.50 $ 1.39 $ 1.13
Return on average assets (3)............. 1.46% 1.37% 1.25% 1.34% 1.22% 1.18% 1.10%
Return on average common stockholders'
equity (3)............................. 19.92% 19.10% 17.12% 19.58% 17.98% 17.83% 15.89%
</TABLE>
- ------------------------------
(1) Represents the loss from early extinguishment of debt, less applicable
income taxes of $159,000.
(2) The Company redeemed its 7% Cumulative Convertible Preferred Stock in March
1997.
(3) Annualized based on results for the nine months ended September 30, 1997 and
1996.
(4) Includes available-for-sale securities and held-to-maturity securities.
(5) Consists of company-obligated mandatorily redeemable preferred securities of
CFB Capital I, a wholly-owned business trust, which holds solely junior
subordinated debentures of the Company.
S-7
<PAGE>
[LOGO]
COMMUNITY BANKING MARKETS
Map of the United States indicating the current states served and the
additional acquisition prospect states of the Company. The map is marked to show
the Company's affiliates, corporate office and pending acquisitions.
<TABLE>
<S> <C>
COMMUNITY FIRST MARKETS SERVED
COLORADO
Colorado Community First National Banks
24 Markets
IOWA
Community First National Banks
2 Markets
MINNESOTA
Community First National Banks
20 Markets
NEBRASKA
Community First National Banks
12 Markets
NORTH DAKOTA
Community First National Banks
9 Markets
SOUTH DAKOTA
Community First State Banks
9 Markets
WISCONSIN
Community First National Banks
3 Markets
WYOMING
Community First National Banks
24 Markets
PENDING ACQUISITIONS (MARKETS TO BE SERVED)
ARIZONA
Bank One
25 Markets
REPUBLIC NATIONAL BANK
1 Market
COLORADO BANK ONE
7 Markets
FIRST NATIONAL SUMMIT BANK
5 Markets
THE PIONEER BANK OF LONGMONT
4 Markets
UTAH BANK ONE
4 Markets
</TABLE>
S-8
<PAGE>
RECENT DEVELOPMENTS
PENDING ACQUISITIONS
PIONEER BANK, LONGMONT, COLORADO. On November 6, 1997, the Company entered
into an Agreement and Plan of Merger (the "Pioneer Merger Agreement") to acquire
Pioneer Bank of Longmont, Longmont, Colorado ("Pioneer"). As of September 30,
1997, Pioneer had five banking offices in four Colorado communities and had
total assets of approximately $119 million, deposits of approximately $110
million and shareholders' equity of approximately $8 million. On completion of
the merger, and subject to adjustments set forth in the Pioneer Merger
Agreement, the Company expects to issue approximately 700,000 shares of its
common stock to the holders of Pioneer common stock. Completion of the
transaction is subject to regulatory approvals, approval by the Pioneer
shareholders and other conditions. The transaction is anticipated to be
completed during the first quarter of 1998 and is expected to be accounted for
as a pooling of interests.
BANK ONE BRANCHES. On September 10, 1997, the Company entered into an
Office Purchase and Assumption Agreement (the "Branch Purchase Agreement") with
three subsidiary banks of Banc One Corporation (the "Bank One Banks") to acquire
37 banking offices located in Arizona (25 locations), Colorado (8 locations in 7
markets) and Utah (4 locations) (individually, a "Bank One Branch" or,
collectively, the "Bank One Branches"). As of October 24, 1997, the Bank One
Banks reported that the Bank One Branches had total deposits of approximately
$760 million and loans of approximately $56 million. The levels of deposits and
loans of the Bank One Branches can be expected to vary prior to closing. Under
the terms of the Branch Purchase Agreement, the Company will pay a purchase
price premium equal to 6% of the deposits of the Bank One Branches at closing.
This premium is estimated to be approximately $46 million, based upon the
reported level of deposits at October 24, 1997. Consummation of the acquisition
is subject to regulatory approvals and other customary conditions and is
expected to occur during the first quarter of 1998. The 25 Arizona offices and
four Utah offices will be merged into the Republic bank being acquired by the
Company. The eight Colorado offices will be merged into the Company's existing
Colorado affiliate bank. The acquisition will be accounted for as an acquisition
of assets and assumption of liabilities and will result in the recognition by
the Company of deposit based intangibles in an amount equal to the purchase
price premium, which is estimated to be approximately $46 million, as described
above.
In the Branch Purchase Agreement, the Bank One Banks made certain
representations and warranties to the Company as to matters including the
businesses, operations and financial condition of the Bank One Branches. These
representations and warranties generally terminate as of the date of closing,
except such as are contained in bills of sale or related documents. The Company
made representations and warranties to the Bank One Banks as to certain matters,
including lack of any conflicts of the Branch Purchase Agreement with certain
agreements, documents or laws relating to the Company. The Bank One Banks have
agreed (i) with specific exceptions, not to acquire or operate any building,
office or other facility or premises within a three mile radius of any Bank One
Branch office for a period of at least two years after the closing date; (ii)
with specific exceptions, not to solicit deposits or refinancing of certain
loans from customers of the Bank One Branches for a period of at least one year
after the closing date; and (iii) to indemnify the Company from losses arising
out of operations at the Bank One Branches, except that such indemnification
does not apply to any loans or assets of the Bank One Branches acquired by the
Company and is subject to certain other exceptions.
The Branch Purchase Agreement is subject to termination by each party upon a
material breach of the agreement by the other party, among other events. In
addition, the agreement may be terminated by the Bank One Banks if the closing
has not occurred on or before January 23, 1998, unless the failure to consummate
the transaction by such time is due to a breach of the agreement by the Bank One
Banks. The Company has deposited $1.5 million with the Bank One Banks, which
they may retain if the Company fails to consummate the acquisition on or before
January 23, 1998. Because the Company does not currently
S-9
<PAGE>
have an Arizona chartered bank, the regulatory approval of the purchase of the
Arizona Bank One Branches will depend on either completing the Republic
acquisition, described below, on or before January 23, 1998 or obtaining a new
banking charter in Arizona on or before that date. Also, in order to meet the
regulatory capital requirements for completion of the acquisition of the Bank
One Branches, the Company intends to increase its level of Tier 1 capital by at
least $90 million through the completion of this Offering and an anticipated
Capital Securities Offering on or before January 23, 1998. See "Use of Proceeds;
Purpose of Offering." The Company believes that it will be able to consummate
the acquisition of the Bank One Branches on or before January 23, 1998; however,
no assurance can be given that the Company will be able to meet this timetable.
If the acquisition is not completed by that date, the Company may be required to
forfeit the deposit paid to the Bank One Banks.
REPUBLIC NATIONAL BANCORP, INC. On August 28, 1997, the Company entered
into an Agreement and Plan of Merger (as amended to date, the "Republic Merger
Agreement") with Republic National Bancorp, Inc., Phoenix, Arizona ("Republic")
and Republic Acquisition Corporation. At September 30, 1997, Republic had a
single banking office located in Phoenix, Arizona and had total assets of
approximately $52 million, total deposits of approximately $46 million and total
shareholders' equity of approximately $5 million. On completion of the merger,
and subject to adjustments set forth in the Republic Merger Agreement, the
Company expects to issue approximately 368,500 shares of common stock to the
former holders of Republic common stock. The necessary regulatory approvals have
been obtained, and the Company expects to complete the merger during the fourth
quarter of 1997, subject to approval by the Republic shareholders at a special
meeting scheduled for November 24, 1997. The acquisition is expected to be
accounted for as a pooling of interests.
FIRST NATIONAL SUMMIT BANKSHARES, INC. On August 22, 1997, the Company
entered into an Agreement and Plan of Merger (as amended to date, the "Summit
Merger Agreement"), with First National Summit Bankshares, Inc., Gunnison,
Colorado ("Summit") and Summit Acquisition Corporation. At September 30, 1997,
Summit had banking offices in five locations in Colorado and had total assets of
approximately $94 million, total deposits of approximately $86 million and total
shareholders' equity of approximately $7 million. Pursuant to the Summit Merger
Agreement, holders of Summit common stock will receive shares of common stock of
the Company in exchange for their shares and holders of Summit preferred stock
will receive $100 in cash per share of preferred stock surrendered plus accrued
but unpaid dividends to the effective time of the merger. On completion of the
merger, and subject to adjustments as set forth in the Summit Merger Agreement,
the Company expects to issue approximately 316,000 shares of common stock to the
former holders of Summit common stock. The necessary regulatory approvals have
been obtained, and the Company expects to complete the merger during the fourth
quarter of 1997, subject to approval by the Summit shareholders at a special
meeting scheduled for December 1, 1997. The acquisition is expected to be
accounted for as a pooling of interests.
SIGNIFICANT ACQUISITIONS
In 1997 and 1996, the Company completed the significant acquisitions
described below.
KEYBANK WYOMING. On July 14, 1997, the Company acquired KeyBank National
Association, Cheyenne, Wyoming ("KeyBank Wyoming"), from KeyCorp, its parent
corporation, ("KeyCorp"), for a purchase price of $135 million. KeyBank Wyoming
has been renamed "Community First National Bank." As of June 30, 1997, KeyBank
Wyoming had total assets of approximately $1.1 billion and 28 banking offices
located in 24 communities in Wyoming, including Cheyenne, Laramie, Casper,
Sheridan and Jackson. The Company believes its banking network is the largest in
Wyoming, providing a full range of commercial and consumer banking services
throughout the state. The transaction was accounted for as a business
combination using the purchase method of accounting and resulted in the
recognition of goodwill by the Company of approximately $60 million.
S-10
<PAGE>
MOUNTAIN PARKS FINANCIAL CORP. On December 18, 1996, the Company acquired
Mountain Parks Financial Corp. ("Mountain Parks"), a bank holding company that
operated a state chartered bank with full service commercial banking facilities
in 17 Colorado communities. At September 30, 1996, Mountain Parks had total
assets of approximately $581.8 million and total stockholders' equity of
approximately $57.1 million. Upon completion of the merger, which was accounted
for as a pooling of interests, the Company issued approximately 5.2 million
shares of common stock to the former holders of Mountain Parks common stock. The
market value of the Company's common stock issued in the merger was
approximately $142.2 million, based on the closing price of the Company's common
stock on the Nasdaq National Market on December 18, 1996. The Mountain Parks
banking offices are located in winter ski and summer recreational areas in the
Colorado mountains and in the greater Denver/Boulder metropolitan area. Pursuant
to commitments made with the Federal Reserve to address resulting concentrations
in certain Colorado banking markets, the Company sold Mountain Parks banking
offices in two Colorado communities. The Mountain Parks banking offices' primary
lending focus is on commercial loans, real estate mortgage loans, residential
real estate construction loans and, to a lesser extent, consumer loans.
USE OF PROCEEDS; PURPOSE OF OFFERING
The net proceeds to the Company from the sale of the Common Stock offered
hereby (after deducting underwriting discount and estimated expenses of the
Offering) will be approximately $48.1 million ($55.3 million if the
Underwriters' over-allotment option is exercised in full). The anticipated
number of shares to be sold in the Offering has been calculated to result in
gross proceeds of approximately $50 million, based upon an assumed offering
price of $47.375 per share (the last reported bid price of the Common Stock on
the Nasdaq on November 20, 1997). At the time the offering price per share has
been established, the actual number of shares to be sold in the Offering will be
adjusted to result in gross proceeds of approximately $50 million (excluding the
over-allotment option). The Company also intends to complete the proposed $60
million Capital Securities Offering at approximately the same time as this
Offering. The Company intends to use the net proceeds of these two offerings to
capitalize the Company's subsidiary banks that will acquire the Bank One
Branches. See "Recent Developments -- Pending Acquisitions."
The purpose of this Offering and the Capital Securities Offering is to
provide additional Tier 1 capital to satisfy regulatory capital requirements in
connection with the proposed acquisition of the Bank One Branches. See "Recent
Developments -- Pending Acquisitions."
If the acquisition of the Bank One Branches does not occur when it is
anticipated, or at all, the Company will retain the net proceeds of this
Offering and the Capital Securities Offering for general corporate purposes,
which may include, without limitation, other acquisitions, funding investments
in, or extension of credit to, the Company's subsidiaries, repayment of maturing
obligations and redemption of securities. If the Company does not consummate the
Capital Securities Offering, the Company may be unable to consummate the Bank
One Branches acquisition.
Pending their ultimate application, the net proceeds may be invested in
short term investment grade financial instruments.
S-11
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND PAYMENT HISTORY
The Company completed an initial public offering of its Common Stock on
August 13, 1991 and its shares are publicly traded on the Nasdaq under the
symbol "CFBX." The following table sets forth the high and low closing prices of
the Company's Common Stock for the periods indicated as reported by the Nasdaq
and the dividends paid (or in the case of fourth quarter of 1997, declared) per
share for each such period.
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PAID
------- ------- -------
<S> <C> <C> <C>
FISCAL YEAR 1995
First Quarter.................................................................... $15 3/4 $13 1/4 $.12
Second Quarter................................................................... 17 14 1/8 .12
Third Quarter.................................................................... 19 1/4 16 3/4 .12
Fourth Quarter................................................................... 23 3/4 19 .12
FISCAL YEAR 1996
First Quarter.................................................................... 22 3/4 20 .14
Second Quarter................................................................... 24 1/4 22 1/4 .14
Third Quarter.................................................................... 23 7/8 22 1/2 .14
Fourth Quarter................................................................... 28 3/4 23 1/8 .16
FISCAL YEAR 1997.....................................................................
First Quarter.................................................................... 32 1/4 27 3/8 .16
Second Quarter................................................................... 38 3/8 29 .16
Third Quarter.................................................................... 49 1/8 36 3/4 .19
Fourth Quarter (through November 20, 1997)....................................... 48 3/4 45 3/4 .19
</TABLE>
On November 19, 1997 the Company had 1,167 shareholders of record. For a
recent closing sale price of the Company's Common Stock, see the cover page of
this Prospectus Supplement.
COMMON STOCK DIVIDEND POLICY
Since its initial public offering in August 1991, the Company has paid
quarterly cash dividends on the Company's Common Stock. The final determination
of the timing, amount and payment of dividends on the Common Stock is at the
discretion of the Board of Directors and will depend on conditions then
existing, including the Company's profitability, financial condition, capital
requirements and other relevant factors, including the restrictions described
below. The principal source of the Company's income (including the funds needed
to pay dividends on the Common Stock) is dividends from the Company's subsidiary
banks. The payment of dividends by the banks is subject to certain restrictions
imposed by federal and state banking laws and regulations.
The Company's ability to pay cash dividends on the Common Stock is also
subject to statutory restrictions and restrictions arising under the terms of
its outstanding and to-be-issued capital securities and debt securities. The
terms of such securities generally restrict payment of dividends on Common Stock
until required payments and distributions are made on those securities and may
impose additional restrictions in the future. Under applicable law, cash
dividends may be paid only from surplus, or, if there is no surplus, from net
profits earned in the current and/or preceding fiscal year. Applicable federal
regulation of bank holding companies may also impose restrictions on the ability
of a bank holding company to pay dividends. The Company does not believe that
Delaware corporate law, applicable banking law, or the terms of its securities
will materially inhibit its plans to pay cash dividends on the Common Stock for
the foreseeable future.
S-12
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1997 and as adjusted to give effect to the proposed issuance of
the Common Stock. The As Adjusted column also reflects the proposed Capital
Securities Offering and the pending acquisitions of Pioneer, Summit and
Republic. There can be no assurance that such offering or acquisitions will be
consummated. See "Recent Developments -- Pending Acquisitions" and "Use of
Proceeds; Purpose of Offering." The pending acquisition of the Bank One Branches
will be accounted for as an acquisition of assets and assumption of liabilities,
and therefore no adjustments are necessary to reflect this acquisition.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Capital leases........................................................................... $ 5,053 $ 5,053
Long-term debt:
Long-term bank debt.................................................................... 26,400 26,400
7.30% Subordinated Notes due 2004...................................................... 60,000 60,000
9.00% Exchangeable Subordinated Notes due 2005......................................... 11,500 11,500
Long-term Federal Home Loan Bank advances and other long-term subsidiary borrowings.... 23,088 23,088
---------- -----------
Total long-term debt................................................................. 120,988 120,988
Company-obligated mandatorily redeemable preferred securities of business trust
subsidiaries holding solely junior subordinated debentures (1)......................... 60,000 120,000
Stockholders' equity:
Preferred stock, $.01 par value, 2,000,000 shares authorized; no shares issued......... -- --
Common stock, $.01 par value, 30,000,000 shares authorized; 18,676,448 shares issued;
21,115,948 shares issued, as adjusted (2)(3)......................................... 187 212
Capital surplus........................................................................ 101,017 160,116
Retained earnings...................................................................... 171,994 181,983
Treasury stock, 46,426 shares.......................................................... (1,771) (1,771)
---------- -----------
Total stockholders' equity........................................................... 271,427 340,540
---------- -----------
Total capitalization............................................................... $ 457,468 $ 586,581
---------- -----------
---------- -----------
</TABLE>
- ------------------------
(1) The Company formed CFB Capital I, a wholly-owned business trust subsidiary
of the Company, to issue $60 million in stated value of 8 7/8% Cumulative
Capital Securities in February 1997. The sole assets of CFB Capital I
consist of approximately $61.8 million principal amount of 8 7/8% Junior
Subordinated Debentures due 2027 issued by the Company to CFB Capital I. The
Company has also formed CFB Capital II, a separate wholly-owned business
subsidiary of the Company, in connection with the proposed Capital
Securities Offering. The sole assets of CFB Capital II will consist of
approximately $61.8 million principal amount of Junior Subordinated
Debentures due 2027 proposed to be issued by the Company to CFB Capital II.
(2) Reflects the adjustment in the number of shares of Common Stock issued
assuming the issuance of (i) approximately 1,055,000 shares in this
Offering, (ii) 316,000 shares in the proposed Summit Merger, (iii) 368,500
shares in the proposed Republic Merger, and (iv) 700,000 shares in the
proposed Pioneer Merger. See "Recent Developments -- Pending Acquisitions"
and "Use of Proceeds; Purpose of Offering."
(3) Excludes (i) 690,257 shares of Common Stock reserved for issuance as of
September 30, 1997 pursuant to options outstanding under the Company's stock
option plans and (ii) 1,793,305 shares of Common Stock reserved for issuance
as of September 30, 1997 pursuant to options which may be granted under the
Company's stock option plans.
S-13
<PAGE>
UNDERWRITING
The Underwriters named below have agreed, subject to the terms of a Purchase
Agreement, to purchase from the Company the number of shares of Common Stock set
forth opposite their names below. The Underwriters are committed to purchase and
pay for all such shares if any are purchased.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Piper Jaffray Inc..........................................................
Keefe, Bruyette & Woods, Inc............................................. .
-----------------
Total....................................................................
-----------------
-----------------
</TABLE>
The Underwriters have advised the Company that they propose to offer the
shares directly to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to selected dealers at such price
less a concession not in excess of $ per share. The Underwriters may allow
and such dealers may reallow a concession not in excess of $ per share to
certain other brokers and dealers. After the public offering, the public
offering price, concession and reallowance, and other selling terms may be
changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus Supplement, under which the
Underwriters may purchase up to an additional 158,250 shares of Common Stock
from the Company at the Price to Public less the Underwriting Discount set forth
on the cover page of the Prospectus. The Company anticipates that the number of
shares of Common Stock to be sold in the Offering will be adjusted as described
under "Use of Proceeds; Purpose of Offering," and the shares subject to the
over-allotment option will be adjusted proportionately. The Underwriters may
exercise the option only to cover over-allotments, if any. To the extent such
option is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as it was obligated to purchase pursuant to the Purchase Agreement.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or to
contribute to payments that the Underwriters may be required to make in respect
thereof.
In order to facilitate the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock during and after the offering. Specifically, the Underwriters may
over-allot or otherwise create a short position in the Common Stock for their
own account by selling more shares of Common Stock than have been sold to them
by the Company. The Underwriters may elect to cover any such short position by
purchasing shares of Common Stock in the open market or by exercising the
over-allotment option granted to the Underwriters. In addition, the Underwriters
may stabilize or maintain the price of the Common Stock by bidding for or
purchasing shares of Common Stock in the open market and may impose penalty
bids, under which selling concessions allowed to syndicate members or other
broker-dealers participating in the offering are reclaimed if shares of Common
Stock previously distributed in the offering are repurchased in connection with
stabilization transactions or otherwise. The effect of these transactions may be
to stabilize or maintain the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. The imposition of a
penalty bid may also affect the price of the Common Stock to the extent that it
discourages resales thereof. No representation is made as to the magnitude or
effect of any such stabilization or other transactions. Such transactions may be
effected on the Nasdaq or otherwise and, if commenced, may be discontinued at
any time.
In connection with this Offering, certain Underwriters (and selling group
members) may also engage in passive market making transactions in the Common
Stock on the Nasdaq. Passive market making
S-14
<PAGE>
consists of displaying bids on the Nasdaq limited by the prices of independent
market makers and effecting purchases limited by such prices and in response to
order flow. Rule 103 of Regulation M promulgated by the Securities and Exchange
Commission limits the amount of net purchases that each passive market maker may
make and the displayed size of each bid. Passive market making may stabilize the
market price of the Common Stock at a level above that which might otherwise
prevail in the open market and, if commenced, may be discontinued at any time.
Piper Jaffray Inc. and Keefe, Bruyette & Woods, Inc. have from time to time
in recent years performed various investment banking services for the Company,
for which they have received customary compensation.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Lindquist & Vennum P.L.L.P., Minneapolis, Minnesota. Patrick Delaney,
a director of CFB and the owner of Common Stock and warrants to purchase Common
Stock, is a member of Lindquist & Vennum P.L.L.P. Certain legal matters will be
passed upon for the Underwriters by Faegre & Benson LLP, Minneapolis, Minnesota.
S-15
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THIS
PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT.
------------------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................................................... S-3
Recent Developments....................................................... S-9
Use of Proceeds; Purpose of Offering...................................... S-11
Price Range of Common Stock and Dividend Payment History.................. S-12
Common Stock Dividend Policy.............................................. S-12
Capitalization............................................................ S-13
Underwriting.............................................................. S-14
Legal Matters............................................................. S-15
Prospectus
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 4
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 8
Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends............................................................... 9
Description of Securities................................................. 9
Plan of Distribution...................................................... 23
Legal Matters............................................................. 24
Experts................................................................... 25
</TABLE>
1,055,000 SHARES
[LOGO]
COMMON STOCK
--------------------------------------
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED NOVEMBER 21, 1997
--------------------------------------
PIPER JAFFRAY INC.
KEEFE, BRUYETTE &
WOODS, INC.
, 1997
