Exhibit 10.1

2003

Community First

Corporate

Annual Incentive Plan

2003 Corporate AIP

Table of Contents

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It is a new year; a new opportunity to prove our performance.  As Wayne Gretzky said, ‘You’re only as good as your last shift on the ice.”  We have completed the first 10% of 2003 and if we want to make 2003 as successful as 2002, to achieve and exceed our plan objectives, and continue to prove to the world that we have a truly special company, we must focus on our contributions to the success of the Community First team.

“Improving Lives Through Financial Solutions”

Do you believe it?

Do you support it?

How do you help improve lives?

You are part of the Community First future and that future starts today.  We are determined to be the best Community First we can be and you are a critical part of our success and the success of our strategic initiatives.  We believe that we can be a top financial performer in the industry, an employer of choice, and can improve our client’s lives.  On behalf of the Board of Directors of Community First Bankshares, Inc., I invite you to affirm your commitment to our future, our success, and our Mission/Vision/Values and participate in the 2003 Annual Incentive Plan.

One year ago, as we launched the 2002 plan following very attractive 2001 incentive awards, I took a very bold stand in suggesting the 2002 awards would be the largest to date.  That prophecy was realized.  Today, we have the opportunity to continue that direction.

I challenge you to commit yourself also to understanding the components of the plan, why they are important and how you can contribute.

Best wishes for 2003.  Let’s make it a team win that will make it a success for us all.

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Introduction

As we approach 2003 with new challenges and opportunities by offering our customers quality financial services, it is important that our compensation package rewards outstanding performance in meeting our sales, financial and credit quality goals.

Plan Objectives

The Annual Incentive Plan (AIP), has been designed to motivate superior performance and create additional shareholder value.

Administrative Guidelines

Eligibility Requirements - - All Community First designated Vice Presidents, Senior Vice Presidents, Executive Vice Presidents, COO & CEO are eligible for the Corporate AIP.

Award Potential - There is no cap on the amount of AIP you are eligible to earn.  AIP is determined as a percent of your year-end annual salary.  This award is based on achievement of all designated measures.

Incentive Payment Schedule - The AIP will be calculated and paid at the end of each plan year, and is typically paid with the first full pay period in March of the year following the incentive period.  The AIP plan year is defined as CFB’s fiscal year, which is also the calendar year.

Communication – AIP progress will be tracked and reported quarterly using actual data where available and providing estimates on all others.  You are encouraged to track the measures on an on-going basis.

New Hires - - Employees hired into eligible positions between January 1 and June 30 of the plan year are eligible for the plan and may receive a pro-rata award.  For example: someone hired in May will be paid for seven months of earned incentive.  Employees hired after June 30 may be eligible to participate in the plan and receive a pro-rata award at the discretion of President/CEO and Director of Human Resources.

Promotions - Employees promoted into AIP eligible positions would be covered under the same provisions as a new hire.

Voluntary Resignation, Involuntary Resignation or Termination prior to the end of the plan year – Potential incentive payment is forfeited.

Voluntary Demotion – Payment may be made at the discretion and approval of the President/CEO and Director of Human Resources.

Transfers – If the employee transfers out of an eligible position, an award may be pro-rated.  If an employee transfers to a different size location, the AIP calculation will be pro-rated to reflect the appropriate time worked in each location during the plan year.

Medical or Unpaid Medical Leave of Absence – Will be reviewed on a case by case basis.

Overall Performance Requirements – To emphasize that achievement of the incentive plan goals must not come at the expense of other responsibilities, no incentive awards will be made to participants whose overall performance for the year receives a rating of less than “Meets Expectations”.

Periodic Review – Periodically the effectiveness of the plan will be reviewed to assure the plan supports CFB’s strategic direction.  Each year the plan will be reviewed to determine participant eligibility and whether it will be continued for the next fiscal year.

Reserved Right - - Community First reserves the right to change any and all terms of the Corporate Annual Incentive Plan, up to and including termination of the plan, at any time.

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2003 Annual Incentive Plan (AIP)

Plan Design

For Division and CFC Presidents, the Corporate AIP represents 50% of their Incentive Plan structure.  The other 50% will be determined based upon the Balanced Scorecard approach.  The Balanced Scorecard is the annual incentive plan we use for our Bank Presidents/Branch Managers (our Sales Management Group).   For all other Corporate participants, the AIP represents 75% of their incentive and 25% is driven by the Balanced Scorecard.

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EXTERNAL AWARD CALCULATION

Compares CFB performance in 2002 on Return on Equity (ROE) and Total Shareholder Return (TSR) to SNL peer group (30 banks).

Percentile TSR

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

External award calculation:

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

1.  Banks in the same state within 40% of total assets.

2.  Banks in the same region within 40% of total assets.

3.  Banks in the same state within 80% of total assets.

4.  Banks in the same region within 80% of total assets.

5.  Any bank within 40% of total assets.

6.  Any bank within 80% of total assets.

7.  Banks closest in asset size.

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

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A Message from Mark Anderson (Balanced Scorecard)

Greetings Team!!!!!

As we complete 2002, we realize the second complete year utilizing the Balanced Scorecard.  What is the assessment after nearly two years of use?  The Balanced Scorecard continues to have an increasing impact on performance and actions, and we made tremendous progress across the board in the Scorecard components.  During the initial year of usage, we learned a great deal about the scorecard and as a result, we made some very important enhancements to it for 2002.  Our interest in a meaningful scorecard and desire to “listen to you”, led to a few additional modifications during the year in the form of a “retroactive mid-year correction”.  This is a terrific tool and measurement vehicle for all of us and the improvement in our Balanced Scorecard totals have been very impressive.

Not content to stay the same, we assembled all the feedback, questions and concerns from you.  This led to a tremendous series of discussions and debates about every aspect of the scorecard that resulted in:

•                  A reaffirmation of our support of the scorecard,

•                  Sweeping modifications for 2003, and

•                  Groundwork for additional change in 2004.

The attached material will present the 2003 Balanced Scorecard.  Among the highlights:

Removed from Scorecard

•      Investment Income to Plan

•      Loan Fees to Plan

•      Campaign Performance

•      New Customer Cross-Sell

Added to Scorecard

•                  Penetration (OPB, OBB & Debit Card)

•                  Net Revenue Growth

Why did we drop these four measures?

•                  Investment income and loan fees are also critical components of Net Revenues/FTE and Non-Interest Income/FTE.  This levels the playing field across markets and the 90-day plans will still tie to profit plan levels for each category, while we emphasize total fee income growth.

•                  Campaign performance has been removed since we have elected to change our approach to campaigns.  Our new approach will tie closely to promotion areas, 90-day plans and the new scorecard.

•                  New customer cross-sell – Frankly, we would like to have retained this measure and believe that we may have this (or a better measure) as a scorecard component in the future with more accurate data and less need to manually test the system.  Keep emphasizing new customer solutions and additional products.

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Why did we add two new measures?

•                  Growth/Penetration – Alternative channels are critical relationship builders.  With the explosive growth of OPB (Online Personal Banking), OBB (Online Business Banking) and debit card usage, we have shown the importance of these approaches to transactions by our clients.  As an interesting note, since our debit card information does not provide easily available location by location information, this is a team goal.  All Community First banks will work together, drive penetration and success, and receive the same score.

•                  Net Revenue Growth – This is a very important change that emphasizes growing our business, whether it is with new or existing clients.  Put simply, we must realize growth, and the earlier scorecard did not have an ideal reward for growth.

The list of enhancements continues.  Our scaling has been changed in a way that provides narrower bank scoring which will result in more accurate scores.  We added a bonus point feature to the credit component.  The weights of the components of the scorecard were reviewed and changed as appropriate given our 2003 focus.

Finally, in conjunction with our analysis of the scorecard, there was a very strong consensus that in the future, the next generation of the Balanced Scorecard will become more balanced.  How do we do that?  The inclusion of an employee component and a client component appear to be appropriate.  For 2003, we will work on developing a “below the line” (that is to say, we will develop a score but it will not factor into the 2003 scorecard) baseline for client and employee.  Our objective is to include those in the Balanced Scorecard in 2004 or 2005.

We are very excited and hope you share the enthusiasm.  There are great opportunities in Community First and the excellent progress over the past few years provides an excellent leverage point.  Thank you for proving the importance of the Scorecard.

All the best,

Mark Anderson, CFA

President and Chief Executive Officer

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Balanced Scorecard Performance Measures

There are six measurement factors included in the AIP plus two “below the line” measures.   Our six weighted measures are:

1.               Number of sales per FTE per week

2.               Net Controllable Revenue per FTE

3.               Controllable Non-interest Income per FTE

4.               Net Controllable Revenue Growth

5.               Credit Goal Scoring

6.               Growth/Penetration

2003 brings increased focus on two key areas of our success: our people and our customers.  For the first time, we’ll be including measures for each of those areas, providing feedback and building benchmarks for future planning.  Ultimately a determination will be made as to which of these, if any will be integrated in to future scorecard measures.

These two measures have no weighting in 2003 and will not affect scorecard awards.

In addition to these measures, the bank’s performance against profit plan is an important indicator of success and is included in the AIP.  The profit plan is based on historical performance but is designed to drive higher level performance.

If the RFC/CFC’s actual performance is less than 90% of profit plan, unless a ROE of 30% is achieved, no AIP will be awarded.  Where actual performance exceeds the profit plan, a higher AIP will be paid to reward Presidents/Managers.

Those employees who establish aggressive profit plans, with higher levels of performance over the previous year, and exceed those plans, will receive a bonus incentive.

Calculating the Balanced Scorecard AIP Award

•                  Each of the measures are based on actual performance and multiplied by the weight assigned to each.  These weighted scores are added to obtain the Balanced Scorecard Points.  Bonus points have been added to all of the measures.  This will allow rewards for performance above and beyond expectations.  Also, a special bonus is included on Sales/FTE/Week measure.  Locations that have a 20% increase over their 2002 average will move into the next higher level.  This will reward substantial growth performance.

•                  The bank’s actual Performance vs. Profit Plan is then computed.  If it is less than 90%, unless the specified ROE is achieved, no AIP will be awarded.

•                  The Balanced Scorecard Performance Points number is computed by multiplying the Total Performance Points in Part A by the Bank’s Performance vs. Profit Plan from Part B.  This provides for a higher incentive when the bank’s performance exceeds plan.

•                  The Target Incentive for each bank is based on a grid showing the bank’s Net Controllable Revenue per FTE vs. Annualized Pretax Adjusted Earnings.  This target incentive takes into account bank earnings and efficiency, rewarding banks that achieve higher earnings and greater efficiency.

•                  The Base Balanced Incentive is computed by multiplying the Target Incentive (D) by the Balance Performance Index (C).  This is the percent of base salary to be paid as the AIP.

•                  A Bonus Incentive is added to the AIP if the bank’s Balanced Scorecard Points (A) are greater than 50 and the bank’s performance vs. profit plan exceeds 100%.  The bonus incentive is based on a

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schedule reflecting the percentage increase in the 2003 Profit Plan pre-tax adjusted earnings over the 2002 actual pre-tax adjusted earnings.  This is intended to provide higher rewards for Presidents/Managers who set aggressive plans and exceed them.

•                  The Total Balance Incentive Percentage equals the Base Balanced Incentive plus the Bonus Incentive, if applicable.  This is the total percentage of the Bank President/Managers salary to be paid out as the AIP.

The following pages illustrate how the Balanced Scorecard AIP scoring and calculations are determined:

1.               Performance Measure Definitions

2.               2003 Qualifying Products

3.               Performance Measure Schedule that shows the assigned goal and scoring tiers

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2003 CFB Balanced Scorecard

Regional Financial Centers/Community Financial Centers

Performance Measurement Definitions – Presidents/Managers

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2003 CFB Balanced Scorecard

Regional Financial Centers/Community Financial Centers

2003 Qualifying Products for Sales Measurements

(Changes from 2002 highlighted in blue)

Number of Sales/FTE/Week

*In development

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2003 CFB Balanced Scorecard

Performance Measurement Schedule

(Changes made from the 2002 scorecard to the 2003 scorecard are highlighted in blue.)

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