Community First Bankshares of Fargo, N.D., got out of the subprime industry last week, selling a $10 million portfolio to two New Orleans financial institutions.

This is one of the last steps in the banking company's yearlong effort to drop out of the business of lending to people with poor credit histories.

Community First's 1996 purchase of Mountain Parks Financial Corp. had brought subprime auto and mortgage portfolios onto its balance sheet. It began liquidating these portfolios last December.

The deal last week, with Crescent Bank and Trust and Southpoint Credit Services LLC, "essentially ends our involvement with the subprime lending business," said Donald R. Mengedoth, president and chief executive of Community First.

"We can now direct our full attention to the business of community banking, for which we see a brighter future," he said.

The $5.9 billion-asset company will retain a "modest portfolio" of subprime residential loans, which are being worked out or paid down, Mr. Mengedoth said.

This was not what Community First had planned when it bought Mountain Parks. Mr. Mengedoth said then that his company planned to keep and even expand Mountain Parks' subprime operations.

But after expanding the finance unit outside its accustomed markets, Community First decided more than a year ago to discontinue its subprime business.

"We have always had very high credit quality," Mr. Mengedoth said.

"Some of the subprime units' higher chargeoffs began to affect our credit quality."

The North Dakota company's timing was also off, he said. "The entire subprime business came under tremendous pressure" at the same time that Community First was trying to expand, he said.

This departure from subprime lending doesn't necessarily mean the business can't be done by small banks, Mr. Mengedoth said.

"It really depends on the geographic marketplaces they're in," he said.

"It didn't work for us because we were expanding in areas that were unfamiliar."

Mr. Mengedoth said he would advise small banks interested in subprime lending to "be careful."

"It's a different kind of business," he said.

Community First has offices in 154 communities in Arizona, Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota, Utah, Wisconsin, and Wyoming.

And it has a deal pending in California.

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