First Interstate Bank
 

Press Release

First Interstate BancSystem Board Announces Death of Board Member Randall Scott

Company Release - 11/15/2019 1:11 PM ET


BILLINGS, Mont.--(BUSINESS WIRE)-- It is with great sadness that First Interstate BancSystem, Inc. (NASDAQ: FIBK) announces that board member Randall (Randy) I. Scott passed away on November 9 in Billings at the age of 65. He was a true leader for the Bank and its industry, for his community and for his faith.

Randy Scott devoted nearly 45 years to serving the bank, starting with his work as a bank teller while attending Rocky Mountain College. He eventually became manager of the Colstrip branch before serving as a Trust officer and consultant. In 1993, he was elected to the Board of First Interstate BancSystem, providing steady leadership up until his death.

Randy Scott embodied the spirit of community and philanthropy. As a director of the First Interstate BancSystem Foundation since 1999 and chairman since 2006, he helped award grants and donations to local organizations. He generously provided leadership, inspiration and resources to his community through his selfless involvement with Rocky Mountain College, St. Vincent Healthcare Foundation, Billings YMCA, Special Olympics Montana, Apostles Evangelical Lutheran Church, and many youth-oriented organizations.

Randy was a leader in Scott Family Governance and in family philanthropy. He was on both the Scott Family Council and the Board of Scott Family Services Corporation, serving as their Chair since 2014. He also served as Chair of the Dan and Jeanne Scott Family Foundation.

Randy’s dedication, spirit and work ethic inspired many and he will be greatly missed. He is survived by his wife, Lynette, and his children, Shad (Patrick), Kayla (Joshua), Shann (Jessica) and Devin (Andrea) as well as two grandchildren, Charlotte and Camden. Funeral services will be held at the Fortin Center at Rocky Mountain College on Saturday, Nov. 16, at 2 p.m.

About First Interstate BancSystem, Inc.

First Interstate BancSystem, Inc. is a financial and bank holding company incorporated in 1971 and headquartered in Billings, Montana. The Company operates banking offices, including detached drive-up facilities, in communities across Idaho, Montana, Oregon, South Dakota, Washington, and Wyoming. Through First Interstate Bank, the Company delivers a comprehensive range of banking products and services to individuals, businesses, municipalities, and other entities throughout the Company's market areas.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191115005438/en/

Marcy Mutch
Chief Financial Officer
First Interstate BancSystem, Inc.
(406) 255-5312
marcy.mutch@fib.com
www.FIBK.com

Source: First Interstate BancSystem, Inc.
Copyright 2019, © S&P Global Market Intelligence Terms of Use
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DEF 14A 1 d701337ddef14a.htm DEFINITIVE PROXY STATEMENT




UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

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¨ Preliminary Proxy Statement

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x Definitive Proxy Statement

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¨ Soliciting Material Pursuant to §240.14a-12

FIRST INTERSTATE BANCSYSTEM, INC.
(Name of Registrant as Specified in its Charter)

N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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¨ Fee paid previously with preliminary materials.

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

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FIRST INTERSTATE BANCSYSTEM, INC.

401 North 31st Street

P.O. Box 30918

Billings, Montana 59116-0918

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held on Wednesday, May 21, 2014

at 4:00 p.m., Mountain Daylight Time

NOTICE IS HEREBY GIVEN that the 2014 Annual Meeting of Shareholders of First Interstate BancSystem, Inc. will be held at First Interstate Bank, Operations Center, 1800 Sixth Avenue North, Billings, Montana, on Wednesday, May 21, 2014, at 4:00 p.m., Mountain Daylight Time, for the following purposes:



1. To elect six directors to serve three-year terms, or until their respective successors have been elected and appointed; and,



2. To ratify the appointment of McGladrey LLP as our independent registered public accounting firm for the year ending December 31, 2014.

Only shareholders of record as of the close of business on March 14, 2014 are entitled to notice of and to vote at the annual meeting and any adjournments or postponements thereof.

YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the annual meeting, we urge you to vote. Registered holders may vote:




By internet—access http://www.voteproxy.com and follow the on-screen instructions;





By telephone—call 1-800-PROXIES in the United States or 1-718-921-8500 in foreign countries from any touch-tone telephone and follow the instructions;





By mail—sign, date and mail your proxy card in the envelope provided as soon as possible; or,





In person—vote your shares in person by attending the annual meeting.


BY ORDER OF THE BOARD OF DIRECTORS

/s/ THOMAS W. SCOTT

Thomas W. Scott

Chairman of the Board of Directors

Billings, Montana

April 2, 2014



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PROXY STATEMENT

FOR

THE ANNUAL MEETING OF SHAREHOLDERS

OF

FIRST INTERSTATE BANCSYSTEM, INC.

Solicitation Information

This proxy statement, the accompanying proxy card and the annual report on Form 10-K are being made available to our shareholders on the Internet at www.astproxyportal.com/ast/40016/ on or about April 2, 2014. Our board of directors, or the Board, is soliciting your proxy to vote your shares at the annual meeting of shareholders to be held on May 21, 2014. The Board is soliciting your proxy to give all shareholders the opportunity to vote on matters that will be presented at the annual meeting. This proxy statement provides you with information on these matters to assist you in voting your shares.

We are pleased to take advantage of the Securities and Exchange Commission, or SEC, e-proxy rules that allow companies to post their proxy materials on the internet. We will be able to provide our shareholders with the information they need while lowering the cost of the delivery of materials and reducing the environmental impact of printing and mailing hard copies. As permitted by the SEC rules, we are sending a Notice of Internet Availability of Proxy Materials, or the Notice, to our shareholders on or about April 2, 2014. All shareholders will have the ability to access the proxy materials on the website referred to above and in the Notice. Shareholders will also have the ability to request a printed set of the proxy materials. Instructions on how to access the proxy materials on the internet or to request a printed copy may be found in the Notice. Instructions on how to vote your shares and how to download a proxy card for voting at the annual meeting will also be contained in the Notice.

When we refer to the “Company,” “we,” “our,” and “us” in this proxy statement, we mean First Interstate BancSystem, Inc. and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, First Interstate BancSystem, Inc. When we refer to the “Bank” in this proxy statement, we mean First Interstate Bank, our bank subsidiary.

What is a proxy?

A proxy is your legal designation of another person to vote on your behalf. By completing and returning the proxy card, you are giving the persons designated in the proxy the authority to vote your shares in the manner you indicate on the proxy card.

Why did I receive more than one proxy card?

While we have attempted to consolidate your holdings onto one proxy card, you may receive multiple proxy cards if you hold your shares in different ways (e.g., joint tenancy, trusts, custodial accounts) or in multiple accounts. In addition, if your shares are held by a broker or trustee, you will receive your proxy card or other voting information from your broker or trustee. You should vote on and sign each proxy card you receive.

Who pays the cost of this proxy solicitation?

We pay the costs of soliciting proxies. Upon request, we will reimburse brokers, banks, trusts and other nominees for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of our common stock.

Is this proxy statement the only way that proxies are being solicited?

In addition to these proxy materials, certain of our directors, officers and employees may solicit proxies by telephone, facsimile, e-mail or personal contact. They will not be specifically compensated for doing so.

Voting Information

Who is qualified to vote?

You are qualified to receive notice of and to vote at the annual meeting if you owned shares of our Class A or Class B common stock as of the close of business on our record date of March 14, 2014.



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How many shares of common stock may vote at the annual meeting?

As of the record date, there were 20,218,688 shares of Class A common stock outstanding and entitled to vote and 24,083,966 shares of Class B common stock outstanding and entitled to vote at our annual meeting. Our Class A common stock and our Class B common stock are referred to collectively as our “common stock.”

How are votes counted?

The proxies appointed by the Board will vote your shares as you instruct on your proxy. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to five votes in all matters submitted to a vote of shareholders. Holders of Class A common stock and Class B common stock vote together as a single class on all matters (including the election of directors) submitted to a vote of shareholders, unless otherwise required by law.

Is there a quorum requirement?

For the annual meeting to be valid, there must be a quorum present. A quorum requires that more than 50% of the voting power of our issued and outstanding common stock be represented at the meeting, whether in person or by proxy.

What is the difference between a “shareholder of record” and other “beneficial” holders?

These terms describe how your shares are held. If your shares are registered directly in your name, you are a “shareholder of record.” If your shares are held in the name of a broker, bank, trust or other nominee as a custodian, you are a “beneficial” holder.

How do I vote my shares?

If you are a “shareholder of record,” you can vote your proxy:




via internet at www.voteproxy.com;





via telephone by calling 1-800-PROXIES in the United States or 1-718-921-8500 in foreign countries;





by mailing in the proxy card that will be sent to you by mail or that you may download from the website referred to in the Notice; or





by designating another person to vote your shares with your own form of proxy.


Please refer to the specific instructions set forth on the proxy card. We encourage you to vote electronically or by telephone. If you are a “beneficial” holder, your broker, bank, trust or other nominee will provide you with materials and instructions for voting your shares.

Can I vote my shares in person at the annual meeting?

If you are a “shareholder of record,” you may vote your shares in person at the annual meeting. If you are a “beneficial” holder, you must obtain a proxy from your broker, bank, trust or other nominee giving you the right to vote the shares at the annual meeting.

What is the Board’s recommendation on how I should vote my shares?

Proposal One—the Board recommends that you vote your shares FOR the election of each of the six director nominees.

Proposal Two— the Board recommends you vote your shares FOR ratification of the appointment of McGladrey LLP as our independent registered public accounting firm for the year ending December 31, 2014.

How will my shares be voted if I do not specify how they should be voted?

If you sign and return your proxy card without indicating how you want your shares to be voted, the proxies appointed by the Board will vote your shares FOR the election of all six director nominees and FOR the ratification of the appointment of McGladrey LLP as our independent registered public accounting firm for the year ending December 31, 2014.

Can my broker vote my shares for the proposal regarding the election of directors?

A broker or other entity holding shares for an owner in street name may vote for routine proposals without receiving voting instructions from the owner under certain circumstances. A broker or other entity may vote on non-routine proposals only if the owner has provided voting instructions. A broker non-vote occurs when the broker or other entity is unable to vote on a proposal because the proposal is non-routine and the owner does not provide any voting instructions. The only routine matter in this proxy statement is Proposal Two to ratify the appointment of our independent registered public accounting firm. Proposal One to elect the director nominees, is a non-routine matter. Therefore, if we receive a proxy card with a broker non-vote, your proxy will be voted for Proposal Two and it will not be included in determining the number of votes cast with regard to Proposal One. It is important that you instruct your broker as to how you wish to have your shares voted on each proposal, even if you wish to vote as recommended by the Board.



4




How are votes withheld, abstentions and broker non-votes treated?

Votes withheld and abstentions are deemed as “present” at the annual meeting, are counted for quorum purposes, and except for voting on directors, will have the same effect as a vote against a matter. Broker non-votes, if any, while counted for general quorum purposes, are not deemed to be “present” with respect to any matter for which a broker does not have authority to vote.

How do I change or revoke my proxy?

After voting you may change your vote one or more times, or you may revoke your proxy, at any time before the vote is taken at the annual meeting. You may revoke your proxy by doing one of the following:




sending a written notice of revocation to our corporate secretary that is received prior to the annual meeting, stating that you revoke your proxy;





signing a later-dated proxy card and submitting it so that it is received prior to the annual meeting in accordance with the instructions included in the proxy card(s);





voting again via the internet or by telephone using the instructions described in the Notice; or





attending the annual meeting and voting your shares in person.


What vote is required?

With respect to Proposal One to elect the director nominees, a majority of votes are needed to elect a director. This means that the six nominees for director must each respectively receive affirmative votes of 50% or more of the votes cast to be elected. Neither a vote to abstain nor a broker non-vote will count as a vote cast “FOR” or “AGAINST” a director nominee. A vote to abstain or a broker non-vote will have no direct effect on the outcome of the election of directors.

With respect to Proposal Two to ratify the appointment of McGladrey LLP as our independent registered public accounting firm for the year ending December 31, 2014, ratification will be approved by the shareholders if the votes cast in favor of the matter exceed the votes cast in opposition. Abstentions will be treated as a vote cast and will have the same effect as a vote “AGAINST” this proposal.

With respect to all other business which may properly come before the annual meeting, unless a greater number of votes are required by law or by our articles of incorporation, the business will be approved by the shareholders if the votes cast in favor of the matter exceed the votes cast in opposition.

Who will count the votes?

Representatives from American Stock Transfer & Trust Company, LLC will count the votes and serve as our inspectors of election. The inspectors of election will be present at the annual meeting.

What if I have further questions?

If you have any further questions about voting your shares or attending the annual meeting, please contact our corporate secretary, Carol Stephens Donaldson, at (406) 255-5378, or e-mail: carol.donaldson@fib.com.

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5




PROPOSAL ONE

ELECTION OF DIRECTORS

In accordance with our second amended and restated bylaws, the number of our directors must be at least five and not more than eighteen. We currently have seventeen directors. The Board is divided into three groups with staggered three-year terms. James W. Haugh’s term ends May 21, 2014. James W. Haugh is not a nominee for re-election.

A total of six directors will be elected at the annual meeting to serve three-year terms, or until their respective successors have been elected and appointed. The Board has nominated for election as directors:




Steven J. Corning





Dana Filip-Crandall





Charles E. Hart, M.D., M.S.





Charles M. Heyneman





Thomas W. Scott





Michael J. Sullivan


All of the director nominees are current members of the Board, except for Dana Filip-Crandall.

Unless authority to vote is withheld, the persons named in the enclosed proxy will vote the shares represented by such proxy for the election of the nominees named above. If, at the time of the annual meeting, any nominee becomes unavailable for any reason for election as a director, the persons entitled to vote the proxy will vote for the election of such substitute(s) as the Board may recommend. At this time, the Board knows of no reason why any nominee might be unavailable to serve.

The following tables set forth certain information regarding the nominees for election at the annual meeting and the directors continuing in office after the annual meeting.





Name and Age

Director
Since

Principal Occupation


Steven J. Corning, 61
2008 President and Chief Executive Officer, Corning Companies

Dana Filip-Crandall, 49
Nominee Vice President-Service Delivery, Comcast

Charles E. Hart, M.D., M.S., 64
2008 President and Chief Executive Officer, Regional Health, Inc.

Charles M. Heyneman, 53
2011 Lead Enterprise Architect, First Interstate Bank

Thomas W. Scott, 70
1971 Chairman of the Board, First Interstate BancSystem, Inc.

Michael J. Sullivan, 74
2003 Senior Attorney, Lewis, Roca & Rothgerber, LLP

A majority of votes are needed to elect a director. This means that the six nominees for director must each respectively receive affirmative votes of 50% or more of the votes cast to be elected.

The Board recommends a vote “FOR” each of the nominees named above.



6




DIRECTORS CONTINUING IN OFFICE AFTER ANNUAL MEETING





Name and Age

Director
Since

Term
Expires

Principal Occupation


David H. Crum, 69
2001 2016 President and Chief Executive Officer, Crum Electric Supply Co., Inc.

William B. Ebzery, 64
2001 2016 Owner, Cypress Capital Management, LLC and Certified Public Accountant-retired

Ed Garding, 64
2012 2015 President and Chief Executive Officer, First Interstate BancSystem, Inc.

John M. Heyneman, Jr., 47
2010 2016 Contractor, North Main Association

David L. Jahnke, 60
2011 2015 Retired Partner, KPMG

Ross E. Leckie, 56
2009 2015 Executive Vice President, Allianz SE

James R. Scott, 64
1971 2015 Executive Vice Chairman, First Interstate BancSystem, Inc.

Jonathan R. Scott, 40
2013 2016 President, First Interstate Bank, Jackson

Randall I. Scott, 60
1993 2015 Managing General Partner, Nbar5 Limited Partnership

Teresa A. Taylor, 50
2012 2015 Owner and Chief Executive Officer, Blue Valley Advisors, LLC

Theodore H. Williams, 59
2013 2016 Developer and Manager, Thompson Creek Unit

PROPOSAL TWO

RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

McGladrey LLP was appointed by the audit committee of the Board as our independent registered public accounting firm for the year ending December 31, 2014. The audit committee recommended that the Board ratify this appointment.

The Board ratified the appointment of McGladrey LLP as our independent registered public accounting firm for the year ending December 31, 2014 and is submitting the appointment to our shareholders for ratification at the annual meeting. No representatives of McGladrey LLP are expected to be present at the annual meeting.

Proxies solicited hereby will be voted for the proposal unless a vote against the proposal or abstention is specifically indicated. A majority of the shares entitled to vote and present in person or represented by proxy are needed to ratify the appointment of the independent registered public accounting firm. This means that the appointment of McGladrey LLP as independent registered public accounting firm for the Company will be ratified if the votes cast by shareholders in favor of ratification exceed those votes cast in opposition of ratification.

The Board recommends a vote “FOR” ratifying the appointment of McGladrey LLP as

our independent registered public accounting firm.



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IMPORTANT NOTE REGARDING CERTAIN INFORMATION

CONTAINED IN THIS PROXY STATEMENT

Unless otherwise indicated, all information relating to shares of our common stock contained in this proxy statement under “Security Ownership of Certain Beneficial Owners and Management,” “Compensation Discussion and Analysis” and “Compensation of Executive Officers and Directors,” including stock options, restricted shares and per share information, gives effect to the recapitalization of our previously-existing common stock which occurred on March 5, 2010, and which, among other things, redesignated our previously-existing common stock as Class B common stock and created a new class of common stock designated as Class A common stock.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of our common stock as of March 14, 2014 for (i) each of our directors and director nominees, (ii) each of the executive officers named in the summary compensation table, (iii) all directors and executive officers as a group, and (iv) beneficial owners of more than 5% of a class of our common stock.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

Percentage of class beneficially owned as of March 14, 2014 is based on 20,218,688 shares of Class A common stock and 24,083,966 shares of Class B common stock outstanding. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of each class of common stock subject to options held by that person that were exercisable on or within 60 days of March 14, 2014. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. In computing the number of shares of Class A common stock beneficially owned by a person and the percentage of Class A common stock ownership of that person, we assumed the conversion of any Class B common stock beneficially owned by such person into Class A common stock on a share-for-share basis.

Certain of our directors and greater than 5% shareholders, who own collectively and in the aggregate more than 50% of our outstanding common stock, are members of a “group,” as that term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, or Exchange Act. This group is comprised of the following individuals and certain entities controlled by these individuals: James R. Scott, Randall I. Scott, Thomas W. Scott, John M. Heyneman, Jr. and Homer A. Scott, Jr.

Unless otherwise noted below, the address for each director, director nominee, named executive officer and beneficial owner of more than 5% of a class of our common stock listed in the table below is: c/o First Interstate BancSystem, Inc., 401 North 31st Street, Billings, Montana 59116.

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BENEFICIAL OWNERSHIP TABLE




Class A Common Stock Class B Common Stock
Beneficially Owned Beneficially Owned

Name of Beneficial Owner
Number Percent Number Percent

Directors and nominees for director




Randall I. Scott(1)
5,442,827 21.2 % 5,430,536 22.5 %

James R. Scott(2)
5,061,106 20.0 5,033,784 20.9

Thomas W. Scott(3)
2,668,943 11.7 2,640,824 11.0

John M. Heyneman, Jr. (4)
1,738,451 7.9 1,723,156 7.2

Jonathan R. Scott(5)
945,224 4.5 914,488 3.8

Ed Garding(6)
247,057 1.2 86,748 *

William B. Ebzery(7)
162,743 * 25,912 *

Charles M. Heyneman(8)
160,750 * 149,214 *

David H. Crum(9)
75,056 * 13,144 *

James W. Haugh(10)
53,343 * 10,744 *

Michael J. Sullivan(11)
45,149 * 35,408 *

Ross E. Leckie(12)
26,083 * 1,960 *

Steven J. Corning(13)
20,747 * 15,208 *

Charles E. Hart, M.D., M.S.(14)
23,492 * 4,464 *

David L. Jahnke
7,391 * — *

Teresa A. Taylor
2,933 * — *

Theodore H. Williams
1,447 * — *

Dana Filip-Crandall(15)
— * — *

Named executive officers who are not directors


Terrill R. Moore(16)
166,839 * 75,971 *

Michael G. Huston(17)
55,498 * 17,192 *

Kevin Riley
47,916 * — *

Kevin J. Guenthner(18)
33,938 * 2,354 *

Robert M. Cerkovnik(19)
28,551 * 2,543 *

All executive officers and directors as a group (22 persons)(20)
17,015,484 46.6 16,183,650 66.4

5% or greater security holders


First Interstate Bank(21)
8,376,641 30.8 6,995,343 29.0

Homer A. Scott, Jr.
2,410,957 10.7 2,363,254 9.8




* Less than 1% of the class of common stock outstanding.

(1)
Includes 3,795,676 Class B shares owned beneficially as managing general partner of Nbar5 Limited Partnership, 357,840 Class B shares owned beneficially as general partner of Nbar5 A Limited Partnership, 670,160 Class B shares owned beneficially as acting managing general partner for various Scott family partnerships, 429,180 Class B shares owned beneficially as co-trustee for Scott family members, 9,648 Class A shares owned through our profit sharing plan and 4,608 Class B shares issuable under stock options.


(2)
Includes 2,211,036 Class B shares owned beneficially as managing partner of J.S. Investments Limited Partnership, 35,240 Class B shares owned beneficially as president of the James R. and Christine M. Scott Family Foundation, 75,852 Class B shares owned beneficially as conservator for a Scott family member, 4,324 Class B shares owned beneficially as trustee for a Scott family member, 352,066 Class B shares and 9,558 Class A shares owned beneficially as a board member of Foundation for Community Vitality, a non-profit organization, 17,764 Class A shares owned through our profit sharing plan and 4,608 Class B shares issuable under stock options.


(3)
Includes 23,076 Class A shares owned through our profit sharing plan, 222,528 Class B shares owned beneficially as owner of IXL Ranch, LLC and 4,608 Class B shares issuable under stock options.




9




(4)
Includes 1,155,792 Class B shares owned beneficially as managing general partner of Towanda Investments, Limited Partnership, 429,180 Class B shares owned beneficially as co-trustee for Scott family members and 15,295 Class A shares issuable under stock options.


(5)
Includes 143,876 Class B shares owned beneficially as trustee for Scott family members, 10,316 Class B shares issuable under stock options and 5,996 Class A shares issuable under stock options.


(6)
Includes 19,056 Class A shares owned through our profit sharing plan, 25,199 Class A shares issuable under stock options and 84,336 Class B shares issuable under stock options.


(7)
Includes 23,750 Class A shares owned through a family limited partnership, 25,912 Class B shares issuable under stock options and 13,081 Class A shares issuable under stock options.


(8)
Includes 3,492 Class A shares owned through our profit sharing plan and 11,976 Class B shares owned beneficially for Scott family members and for which Mr. Heyneman has sole voting and no investment authority.


(9)
Includes 59,940 Class A shares held in trust for Crum family members, 13,144 Class B shares issuable under stock options and 1,972 Class A shares issuable under stock options.


(10)
Includes 10,744 Class B shares issuable under stock options and 1,972 Class A shares issuable under stock options. Mr. Haugh is not a nominee for re-election.


(11)
Includes 13,144 Class B shares issuable under stock options and 7,773 Class A shares issuable under stock options.


(12)
Includes 1,960 Class B shares issuable under stock options and 1,972 Class A shares issuable under stock options.


(13)
Includes 4,464 Class B shares issuable under stock options and 1,972 Class A shares issuable under stock options.


(14)
Includes 4,464 Class B shares issuable under stock options and 4,186 Class A shares issuable under stock options.


(15)
Ms. Filip-Crandall is a director nominee.


(16)
Includes 12,572 Class A shares owned through our profit sharing plan, 15,750 Class A shares issuable under stock options and 75,436 Class B shares issuable under stock options. Mr. Moore retired as Chief Financial Officer in August 2013.


(17)
Includes 4,972 Class A shares owned through our profit sharing plan, 9,060 Class A shares issuable under stock options and 15,416 Class B shares issuable under stock options.


(18)
Includes 8,760 Class A shares owned through our profit sharing plan, and 4,897 Class A shares issuable under stock options.


(19)
Includes 5,248 Class A shares owned through our profit sharing plan.


(20)
Includes 104,588 Class A shares owned through our profit sharing plan, 109,125 Class A shares issuable under stock options and 273,160 Class B shares issuable under stock options.


(21)
Includes 1,248,475 Class A shares that may be deemed to be beneficially owned as trustee of our profit sharing plan, 132,823 Class A shares that may be deemed to be beneficially owned as trustee for Scott family members and 6,995,343 Class B shares that may be deemed to be beneficially owned as trustee for Scott family members. Shares owned beneficially by First Interstate Bank, as trustee, may also be beneficially owned by participants in our profit sharing plan and certain Scott family members.


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10




Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information, as of December 31, 2013, regarding our equity compensation plans.




Number of Securities Number of Securities
to be Issued Upon Weighted Average Remaining Available
Exercise of Exercise Price of For Future Issuance
Outstanding Options, Outstanding Options, Under Equity

Plan Category
Warrants and Rights Warrants and Rights Compensation Plans(1)(2)

Equity compensation plans
approved by shareholders(3)
2,523,593 $ 17.20 647,313

Equity compensation plans not approved by shareholders
NA NA NA



(1)
Excludes number of securities to be issued upon exercise of outstanding options, warrants and rights.


(2)
On January 24, 2014, we filed a Registration Statement on Form S-8 to register an additional 1,500,000 shares of Class A common stock to be issued pursuant the 2006 Equity Compensation Plan, as amended and restated. This increase in number of shares authorized for issuance under the 2006 Equity Compensation Plan, as amended and restated, was approved by shareholders at the Annual Meeting of Shareholders held in May 2013.


(3)
Represents stock options issued pursuant to the 2001 Stock Option Plan and 2006 Equity Compensation Plan, as amended and restated. See Note 18, (Stock-based Compensation) of our audited financial statements for the fiscal year ended December 31, 2013 included in our annual report on Form 10-K.


DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning each of our current directors, director nominees and executive officers.





Name

Age

Position


Thomas W. Scott
70 Chairman of the Board

James R. Scott
64 Executive Vice Chairman of the Board

Ed Garding
64 President, Chief Executive Officer and Director

Kevin P. Riley
54 Executive Vice President and Chief Financial Officer

Robert M. Cerkovnik
55 Senior Vice President and Chief Credit Officer

Kevin J. Guenthner
50 Senior Vice President and Chief Information Officer

Michael G. Huston
46 Executive Vice President and Chief Banking Officer

Steven J. Corning
61 Director

Dana Filip-Crandall
49 Director Nominee

David H. Crum
69 Director

William B. Ebzery
64 Director

Charles E. Hart, M.D., M.S.
64 Director

James W. Haugh(1)
77 Director

Charles M. Heyneman
53 Director

John M. Heyneman, Jr.
47 Director

David L. Jahnke
60 Director

Ross E. Leckie
56 Director

Jonathan R. Scott
40 Director

Randall I. Scott
60 Director

Michael J. Sullivan
74 Director

Teresa A. Taylor
50 Director

Theodore H. Williams
59 Director



(1)
Term expires May 21, 2014. Not a nominee for re-election.




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Business Biographies

Thomas W. Scott has been our chairman since January 2004 and a director since 1971. He began his employment with the Company in 1969. Mr. Scott served as our chief executive officer from 1978 through 2003. In addition, Mr. Scott has been a director of First Interstate Bank since January 2002, serving as chairman of the Board from 2004 to 2011. Mr. Scott has also served as a director of First Interstate BancSystem Foundation since 1990 and was a member of the Federal Reserve Bank Board of Minneapolis from 2007 to 2009. Mr. Scott also served as Chairman of Leadership Montana. Mr. Scott was appointed by Wyoming’s governor to serve on the board of the Wyoming Business Council. Mr. Scott received his Bachelor of Arts degree in Economics from the University of Wyoming. Mr. Scott is the brother of James R. Scott, the father of Jonathan R. Scott and the uncle of Charles M. Heyneman, John M. Heyneman, Jr., and Randall I. Scott.

The qualifications of Mr. Scott identified by the Board include the following: Mr. Scott has significant executive management and business experience as a result of his years of service in top executive management positions with the Company and other family-related businesses, as well as his service on other corporate boards. Mr. Scott has extensive knowledge of the economies of our region and communities the Company serves and over the years has exercised community leadership positions. He also has extensive knowledge of the Company’s unique challenges, regulatory environment and history.

James R. Scott has been a director of ours since 1971, the executive vice chairman of the Board since March 2012 and the vice chairman of the Board from 1990 to 2012. Mr. Scott has served as a director of First Interstate Bank since 2007, serving as chairman since 2011. Mr. Scott is chairman of the Padlock Ranch Corporation, managing partner of J.S. Investments, vice president of the Foundation for Community Vitality, board member of First Interstate Foundation and lifetime trustee at Fountain Valley School of Colorado. Mr. Scott also served as chairman of the Homer A. and Mildred S. Scott Foundation from 1990 to 2006, chairman of First Interstate Foundation from 1990 to 2006, and chairman of Scott Family Services, Inc. from 2003 to 2012. Mr. Scott is the brother of Thomas W. Scott, and the uncle of Charles M. Heyneman, John M. Heyneman, Jr., Jonathan R. Scott and Randall I. Scott.

The qualifications of Mr. Scott identified by the Board include the following: Mr. Scott has significant executive management, business and corporate governance experience as a result of his years of service to the Company and other family-related businesses. Mr. Scott has extensive knowledge of key issues, dynamics and trends affecting the Company, its business and the banking industry in general. He also has extensive knowledge of the Company’s unique challenges, regulatory environment and history. Mr. Scott serves as chairman of the executive committee.

Ed Garding has been our chief executive officer since April 2012, our chief operating officer from August 2010 to April 2012 and served as an executive vice president of ours since January 2004. Mr. Garding has served as a director of ours since 2012. Mr. Garding served as our chief credit officer from 1999 to August 2010, senior vice president from 1996 through 2003, president of First Interstate Bank from 1998 to 2001 and president of the Sheridan branch of First Interstate Bank from 1988 to 1996. Prior to joining our management team in 1996, Mr. Garding served in various positions within our company since 1971. He received his Bachelor of Science degree in Business from Montana State University-Billings. Mr. Garding serves on the board of the Billings YMCA and is a member of the Montana State University-Billings School of Business. Mr. Garding served as chairman of the Montana Bankers Association, served as chairman of the Wyoming Bankers Association and is past chairman and board member of the Pacific Coast Banking School.

The qualifications of Mr. Garding identified by the Board include the following: Mr. Garding has extensive knowledge of key issues, dynamics and trends affecting the Company, its business and the banking industry in general. Mr. Garding also provides strategic insight and direction to the Company.

Kevin P. Riley has been our executive vice president and chief financial officer since August 2013. Mr. Riley has also served as a director of First Interstate Bank since August 2013. Prior to working with us, Mr. Riley served as executive vice president and chief financial officer of Berkshire Hills Bancorp in Massachusetts since 2007, and served in various executive-level positions with KeyCorp since 1986. Mr. Riley earned his Bachelor of Science degree in Business Administration from Northeastern University in Boston, Massachusetts. Mr. Riley is a certified public accountant.

Robert M. Cerkovnik has been a senior vice president of ours since February 2008 and our chief credit officer since September 2010. Prior to that time, Mr. Cerkovnik served as senior credit officer and credit department manager since February 2003 and served in various credit-related positions since September 1996. Prior to working for us, Mr. Cerkovnik served in credit and lending positions with Wells Fargo and First Interstate Bank of California from 1984 to 1996. Mr. Cerkovnik received his Bachelor of Science degree in Business from the University of Montana. Mr. Cerkovnik is a graduate of Pacific Coast Banking School. He also serves as a vice chair of the Billings Catholic Schools Foundation Board.



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Kevin J. Guenthner has been a senior vice president and chief information officer of ours since March of 2003. In addition, Mr. Guenthner has served on the board of First Interstate Bank since March 2012. Prior to his current position, Mr. Guenthner served as our vice president and general auditor from September 1996 to March 2003, and in various internal audit positions from January 1991 to September 1996. Prior to employment with us, Mr. Guenthner was employed as a bank examiner for the State of Montana from January 1989 to January 1991. Mr. Guenthner has a Bachelor of Science degree in Business with an Accounting option from Montana State University and is an honors graduate of the Pacific Coast Banking School.

Michael G. Huston has been our executive vice president and chief banking officer since March 2012. Prior to his current position, Mr. Huston served as a regional president of First Interstate Bank from 2010 to 2012, market president from 2008 to 2010, and in various lending positions within our Company since 1990. Mr. Huston served as president of the United Way of Natrona County board, president of the Casper Board of Public Utilities and vice chairman of the Amoco Reuse Joint Powers board. Mr. Huston received his Bachelor of Science degree in Finance from Arizona State University and is a graduate of the Pacific Coast Banking School.

Steven J. Corning has been a director of ours since 2008. Mr. Corning has served as president and chief executive officer of Corning Companies, a real estate development firm, and has also been the president and broker/owner of Corning Companies Commercial Real Estate Services since 1979. Mr. Corning received his Bachelor of Arts degree in American Government, Cum Laude, from Harvard University.

The qualifications of Mr. Corning identified by the Board include the following: Mr. Corning has significant executive management, business ownership and entrepreneurial experience as a result of his years in the real estate development industry, which gives him a unique perspective as to real estate and property trends. Mr. Corning has extensive knowledge in key issues, dynamics and trends that affect the Company, including real estate, real estate development, asset management, investment consulting, and the health care industry. Mr. Corning qualifies as an independent director and serves as chairman of the credit committee.

Dana Filip-Crandall is a director nominee. Ms. Filip-Crandall has over 25 years of experience in executive management and global operations. She has been Vice President—Service Delivery of Comcast, a public company with more than 120,000 employees, since December 2013. Prior to that, Ms. Filip-Crandall was a managing director and chief information officer of British Telecom from 2009 to 2013, Vice President—Network Strategy and Call Center Operations at Qwest Communications from 2005 to 2009, and served in various other executive-level positions with Qwest Communications from 1992 to 2005. Ms. Filip-Crandall received her Bachelor of Science degree in Electrical Engineering from the University of Denver in 1987 and her Master in Business Administration degree from Northwestern University—Kellogg School of Management in 2001.

The qualifications of Ms. Filip-Crandall identified by the Board include the following: Ms. Filip-Crandall has significant knowledge in strategic planning, technology development and operations management. She also has knowledge on the fiduciary obligations, governance, operations practices and other requirements and duties of a public company. Ms. Filip-Crandall qualifies as an independent director.

David H. Crum has been a director of ours since 2001. Mr. Crum founded Crum Electric Supply Co., Inc., a distributor of electrical equipment, in 1976 and has been president and chief executive officer of that company since its inception. Mr. Crum has also served on the board of directors of various companies including IDEA, Inc., a data exchange technology company, supplyFORCE, Inc., a logistics technology company, and WESTECH, Inc., a manufacturer of mining equipment. He has also served on the board of directors of First Interstate Bank of Wyoming, N.A. Mr. Crum was a director of the National Association of Electrical Distributors and was chairman of its board. He also was appointed by Wyoming’s governor to the board of the Wyoming Business Council on which he served as chairman. Mr. Crum received his Bachelor of Science degree in Electrical Engineering from the University of Wyoming.

The qualifications of Mr. Crum identified by the Board include the following: Mr. Crum has significant experience in executive management and business ownership as a result of his years in the electric supply business particularly from the standpoint of a regional small business owner. Mr. Crum also has extensive knowledge in information technology. By virtue of the regional nature of his business operation, he also understands the economies of our region and the communities the Company serves. Mr. Crum qualifies as an independent director.



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William B. Ebzery has been a director of ours since 2001. Mr. Ebzery is a certified public accountant (retired) and registered investment advisor. Mr. Ebzery has been the owner of Cypress Capital Management, LLC since 2004. Prior to Cypress Capital Management, LLC, Mr. Ebzery was a partner in the certified public accounting firm of Pradere, Ebzery, Mohatt & Rinaldo from 1975 to 2004. Mr. Ebzery received his Bachelor of Science degree in Accounting from the University of Wyoming.

The qualifications of Mr. Ebzery identified by the Board include the following: Mr. Ebzery has significant experience in business ownership, accounting, auditing and financial services as a result of his years in the private sector. Mr. Ebzery has significant knowledge in key issues, dynamics and trends that affect the Company. Mr. Ebzery qualifies as a financial expert and is an independent director.

Charles E. Hart, M.D., M.S. has been a director of ours since 2008. Dr. Hart has been the president and chief executive officer of Regional Health, Inc., a not-for-profit healthcare system serving western South Dakota and eastern Wyoming since 2003. Dr. Hart is a director, board vice-chairman and chairman of the governance committee of the board of directors of Premier Inc., a healthcare purchasing organization listed on the Nasdaq exhange, composed of 2,400 hospitals and 70,000 healthcare sites and past chairman of the board of Safety Net Hospitals for Pharmaceutical Access, an advocacy group for over 600 hospitals and healthcare organizations serving the underprivileged. In addition, Dr. Hart serves on the South Dakota Chamber of Commerce board, Black Hills Vision board, Rapid City Economic Development Board, the American Hospital Association Regional Policy Committee and the Black Hills Community Health Center’s Finance Committee. Dr. Hart received his Bachelor of Science degree in Preprofessional Studies from the University of Notre Dame, his Doctor of Medicine degree from the University of Minnesota, and his Masters of Science in Administrative & Preventative Medicine from the University of Wisconsin.

The qualifications of Dr. Hart identified by the Board include the following: In addition to his understanding of community needs in the practice of medicine, Dr. Hart has significant experience in executive management and business as a result of years of administrative service in the health care industry as well as service on other community boards. Dr. Hart has extensive knowledge in key issues, dynamics and trends that affect the Company and understands the economies of our region and communities the Company serves. Dr. Hart brings geographic diversity to the Board. Dr. Hart serves as chairman of the technology committee.

James W. Haugh has been a director of ours since 1997. Mr. Haugh formed American Capital, LLC, a financial consulting firm, in 1994 and has operated this firm since its inception. Prior to forming American Capital LLC, Mr. Haugh was a partner in KPMG LLP, a certified public accounting firm where he served as national practice director, bank tax services. Mr. Haugh was employed by KPMG, LLP for 26 years, including 21 years as a partner. Since January 2010, he has been an advisor to clients of a national CPA firm, is currently a director of Ironbridge Funds, a public $1.8 billion mutual fund, and is also a director of an international privately held company. Mr. Haugh served as a director of Harris Bank Hinsdale from 1994 to 1997 and as a director of First Bank of the Americas in 2004. He has also served as an instructor in banking, tax, and accounting matters for the Office of the Comptroller of the Currency, The Federal Reserve Bank of Chicago, the Federal Deposit Insurance Corporation, the United States Agency for International Development and the American Bankers Association. Mr. Haugh is a governing member of the Chicago Symphony Orchestra, past chairman and life trustee of the Great Books Foundation and past chair of Dominican University. Mr. Haugh received his Bachelor of Arts degree in Economics, Cum Laude, from Princeton University and his Juris Doctor degree from the University of Michigan. He has done postgraduate work at the University of Chicago in Law and Economics.

The qualifications of Mr. Haugh identified by the Board include the following: Mr. Haugh has significant experience in the accounting, legal and financial consulting industries as a result of his years in those industries. Mr. Haugh possesses extensive knowledge of the fiduciary obligations and other legal requirements and duties of public companies as well as a particular knowledge of the banking industry gained by prior consulting and broad experience. He also brings geographic diversity to the Board. Mr. Haugh is an independent director. Mr. Haugh’s term ends May 21, 2014. Mr. Haugh is not a nominee for reelection.

Charles M. Heyneman has been a director of ours since May 2011. Mr. Heyneman has served as lead enterprise architect for First Interstate Bank since 2006. Prior to this appointment, Mr. Heyneman was an IT project manager and application developer for i_Tech Corporation, a former nonbank subsidiary of ours, from 2000 to 2004, and held loan review officer and credit analyst positions with First Interstate Bank from 1993 to 2003. Mr. Heyneman served as a director of ours from 2004 to 2010. Mr. Heyneman received his Bachelor of Arts degrees in History and Government from Oberlin College and his Masters of Science degree in Agricultural Economics from the University of Wisconsin. Mr. Heyneman is a director of First Interstate BancSystem Foundation. Mr. Heyneman is the nephew of James R. Scott and Thomas W. Scott, the brother of John M. Heyneman, Jr. and the cousin of Jonathan R. Scott and Randall I. Scott. Mr. Heyneman was recommended for Board service by the Scott family council.



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The qualifications of Mr. Heyneman identified by the Board include the following: Mr. Heyneman has significant banking, information technology and banking operations experience as a result of his years of service to the Company and other family-related businesses. Mr. Heyneman also possesses knowledge of the Company’s unique challenges, regulatory environment and history.

John M. Heyneman, Jr. has been a director of ours since May 2010. Mr. Heyneman is based in Sheridan, Wyoming as a contractor for the North Main Association, a private non-profit organization focused on economic development and business recruitment in Sheridan, Wyoming. He has served in this capacity since February of 2013. From November of 2009 to November of 2012, Mr. Heyneman served as the Wyoming project manager for Sonoran Institute, a non-profit organization based in Tucson, Arizona. From 2005 to November 2009, Mr. Heyneman served as the general manager of North Rim Ranch, LLC, a large cattle ranch in northern Arizona and southern Utah. Prior to this position, from 1998 to 2005, Mr. Heyneman served as an assistant manager at Padlock Ranch, in Dayton, Wyoming. Mr. Heyneman served as a director of ours from 1998 to 2004, and also as a director of the First Interstate BancSystem Foundation from 1998 to 2002. Mr. Heyneman received his Bachelor of Arts degree in American Studies from Carleton College. Mr. Heyneman is the nephew of James R. Scott and Thomas W. Scott, the brother of Charles M. Heyneman and the cousin of Jonathan R. Scott and Randall I. Scott. Mr. Heyneman was recommended for Board service by the Scott family council.

The qualifications of Mr. Heyneman identified by the Board include the following: Mr. Heyneman brings to the Board executive management and business experience from the agriculture industry. Mr. Heyneman understands the economies of the region and communities the Company serves. Mr. Heyneman also possesses knowledge of the Company’s unique challenges, regulatory environment and history as a result of his years of service to the Company.

David L. Jahnke has been a director of ours since September 2011. Mr. Jahnke is a certified public accountant. In 2010, Mr. Jahnke completed a 35-year career as a partner of KPMG with a focus on global clients, especially in the financial services industry. He currently serves as a director and chairman of the audit committee to Swiss Re America Holding Corporation and its primary related US operating companies. Mr. Jahnke also serves as a director, member of the audit committee and member of the nominating and corporate governance committee to Schnitzer Steel Industries, Inc., an SEC-listed company.

The qualifications of Mr. Jahnke identified by the Board include the following: Mr. Jahnke has significant experience in the accounting, auditing and financial service industries, both nationally and internationally. Mr. Jahnke has extensive knowledge in the key issues, dynamics and trends affecting the Company, its business and the banking industry in general. He has extensive knowledge regarding fiduciary obligations, insurance and other legal requirements and duties of a public company. Mr. Jahnke qualifies as an independent director, is a financial expert and serves as chairman of the governance and nominating committee.

Ross E. Leckie has been a director of ours since May 2009. Mr. Leckie is a certified public accountant. In October 2008, Mr. Leckie completed a 27-year career as a partner with KPMG. During that time, his focus was on public companies and clients within the financial services sector. Since 2000, Mr. Leckie was based in Frankfurt, Germany, ultimately serving as the lead partner for a major global investment/universal bank and as a senior technical and quality review partner for a major global investment/universal bank based in Zurich, Switzerland. Through 2011, Mr. Leckie continued to provide advisory services on a selective basis for global and domestic financial services companies. In September 2011, Mr. Leckie joined Allianz SE, a multi-billion dollar financial services group based in Munich, Germany, taking on consultative and quality assurance roles in the office of the chief financial officer.

The qualifications of Mr. Leckie identified by the Board include the following: Mr. Leckie has significant experience in the accounting, auditing and financial services industries, both nationally and internationally. Mr. Leckie has extensive knowledge in the key issues, dynamics and trends affecting the Company, its business and the banking industry in general. He has extensive knowledge regarding fiduciary obligations and other legal requirements and duties of a public company. Mr. Leckie qualifies as a financial expert, is an independent director and serves as chairman of the audit committee.

Jonathan R. Scott has been a director of ours since 2013. Mr. Scott was previously a director of ours from 2006 to 2011. Mr. Scott currently serves as President of our Jackson branch and has since 2011. Prior to that appointment, Mr. Scott served in various management and other positions within our company, including serving as community development officer of First Interstate Bank from 2008 to 2011, president of FIB CT, LLC, dba Crytech, a related non-banking subsidiary of ours, from 2004 to 2008, and an employee of our Financial Services and Marketing Divisions from 1998 to 2004. Mr. Scott received his Bachelor of Science degree in Economics from the University of Montana. Mr. Scott is the son of Thomas W. Scott, the nephew of James R. Scott, and the cousin of Charles M. Heyneman, John M. Heyneman, Jr. and Randall I. Scott.



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The qualifications of Mr. Scott identified by the Board include the following: Mr. Scott has a history of achievement in management positions as a result of his years of service to the Company. Mr. Scott has extensive knowledge of the Company’s unique challenges, regulatory environment and history. Mr. Scott was recommended for Board membership by the Scott family council.

Randall I. Scott has been a director of ours since 2012. Mr. Scott was previously a director of ours from 1993 to 2002 and from 2003 to 2011. Mr. Scott is a certified financial planner and has been the managing general partner of Nbar5 Limited Partnership since 1994. In addition, Mr. Scott has served as a director of First Interstate BancSystem Foundation since 1999, serving as chairman since 2006. Mr. Scott is also chair of Scott Family Services and served as vice chair from 2003 to 2011. Previously, Mr. Scott worked in various capacities for our company over a period of twenty years including as a branch manager of our Colstrip branch from 1983 to 1985, as a trust officer of First Interstate Bank from 1991 through 1996 and as a consultant from 1996 through 1998. Mr. Scott received his Bachelor of Science degree in Business from Rocky Mountain College. Mr. Scott is the nephew of Thomas W. Scott and James R. Scott, and the cousin of Charles M. Heyneman, John M. Heyneman, Jr. and Jonathan R. Scott. Mr. Scott was recommended for Board membership by the Scott family council.

The qualifications of Mr. Scott identified by the Board include the following: Mr. Scott has significant executive management and business experience in the financial planning, banking and non-profit industries. He also has extensive knowledge of the Company’s unique challenges, regulatory environment and history as a result of his years of service to the Company.

Michael J. Sullivan has been a director of ours since 2003. Mr. Sullivan is a senior attorney for the law firm of Lewis, Roca & Rothgerber, LLP, formerly known as Rothgerber, Johnson & Lyons, LLP, practicing in Casper, Wyoming, having been a partner from 2003 to 2009 and special counsel from 2001 to 2003. Prior to 2001, Mr. Sullivan practiced law with a Wyoming firm from 1964, taking leave to serve as U.S. ambassador to Ireland from 1998 to 2001 and as governor of the State of Wyoming from 1986 through 1994. Mr. Sullivan was a director of Allied Irish Bank, PLC in Dublin, Ireland from 2001 to 2009. Mr. Sullivan has been a director of Cimarex Energy Co. and Sletten Construction, Inc. since 2002 and Kerry Group PLC from 2004 to 2011. Mr. Sullivan received his Bachelor of Science degree in Petroleum Engineering and his Juris Doctor degree from the University of Wyoming.

The qualifications of Mr. Sullivan identified by the Board include the following: Mr. Sullivan has significant executive management, government, and legal experience including mediating a number of complex legal matters, as a result of his careers in both the private and public sectors including service as Wyoming’s governor and U.S. ambassador to Ireland. He has extensive knowledge regarding fiduciary obligations and other legal requirements and duties of a public company and its boards. Mr. Sullivan also has valuable relationships with key government representatives and local, national and international industry and government leaders and an understanding of the region the Company serves. Mr. Sullivan is an independent director and serves as lead director.

Teresa A. Taylor has been a director of ours since January 2012. Ms. Taylor has more than 28 years of experience in technology, media and the telecom sector. Ms. Taylor is the owner of Blue Valley Advisors, LLC, and has served as Blue Valley Advisor’s chief executive officer since May 2012. Ms. Taylor also serves as a director of NiSource and T-Mobile USA. From 1988 to 2011, Ms. Taylor worked for Qwest Communications in Denver, Colorado, where she most recently served as chief operating officer, leading daily operations and a senior management team responsible for 30,000 employees in field support, technical development, sales, marketing, customer support and IT systems. Previous positions at Qwest include executive vice president—Business Marketing Group, executive vice president and chief administrative officer—executive vice president Wholesale Markets and executive vice president—Product and Pricing. Ms. Taylor received a Bachelor of Science degree from the University of Wisconsin-LaCrosse.

The qualifications of Ms. Taylor identified by the Board include the following: Ms. Taylor has extensive knowledge in strategic planning and execution, technology development, human resources, union labor relations and corporate communications. She also has extensive knowledge on the fiduciary obligations, governance and compensation practices and other requirements and duties of a public company. Ms. Taylor qualifies as an independent director and serves as chairman of the compensation committee.

Theodore H. Williams has been a director of ours since May 2013. Mr. Williams has been a developer and manager of Thompson Creek Unit, an enhanced oil recovery project in northeastern Wyoming, since 1998. Additionally, Mr. Williams has acquired and managed multiple oil and gas properties located throughout the Rocky Mountain region of the United States since 1988. Prior to that time, Mr. Williams was self-employed as an oil and gas lease broker from 1979 to 1987 and served as a field and service representative for Haliburton Company from 1976 to 1978. Mr. Williams serves as a director of a regional independent oil and gas company with interests in more than 2,500 wells located primarily in Utah and Wyoming. Mr. Williams received his Bachelors of Arts degree in English from the University of Montana in 1976.



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The qualifications of Mr. Williams identified by the Board include the following: Mr. Williams has significant knowledge in the oil and gas industries as a result of his years in those industries, which gives him a unique perspective as to trends in the energy field. Mr. Williams has significant understanding of the geopolitical, environmental, economic and technical changes that are accelerating a transformation of the global energy system. Mr. Williams qualifies as an independent director.

Board and Committee Matters

Members of the Scott family control in excess of 80% of the voting power of our outstanding common stock. The Scott family members have entered into a shareholder agreement giving family members a right of first refusal to purchase shares of Class B common stock that is intended to be sold or transferred, subject to certain exceptions, by other family members. This agreement may have the effect of continuing ownership of the Class B common stock and control of our Company within the Scott family.

Due to the ownership and control of our Company by members of the Scott family, we are a “controlled company” as that term is used under the NASDAQ Marketplace Rules. As a “controlled company,” we may rely on exemptions from certain NASDAQ corporate governance requirements, including those regarding independent director requirements for the Board and committees of the Board.

Regardless of whether a company is a “controlled company,” however, the NASDAQ Marketplace Rules require that a company have an audit committee of at least three members, each of whom must:




be independent as defined under the NASDAQ Marketplace Rules;





meet the criteria for independence set forth in the applicable SEC rules (subject to applicable exemptions);





not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years; and





be able to read and understand financial statements, including a balance sheet, income statement and cash flow statement.


During 2013, the Board met seven times with each serving director attending at least 75% of the meetings. The Board is accountable to our shareholders to build long-term financial performance and value and to assure that we operate consistently with shareholder values and strategic vision. The Board’s responsibilities include:




identifying organizational values and vision on behalf of our shareholders;





hiring and evaluating our chief executive officer;





ensuring management succession;





providing guidance, counsel and direction to management in formulating and evaluating operating strategies and plans;





monitoring our performance against established criteria;





ensuring prudence and adherence to ethical practices;





ensuring compliance with federal and state law;





ensuring that full and fair disclosure is provided to shareholders, regulators and other constituents;





overseeing risk management;





exercising all powers reserved to us by organizational documents of limited liability companies and partnerships in which we are a member or shareholder; and





establishing policies for board operations.


Applicable SEC rules require that we make certain disclosures regarding the independence of our directors pursuant to the NASDAQ Marketplace Rules governing independent board members. The Board has determined that the following directors are independent in accordance with such standards:




Steven J. Corning





David H. Crum





William B. Ebzery





James W. Haugh (retiring May 21, 2014)





David L. Jahnke





Ross E. Leckie





Michael J. Sullivan





Teresa A. Taylor





Theodore H. Williams




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In its determination of independence, the Board considered that the Company (1) conducts banking and credit transactions in the ordinary course of business with certain independent directors, (2) retained Mr. Corning as project manager for a bank branch currently under construction, and, (3) made payments to Dr. Hart under a deferred compensatory agreement. Each of these transactions is more fully described under the heading “Certain Relationships and Related Transactions” below. The Company also purchases electrical services from an entity owned by Mr. Crum. None of these transactions or relationships, other than payments made to Dr. Hart under the deferred compensatory agreement, was deemed by the Board to impair the independence for these directors.

We have a credit committee, an executive committee, a compensation committee, a governance & nominating committee, a technology committee and an audit committee, all established by the Board and each of which consists of members of the Board.

In addition to these committees, our chairman and executive vice chairman of the Board may from time to time designate and appoint, on a temporary basis, one or more directors to assist in the form of a limited or special assignment in the performance or discharge of any powers and duties of the Board or any committee thereof.

Credit Committee. Credit committee members currently include Steven J. Corning (Chair), William B. Ebzery, Ed Garding, John M. Heyneman, Jr., James R. Scott,Thomas W. Scott and Theodore H. Williams. The credit committee’s primary responsibility is to advise the chief credit officer in the establishment of a loan portfolio and credit policies that will assure the safety of depositors’ money, earn sufficient income to provide an adequate return on capital and enable communities in our market area to prosper. The credit committee met twelve times in 2013 with each serving committee member attending at least 75% of the meetings.

Executive Committee. Executive committee members currently include James R. Scott (Chair), Steven J. Corning, William B. Ebzery, Charles M. Heyneman, Ed Garding, Ross E. Leckie, Jonathan R. Scott, Thomas W. Scott and Teresa A. Taylor. The executive committee functions and acts on behalf of the Board between regularly scheduled board meetings, usually when time is critical, and assists the Board in carrying out its responsibility to monitor the Company’s capital management policy. The executive committee met three times in 2013 with each serving committee member attending at least 75% of the meetings.

Compensation Committee. Compensation committee members currently include Teresa A. Taylor (Chair), Charles E. Hart, M.D., M.S., James W. Haugh, John M. Heyneman, Jr., Randall I. Scott and Michael J. Sullivan.

The compensation committee has the following responsibilities:




reviewing and approving corporate goals relevant to compensation for executive officers;





evaluating the effectiveness of our compensation practices in achieving our strategic objectives, encouraging behaviors consistent with our values and aligning performance objectives consistent with our vision;





evaluating the performance of our chief executive officer in determining compensation;





approving the compensation of our chief executive officer and other executive officers;





evaluating the performance of our Board chairman and vice chairman;





overseeing succession planning for executive officers;





recommending compensation for Board members;





recommending adjustments to director and officer insurance;





reviewing the financial performance and operations of employee benefit plans, excluding plans subject to Title I of the Employment Retirement Income Security Act of 1974, as amended; and





administering incentive compensation and other employee benefit plans.


The compensation committee met eight times during 2013 with each serving committee member attending at least 75% of the meetings. A current copy of the compensation committee charter is available to shareholders on our website at www.FIBK.com.

Governance & Nominating Committee. Governance & nominating committee members currently include David L. Jahnke (Chair), Charles E. Hart, M.D., M.S., James W. Haugh, James R. Scott, Jonathan R. Scott, Randall I. Scott, Thomas W. Scott and Michael J. Sullivan. The governance & nominating committee has the following responsibilities:




ensuring we have an effective and efficient system of governance, including development of criteria for Board membership;





identifying, screening and recommending candidates to the Board;





nominating candidates for election to the Board at our annual meeting of shareholders;




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filling vacancies on the Board that may occur between annual meetings of shareholders;





overseeing the orientation, development and evaluation of Board members;





evaluating services provided to and communications with shareholders; and





reviewing and approving related party transactions.


The governance & nominating committee met five times in 2013 with each serving committee member attending at least 75% of the meetings.

The Board has reviewed, assessed the adequacy of and approved a written charter for the governance & nominating committee. A current copy of the governance & nominating committee charter is available to shareholders on our website at www.FIBK.com.

When formulating its recommendations for director nominees, the governance & nominating committee considers recommendations offered by our chief executive officer, our shareholders and any outside advisors the governance & nominating committee may retain. The Scott family, through a family council, recommends Scott family members to the governance & nominating committee for consideration as candidates for Board membership. All current year nominees, with the exception of Dana Filip-Crandall, are standing for re-election to the board. Charles M. Heyneman was recommended for Board membership by the Scott family council. All candidates for Board membership, including those recommended by the Scott family council, are evaluated by the governance & nominating committee on the basis of broad experience, financial acumen, professional and personal accomplishments, educational background, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment and willingness to devote adequate time to board duties. The qualifications, attributes and skills of each of the nominees, together with their business experience described above, led to the conclusion that each nominee is qualified to serve as a director of the Company.

The Scott family does not approve candidates for board membership prior to their nomination by the governance & nominating committee and there are no arrangements or understandings between any candidate and the Scott family that require disclosure pursuant to Item 401(a) of Regulation S-K.

We do not have a formal policy concerning shareholder recommendations of candidates for Board membership. The Board views that such a formal policy is not necessary given the procedures described above and our willingness to consider candidates recommended by shareholders. Shareholders may recommend candidates by writing to our corporate secretary at our headquarters, 401 N. 31st Street, Billings, Montana 59116, giving the candidate’s name, contact information, biographical data and qualifications. A written statement from the candidate consenting to be named as a candidate and, if nominated and elected, to serve as a director should accompany any such recommendation. See “Shareholder Proposals” and “Shareholder Communications with the Board” contained herein.

Technology Committee. Technology committee members currently include Charles E. Hart, M.D., M.S. (Chair), David H. Crum, Charles M. Heyneman, James R. Scott, Thomas W. Scott and Teresa A. Taylor. The technology committee’s primary responsibility is to monitor the alignment between our overall business strategies and our information technology strategic plan. The technology committee met four times in 2013 with each serving committee member attending at least 75% of the meetings.

Audit Committee. Audit committee members currently include Ross E. Leckie (Chair), David H. Crum, William B. Ebzery, David L. Jahnke and Theodore H. Williams. All members of the audit committee are independent directors based upon the definition of independence contained in the NASDAQ Marketplace Rules and in accordance with the Sarbanes-Oxley Act requirements and our governance guidelines.

The audit committee has the following responsibilities:




reviewing our accounting and financial reporting processes, internal and disclosure control systems and external and internal auditing systems;





overseeing risk management objectives;





oversight of the internal audit function, including approval and monitoring of the annual internal audit plan;





reviewing and approving the reports on Form 10-K and Form 10-Q;





reviewing the effectiveness of the systems for monitoring adherence with laws, regulations and our codes of ethics;





selection of the external auditors and monitoring the performance and results of their activities; and,





establishing procedures to handle complaints regarding accounting, internal controls or audit matters.




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The audit committee met ten times during 2013 with each serving committee member attending at least 75% of the meetings.

The Board has determined that each of William B. Ebzery, David L. Jahnke and Ross E. Leckie qualifies as an “audit committee financial expert,” as that term is defined in applicable SEC regulations. The Board has reviewed, assessed the adequacy of and approved a written charter for the audit committee. A current copy of the audit committee charter is available on our website at www.FIBK.com.

The Board’s Leadership Structure

Currently, the offices of chairman of the board and chief executive officer are separate. Our chairman is Thomas W. Scott, and our president and chief executive officer is Ed Garding. The chairman of the board is responsible for presiding at meetings of the Board and exercising such other powers and duties as set forth in our second amended and restated bylaws and as may from time to time be assigned to him by the Board. The chief executive officer is responsible for general supervision, direction, and control of our business affairs, and ensuring that all orders and resolutions of the Board are carried into effect. In addition, Michael J. Sullivan acts as our lead independent director. The lead independent director acts as a liaison between the chairman and independent directors, presides over semi-annual meetings of the independent directors and, if requested by major shareholders, is available for consultation and direct communication. The Board believes that our existing corporate governance structure best serves the current needs of our company and our shareholders.

The Board’s Role in Risk Oversight

It is the responsibility of the chief executive officer to fulfill the Board’s expectation of a strong risk management culture throughout the organization. It is the responsibility of the chief risk officer to ensure an appropriate risk management framework is implemented to identify, assess, and manage our exposure to risk. The Board and its committees play an important role in overseeing executive management’s performance of their responsibilities relating to risk management. In general, this oversight includes working with executive management to determine an appropriate risk management culture, monitoring the amounts and types of risk taken in executing our business strategy and evaluating the effectiveness of risk management processes against the policies and procedures established to control those risks. We have adopted a risk management oversight structure designed to ensure that all significant risks are actively monitored by the entire Board or one of its committees. Furthermore, given the importance of the Bank’s operations to us, additional risk management oversight is provided by the Bank’s board of directors, members of which include certain of our directors.

In most cases, our respective Board committees are responsible for the oversight of specific risks as outlined in each of their respective charters. For example, the credit committee’s risk oversight responsibilities include oversight of the annual credit plan, lending policies, credit trends, the allowance for loan loss policy, and high risk portfolios and concentrations. In addition to its oversight of all aspects of our annual independent audit and the preparation of our financial statements, the audit committee has been delegated responsibility for oversight of risks associated with our internal controls, compliance with applicable laws and regulations, monitoring the implementation of codes of conduct and overseeing responses to reports of examination. The compensation committee has been delegated responsibility for oversight of our compensation programs, including evaluating whether any of these programs contain features that promote excessive risk-taking by management and other employees, either individually or as a group. The executive committee oversees our capital positions and capital management activities to ensure compliance with applicable regulatory requirements and to ensure that our capital levels are a source of financial strength. The governance & nominating committee has been delegated responsibility for establishing and reviewing the adequacy of our codes of conduct and ethics, reviewing and approving related party transactions, developing criteria and qualifications for board membership, considering, recommending, and recruiting candidates to fill new or vacant positions on the Board, and ensuring an effective and efficient system of governance is in place for the Company. The technology committee has been delegated responsibility for ensuring adequate processes are in place to protect the Company’s data.

In addition to oversight of risk management by the Board and its committees, the Bank’s board of directors and its committees have been delegated the responsibility for overseeing management of the Bank’s lending activities, liquidity and capital position, asset quality, interest rate risk and investment strategies. The chairman of the Bank’s board communicates relevant information with respect to these activities to the full Board.

The Board’s committees carry out their responsibilities by requesting and obtaining reports and other information from management with respect to relevant risk areas. In addition to our committee structure, our entire Board periodically receives reports and information about key risks and enterprise risk management from the chief risk officer.



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Board Diversity

The Board does not have a formal written policy with regard to the consideration of diversity in identifying director nominees. Our governance standards, however, require the Board’s governance & nominating committee to review the qualifications of candidates to the Board, of which diversity is one of the criteria. This assessment includes the consideration of personal and professional ethics and integrity, including a candidate’s reputation for integrity in the business community; diversity among the existing Board members, including racial and ethnic background and gender; specific business experience and competence, including an assessment of whether the candidate has experience in, and possesses an understanding of, business issues applicable to the success of the banking industry and whether the candidate has served in policy-making roles in business, government, education or other areas that are relevant to the Company’s regional activities; financial acumen, including whether the candidate, through education or experience, has an understanding of financial matters and the preparation and analysis of financial statements; professional and personal accomplishments, including involvement in civic and charitable activities; educational background; and whether the candidate has expressed a willingness to devote sufficient time to carrying out his or her duties and responsibilities effectively and is committed to service on the Board.

Principal Accounting Fees and Services

The audit committee appointed McGladrey LLP as our independent auditor for the fiscal year ending December 31, 2014. McGladrey LLP has been our independent auditor since March 2004. No representatives of McGladrey LLP are expected to be present at the annual meeting.

During the period covering the fiscal years ended December 31, 2013 and 2012, McGladrey LLP performed the following professional services:




2013 2012

Audit fees(1)
$ 565,000 $ 550,000

Audit-related fees(2)
3,500 —

Tax fees
— —

All other fees
— —



(1)
Audit fees consist of fees for annual audit and reviews of the quarterly reports on Form 10-Q.


(2)
Audit-related fees consist of fees for review of our Registration Statement on Form S-3 filed with the SEC on May 24, 2013.


Pre-Approval Policies and Procedures

After our registered public accounting firm has been retained by us, following approval by the audit committee and the Board, the audit committee does not require advance approval for audit and audit-related services. Although pre-approval is not required for these services, the audit committee has adopted a policy of approving such services either in advance or after the fact. The audit committee has adopted a policy that requires advance approval of all non-audit or audit-related services performed by our independent registered public accounting firm when fees are expected to exceed $15,000. These policies are consistent with the audit committee charter. The audit committee has delegated to the audit committee chairman, Ross E. Leckie, or any two other members of the audit committee, authority to approve services, subject to ratification by the audit committee at its next committee meeting.

Report of the Audit Committee of the Board of Directors

March 19, 2014

To the Board of Directors of First Interstate BancSystem, Inc.:

The audit committee (“Committee”) operates under a charter approved by the Board of Directors (“Board”) that specifies the scope of the Committee’s responsibilities and how they are carried out. The Board has determined that all members of the Committee are independent based upon the standards adopted by the Board, which standards incorporate the independence requirements under applicable laws and regulations.



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Management is responsible for the Company’s systems of internal controls and the financial reporting process. McGladrey LLP, the Company’s independent registered public accounting firm (“independent auditors”), is responsible for the integrated audit of the consolidated financial statements and internal controls over financial reporting. The Company’s internal auditors are responsible for preparing an annual audit plan and conducting internal audits under the control of the Chief Audit Executive, who is accountable to the Committee.

The Committee’s responsibility is to monitor and oversee these processes and procedures.

The Committee relies, without independent verification, on the information provided to it and on the representations made by management regarding the effectiveness of internal control over financial reporting, and that such financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Committee also relies on the opinions of the independent auditors on the consolidated financial statements and on the effectiveness of internal control over financial reporting. The Committee’s oversight does not provide assurance that management’s and the auditor’s opinions and representations are correct.

The Committee reviewed and discussed the financial statements as of and for the year ended December 31, 2013 with management, the internal auditors and the independent auditors. The audit committee’s review of and discussions about the financial statements included discussions about the quality, not just the acceptability, of the accounting principles used, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

The Committee also discussed with the independent auditors all communications required by the standards of the Public Company Accounting Oversight Board (PCAOB) and has received the written disclosures required by the PCAOB concerning independence. The Committee discussed with the independent auditors any relationships that might have an impact on their objectivity and independence and reviewed and approved the amount of fees paid for audit and audit related services.

Based on the above-mentioned reviews and discussions, and subject to the limitations on its role and responsibilities described above and in the Committee charter, on February 25, 2014, the Committee recommended to the Board that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for filing with the SEC.

SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:




Ross E. Leckie David L. Jahnke David H. Crum
William B. Ebzery Theodore H. Williams

Shareholder Communications with the Board

We have not, to date, developed a formal process for shareholder communications with the Board. We believe our current informal process, in which any communication sent to the Board either generally or in care of the chief executive officer, corporate secretary or other corporate officer or director is forwarded to all members of the Board, has adequately served the Board’s and the shareholders’ needs.

Financial Code of Ethics

Our chief executive officer, chief financial officer and principal accounting officers or other persons performing similar functions are required to comply with our code of ethics for chief executive officer and senior finance officers.

The purposes of the code of ethics are as follows:




to deter wrongdoing and to promote, among other things, honest and ethical conduct;





to promote full, fair, accurate, timely and understandable disclosure in SEC and public filings;





to promote compliance with applicable governmental laws, rules and regulations;





to facilitate prompt internal reporting of violations of the financial code of ethics; and





to oversee adherence to such code.




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Employees may submit concerns or complaints regarding ethical issues on a confidential basis by means of a toll-free telephone hotline or the use of an internet-based reporting system. All concerns and complaints are reported to our security officer and audit committee chairman in a summary format for investigation. A current copy of our financial code of ethics is maintained on our website at www.FIBK.com.

COMPENSATION DISCUSSION AND ANALYSIS

Role of Compensation Committee

The Compensation Committee’s overall responsibility is to review and approve our compensation structure, policy and programs in order to assess whether the compensation structure establishes appropriate incentives for executive management and employee benefits. The Compensation Committee oversees the administration of our equity and incentive compensation plans and is responsible for oversight of executive officer succession planning. The Committee charter, which is posted on our website at www.fibk.com, sets forth the various responsibilities and duties of the Compensation Committee. In the annual review of the charter, the Committee determined the charter was appropriate with regard to the responsibilities and duties specified therein.

The Compensation Committee is comprised of both outside members and non-outside members. Outside members are those who meet both the definition of (1) a non-employee director, as that term is defined for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (2) an outside director, as that term is defined for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.

Outside members annually review and determine the salary, bonus and equity compensation awarded to our CEO. They also approve equity awards for all of our elected officers, taking into consideration non-binding recommendations from the non-outside members. In addition, the outside members approve all executive officers’ compensation, taking into consideration non-binding recommendations from both our CEO and non-outside members.

Executive Compensation Philosophy

Our executive compensation philosophy is designed to establish an appropriate relationship between executive pay and our annual performance, long-term growth objectives, individual performance of the executive officer and our ability to attract and retain qualified executive officers. The Compensation Committee seeks to achieve these goals by integrating competitive annual base salaries with bonuses based on corporate performance and on the achievement of specified performance objectives, along with long-term incentives of stock option and restricted stock awards through our equity compensation plan.

The Compensation Committee believes that cash compensation in the form of salary and bonus provides our executives with short-term rewards for individual performance and success in operations. Long-term compensation, through awards of stock options and restricted stock, assists in employee retention and encourages management stock ownership. In turn, management ownership leads to increased commitment to our long-term performance and success.

Relation of Compensation Policies and Programs to Risk Management

After reviewing our executive compensation policy and programs, the Compensation Committee concluded that our incentive programs do not encourage or promote unnecessary or excessive risk-taking behavior by executive officers or other employees that could threaten the value of our Company or would be reasonably likely to have a material adverse effect on us. The Company discourages undue risk taking by reserving the right to use discretion in the payout of all incentives.

On November 17, 2011, based on the Compensation Committee’s recommendation, the Board of Directors approved a clawback policy for all Section 16 reporting officers, including the named executive officers. The clawback policy authorizes the Board to recoup all performance-based compensation paid during the years affected by a financial restatement or executive misconduct. Based upon the facts and circumstances surrounding the restatement, the Board may also direct the Company to cancel any equity-based awards granted to the executives during the applicable time period and recoup any gains realized during the time period with respect to equity-based awards.



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Role of Executive Officers

The individuals who served as our chief executive officer, or CEO, and chief financial officer, or CFO, during 2013, as well as the other individuals included in the summary compensation table, are collectively referred to as the named executive officers, or NEOs.

The CEO annually reviews the performance of the executive officers and makes non-binding recommendations to the Compensation Committee for salary adjustments, annual bonuses, and equity-based compensation. The Compensation Committee may exercise its discretion to accept, reject or modify any recommended salary adjustments, bonuses or awards to executives.

Role of Compensation Consultants/Peer Group

The Compensation Committee made a comprehensive review of our executive compensation in 2013 utilizing the Equilar subscription service to obtain proxy data based on a custom peer group. The peer group was composed of the following banks:




1st Source Corporation International Bancshares Corporation
BancFirst Corporation Old National Bancorp
BancorpSouth, Inc. Park National Corporation
Banner Corporation Prosperity Bancshares, Inc.
Chemical Financial Corporation Renasant Corporation
Columbia Banking System, Inc. Sterling Financial Corporation
First Financial Bancorp Trustmark Corporation
First Merchants Corporation UMB Financial Corporation
First Midwest Bancorp, Inc. Umpqua Holdings Corporation
Glacier Bancorp, Inc. United Community Banks, Inc.
Great Southern Bancorp, Inc. WesBanco, Inc.
Heartland Financial USA, Inc.

Changes to the peer group from the previous year include the addition of BancorpSouth, Inc., First Merchants Corporation, Great Southern Bancorp, Inc. and Renasant Corporation, who were added based on their asset size.

The Compensation Committee targets market competitive (50th percentile) base pay, incentives and total cash compensation within the peer group. The Compensation Committee took into consideration data from salary surveys conducted by the American Bankers Association, the Economic Research Institute, Mercer, and Equilar.

During 2013, the Compensation Committee engaged the services of Pearl Meyer & Partners, a compensation consulting firm, to assist with its executive compensation review and to provide competitive market data. This consulting engagement was extended through 2014.

Say on Frequency/Say on Pay

In 2011, the shareholders approved a biennial “say on pay” vote. The Compensation Committee reviewed the 2013 “say-on-pay” voting results and noted that the advisory vote on executive compensation was approved by shareholders as follows:





Votes for
99,744,969

Votes against
142,706

Abstentions
1,179,007

Broker non-votes
3,239,840

We believe our compensation policies and programs are based on a pay-for-performance culture and align with the long-term interests of our shareholders. Beginning in 2011, Section 14A of the Exchange Act (as enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act) requires us to provide our shareholders a “Say-on-Pay” vote. This vote gives our shareholders’ the opportunity to endorse or not endorse the compensation of our NEOs. The shareholder vote is advisory and is not binding on the Compensation Committee; however, the Committee will take into account the outcome of the vote.





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2013 Company Performance Relationship to Executive Pay

2013 Financial Performance. In considering executive compensation, the Compensation Committee takes into account various metrics of our financial performance. We have consistently reported net income to shareholders for the last 26 years and have had over 19 years of consecutive quarterly dividends. The Company has recently announced a 14% increase in dividends, to $.016 per common share, for the first quarter of 2014.

The Company set record levels of earnings in 2013, with $86.1 million of net income available to common shareholders, or $1.96 per diluted share. Earnings levels were driven by further improvement in credit quality, with non-performing assets and criticized assets reaching the lowest levels since 2008. Additionally, another strong year of income generated from the origination and sale of residential mortgages, along with growth in Wealth Management revenues, helped the Company achieve this high level of earnings.

Financial metrics demonstrate positive trends as shown in the tables below. As reflected in the earnings per share and dividends per share table, the Company accelerated payment of the first quarter 2013 dividend to December 2012, resulting in five dividend payments in 2012 and three dividend payments in 2013.




LOGO LOGO
LOGO LOGO



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Base Salaries. In determining the salary increase matrix for all employees for 2013 and 2014, the Compensation Committee took into consideration the following:




projected loan demand;





increased compliance costs; and





the ratio of current salaries to market survey data.


In 2013, the merit increase table reflected an approximate 2.8% midpoint increase for an employee who performed satisfactorily and whose salary was currently at market value. For 2014, the midpoint increase was 3.0%. In 2013, increases for NEOs ranged from 2.7% to 11.2%.

The outside members of the Compensation Committee approved the 2013 base salary of Mr. Garding, the current CEO. They also approved the 2013 compensation of other executive officers, including the NEOs, as recommended by the CEO.

In approving the base salary of each executive officer, the Compensation Committee utilized the above mentioned salary increase matrix along with data from the executive compensation peer review discussed previously.

Bonuses. The Compensation Committee awards executive bonuses based upon earnings and the achievement of an ROA percentile ranking relative to the FIBK peer group. Bonuses for executive officers in 2013 were higher than in 2012 due to improved earnings. Target bonuses for 2013 for the NEOs ranged from 33% of base salary to 50% of base salary for the CEO. The varying percentages reflect the Compensation Committee’s belief that an executive officer’s scope of work, responsibilities and performance all be considered when awarding an executive officer a bonus.

Long Term Incentive. Long-term equity incentive compensation encourages employees to focus on our long-term performance. It also provides an opportunity for executive officers and certain designated key employees to increase their stake in our company through stock option grants and restricted stock awards, further aligning their interests with those of our shareholders.

In 2013, the outside members of the Compensation Committee awarded a targeted percentage of salary in a mix of long-term incentives to the NEOs as follows:





LOGO

Mr. Moore did not receive long-term incentives due to his planned retirement in 2014. Mr. Riley received a long-term incentive of 12,000 shares of time restricted stock on his hire date of July 16, 2013.

The actual number of options granted was determined based on a value established using the Black-Scholes option pricing model using the Company’s historical volatility and a 7 year life. Both the stock options and the time vested stock have a 3-year graded vesting period.



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The performance restrictions for the performance vested stock are based on the three-year return on assets (ROA), a three-year return on equity (ROE), and a three year return on total shareholder return (TSR) average of our company compared to the SNL Financial index of bank holding companies with total assets between $4.0 billion and $12.0 billion (SNL Index). The measurement date is September 30, 2015, using the previous 12 quarters. Vesting is as follows:





Percentile of Peers
Vesting Percentage

<41st
0 %

41st to <45th
25 %

45th to <50th
38 %

50th to <60th
50 %

60th to <70th
75 %

70th to <80th
100 %

80th to <90th
115 %

90th and higher
125 %

The value of the long-term incentive granted under our equity compensation plan to our NEOs, as well as to certain other officers, was based primarily on the individual’s ability to influence our long-term growth and profitability.

The Compensation Committee believes long-term incentive vehicles, such as stock options and restricted stock, afford desirable compensation methods because they:




enhances the link between the creation of shareholder value and long-term executive incentive compensation;





provides an opportunity for increased equity ownership by executives; and





maintain competitive levels of total compensation.


All awards under our equity compensation plan are based on the closing price of the underlying common stock as quoted on NASDAQ Stock Market for the last market trading day prior to the date of the award. Dollar values of the annual awards of long term incentives to executives have historically been approved at the Compensation Committee’s regularly scheduled meeting in January with the date of the awards specified at that time.

Other Compensation. We provide our NEOs with other compensation that the Compensation Committee believes is reasonable and consistent with the overall compensation program to better enable us to attract and retain superior employees for key positions. The Compensation Committee annually reviews the levels of other compensation provided to NEOs.

The NEOs participate in the following plans and programs along with health and group life and disability insurance. Additional benefits offered to the NEOs may include some or all of the following:




individual life insurance, as described below under “Endorsement Split Dollar and Survivor Income Benefits”;





payment of social club dues;





dividends on unvested restricted stock; and





use of a company automobile.


Company paid individual long term disability policies were discontinued in July 2010.

Retirement and Related Plan. We maintain a profit sharing plan for all non-temporary employees. Contributions are made as authorized by the Board. Participants vest after three years of service. In addition, employees are permitted to defer a portion of their compensation into our profit sharing plan under a 401(k) feature, and we make limited matching contributions with respect to such deferrals.

CEO Total Compensation. The outside members of the Compensation Committee reviewed all components of Mr. Garding’s total compensation package. The compensation was determined to be reasonable based on the review of our peers’ CEO total compensation data. Mr. Garding’s compensation package was larger than those granted to our other executives in recognition of his responsibility and performance.

As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that we may not deduct compensation of more than $1,000,000 that is paid to certain individuals unless certain conditions are met. We believe that compensation paid under the management incentive plans is generally fully deductible for federal income tax purposes.



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Endorsement Split Dollar and Survivor Income Benefits

We obtained life insurance policies covering two of the NEOs. Under these policies, we receive all benefits payable upon death of the insured. An endorsement split dollar agreement has been executed with each of the selected executive officers whereby a portion of the policy death benefit is payable to his designated beneficiary. The endorsement split dollar agreement will provide post-retirement coverage for those selected key officers meeting specified retirement qualifications. We have entered into this type of endorsement split dollar agreement with Mr. Garding and Mr. Moore.

We also obtained a life insurance policy covering selected officers of First Interstate Bank. Under this policy, we receive all benefits payable upon death of the insured. An endorsement split dollar agreement has been executed with each of the insured officers whereby $100,000 of the policy death benefit is payable to designated beneficiaries if the participant is employed by us at the time of death. Upon termination of employment, the policy remains in place and 100% of the policy death benefit is payable to the Company. We have entered into this type of endorsement split dollar agreement with Mr. Garding and Mr. Moore.

During 2013, we obtained additional life insurance policies on selected officers of First Interstate Bank. Under these policies, we receive all benefits payable upon death of the insured. A survivor income agreement was executed with each of the insured officers whereby a survivor benefit of $150,000 is payable to designated beneficiaries if the participant is employed by us at the time of death. We have entered into this type of survivor income agreement with Mr. Riley and Mr. Guenthner.

Employment Contracts

We do not currently have employment agreements with any of our executive officers.

Stock Ownership Guidelines

In order to further align the interests of the employees with the interests of the Company, on September 23, 2010, the Board of Directors approved a Stock Ownership Guideline Policy based on the Compensation Committee’s recommendation. The Policy recommends the following stock holdings for directors and NEOs and allows them five years to achieve the recommended level of holding:

Directors – five times their annual cash retainer

CEO – five times base salary

NEOs – three times base salary

Stock holdings are measured at the end of each year using the year’s closing stock price. While the directors and NEOs are not required to meet the recommended level of holding until September 23, 2015 at the earliest, all directors and NEOs, with the exception of two recently elected directors and three recently appointed NEOs, currently meet the minimum level of ownership.

Equity Compensation Plans

Stock options awarded prior to March 23, 2010 that are currently outstanding under our equity compensation plans are exercisable for shares of our Class B common stock. Awards of stock options, restricted stock and other securities issued under our equity compensation plans on or after March 23, 2010 are exercisable for shares of our Class A common stock.

2006 Equity Compensation Plan. Our 2006 equity compensation plan, as amended and restated, is an omnibus equity compensation plan pursuant to which we may grant equity awards to our directors, officers and other employees. The 2006 plan provides additional benefits as contained in the plan and consolidates into one plan the benefits available under the following equity compensation plans previously adopted:




the 2001 stock option plan;





the 2004 restricted stock award plan;





the director stock compensation plan; and





the officer stock benefit plan.


The 2006 plan does not increase the number of shares of common stock that were available for awards under the prior plans. The prior plans continue with respect to awards made previously under such plans.



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The 2006 Plan contains the following important features:




The initial number of shares of common stock reserved under the 2006 plan was 3,000,000, which was approximately 9.2% of our previously-existing common stock outstanding at the time of shareholder approval.





In 2013, the Board recommended and shareholders approved an amendment to the 2006 plan to increase the number of shares authorized for issuance by an additional 1,500,000 shares of common stock.





Awards under the 2006 plan are subject to broad discretion by the Compensation Committee administering the plan.





All awards under the 2006 Plan are based on the closing price of the underlying common stock as quoted on NASDAQ Stock Market for the last market trading day prior to the date of the award.





Stock options granted under the 2006 plan are nonqualified stock options that have terms of not more than ten years.





There is no fixed term for the 2006 plan and the 2006 plan continues in effect until terminated by the Board.





The Plan prohibits repricing or option exchanges without shareholder approval.


The purpose of the 2006 plan is to advance the interests of our shareholders by enhancing our ability to attract, retain and motivate employees and directors who are expected to make important contributions to us by providing them with both equity ownership opportunities and performance-based incentives intended to align their interests with those of our shareholders. The 2006 plan is designed to provide us with flexibility to select from among various equity-based compensation vehicles and to be able to address changing accounting requirements, tax rules and corporate governance practices by optimally utilizing stock options and shares of our common stock.

The 2006 plan permits awards of stock options, restricted stock and other stock awards. All awards made under the 2006 plan after March 23, 2010 are in shares of Class A common stock. The following terms apply to the awards granted under the Plan for each of the last three years:




Stock options - 3-year graded vesting period, with a term of no more than 10 years;





Time-restricted awards - 3-year graded vesting period; and





Performance-restricted awards - cliff vesting as of December 31 of the third year following the year of the award, based on achievement of specified performance conditions.


In addition, in 2012, common shares were awarded under the 2006 Plan to members of the Strategic Design Team (SDT), a group responsible for developing the Company’s long-term strategies, in recognition of additional duties performed by members of the SDT.

Participants include any person who is designated by the Board to receive one or more benefits under the 2006 plan. Awards are generally made to executive officers in the first quarter of each year.

Deferred Compensation Plans

In 2006, we restated our principal deferred compensation plan that was established for the benefit of a select group of management and highly compensated employees. The purpose of the restatement was (1) to amend the plan to comply with Section 409A of the Internal Revenue Code and related guidance issued before the adoption of the restatement and (2) to merge into the plan another previously administered nonqualified deferred compensation plan known as the executive nonqualified deferred compensation plan. The restated plan allows eligible employees, as determined by our Board or Compensation Committee, and eligible directors to defer a portion of base salary, bonus or director fees subject to certain maximums as set forth by the plan administrator.

Additionally, we make discretionary contributions on behalf of the executive officer participants for 401(k) plan matching contributions and profit sharing contributions in excess of Internal Revenue Code limitations. Other contributions on behalf of a participant may be made at the discretion of the Board.

The deferral account of each participant is adjusted by investment earnings or losses based upon the performance of the underlying investments selected by the participant from among alternatives selected by the plan administrator. Deferral accounts are distributed based on each participant’s election. The distribution elections are all made in accordance with Section 409A and may be lump sums or annual installments over a period of years.



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Report of the Compensation Committee of the Board of Directors

The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the “Compensation Discussion and Analysis” be included in this proxy statement.

SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:




Teresa A. Taylor Charles E. Hart James W. Haugh
John M. Heyneman Jr. Randall I. Scott Michael J. Sullivan

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

Charles E. Hart, James W. Haugh, John M. Heyneman Jr., Randall I. Scott, Michael J. Sullivan, and Teresa A. Taylor serve on our Compensation Committee. None of the Compensation Committee members serve as employees of the Company.

For additional information on these relationships and related transactions, see “Certain Relationships and Related Transactions” below.

None of our executive officers served as a director or member of the compensation committee of any other company, which other company had an executive officer that served as one of our directors or as a member of the Compensation Committee during 2013.

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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of the named executive officers for the fiscal years ended December 31, 2013, 2012 and 2011. When approving total compensation for each of the named executive officers, the compensation committee considers compensation paid to similarly situated executives in similarly sized financial institutions.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS





Name and Position
Salary
($) Bonus
($) Stock
Awards
($)(1) Option
Awards
($)(2) Non-Equity
Incentive Plan
Compensation
($) All Other
Compensation
($)(3) Total
($)

Edward Garding
2013 $ 474,312 $ 235,000 $ 157,511 $ 67,499 $ — $ 44,906 (4) $ 979,228

President & Chief
2012 426,492 200,000 123,344 51,627 — 54,817 (4) 856,280

Executive Officer
2011 341,083 100,000 104,966 44,998 — 41,048 (4) 632,095

Kevin P. Riley
2013 131,539 56,700 266,880 — — 65,910 (5) 521,029

Exec. Vice President &
2012 NA NA NA NA NA NA NA

Chief Financial Officer
2011 NA NA NA NA NA NA NA

Terrill R. Moore(10)
2013 278,751 140,000 — — — 20,835 (6) 439,586

Exec. Vice President &
2012 271,522 79,947 93,520 40,084 — 32,692 (6) 517,764

Chief Financial Officer
2011 267,240 69,000 93,507 40,086 — 30,471 (6) 500,304

Michael G. Huston
2013 235,449 80,578 56,309 24,147 — 24,548 (7) 421,032

Exec. Vice President &
2012 215,692 56,411 43,404 17,376 — 169,828 (7) 502,711

Chief Banking Officer
2011 NA NA NA NA NA NA NA

Kevin J. Guenthner
2013 200,334 68,450 47,734 20,472 — 13,448 (8) 350,438

Exec. Vice President &
2012 191,631 47,233 46,321 18,632 — 18,222 (8) 322,038

Chief Information Officer
2011 NA NA NA NA NA NA NA

Robert M. Cerkovnik
2013 175,341 75,083 20,354 8,718 — 14,029 (9) 293,525

Senior Vice President &
2012 169,800 31,379 13,407 13,400 — 17,477 (9) 245,463

Chief Credit Officer
2011 162,954 26,000 13,589 13,599 — 14,467 (9) 230,609



(1)
The amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Stock awards are a combination of time and performance restricted stock awards. In addition, in 2012 common shares were awarded to members of the SDT in recognition of additional duties performed. Mr. Garding was awarded 3,168 shares of time restricted and 4,224 shares of performance restricted stock in 2011; 3,594 shares of time restricted, 4,790 shares of performance restricted stock and 200 SDT shares in 2012; and 3,921 shares of time restricted and 5,226 shares of performance restricted stock in 2013. Mr. Riley was awarded 12,000 shares of time restricted stock in 2013. Mr. Moore was awarded 2,823 shares of time restricted and 3,762 shares of performance restricted stock in 2011; and 2,790 share of time restricted stock and 3,718 shares of performance restricted stock in 2012. Mr. Huston was awarded 1,209 shares of time restricted stock, 1,612 shares of performance restricted stock and 200 SDT shares in 2012; and 1,401 shares of time restricted stock and 1,869 shares of performance restricted stock in 2013. Mr. Guenthner was awarded 1,296 shares of time restricted stock, 1,728 shares of performance restricted stock and 200 SDT shares in 2012; and 1,188 of time restricted stock and 1,584 shares of performance restricted stock in 2013. Mr. Cerkovnik was awarded 957 shares of time restricted stock in 2011, 933 shares of time restricted stock in 2012; and 507 shares of time restricted stock and 675 shares of performance restricted stock in 2013.




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The value included for the performance shares is based on 100% vesting. In order for this level of vesting to occur, the Company much achieve an average ROA and ROE performance at the 71st to 80th percentile for both the 2011 and 2012 awards and on average ROA, ROE and TSR performance at the 70th to 79th percentile for the 2013 award. The maximum vesting for the performance awards is 125% of the shares if average ROA and ROE performance is at or above the 91st percentile of the SNL Index defined earlier for the 2011 and 2012 awards and the average ROA, ROE and TSR performance is at or above the 90th percentile of the SNL Index defined earlier for the 2013 award.

Based on the Company’s financial performance, it was determined on December 31, 2012 that it was unlikely that any of the 2011 performance shares would vest and a 50% vesting of the 2012 performance shares would be most likely to occur.

The 2011 equity-based awards were valued at $14.20 per shares as of the grant date; the 2012 performance and time vested awards were valued at $14.37 per share as of the grant date; the shares awarded to SDT members in 2012 were valued at $14.33 per share as of the grant date; the 2013 time and performance vested awards to all named executive officers except for Mr. Riley were valued at $17.22 per share as of the grant date; and the 2013 time vested award to Mr. Riley was valued at $22.24 per share as of the grant date.



(2)
The amounts reflect the aggregate grant date fair value, for the periods presented, computed in accordance with FASB ASC Topic 718. For information and assumptions related to the calculation of these amounts, see Notes 1 and 18 of the Notes to Consolidated Financial Statements included in our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2013.


(3)
The amounts shown reflect for each named executive officer: contributions by us to our qualified profit sharing and employee savings plans, under Section 401(k) of the Internal Revenue Code of 1986, as amended; contributions by us to our nonqualified deferred compensation plan; imputed income from our split dollar life insurance plans; “gross up” amounts to cover taxes on the imputed income from the split dollar life insurance plans and premiums paid by us for individual long term care plans; and dividends on unvested restricted stock. The amounts do not reflect premiums paid by us for group health, life and disability insurance policies that apply generally to all salaried employees on a nondiscriminatory basis.


(4)
The amounts in the All Other Compensation column for Mr. Garding also reflect income from the personal use of a company vehicle and amounts paid by us for social club dues and 401k match and profit sharing dollars over the IRS compensation limit.


(5)
Mr. Riley was hired as an executive officer in July 2013 and became our CFO in August 2013. The amounts in the All Other Compensation column for Mr. Riley also reflect income from amounts paid by us for moving and relocation expenses of $55,973.


(6)
The amounts in the All Other Compensation column for Mr. Moore also reflect income from amounts paid by us for 401k match and profit sharing dollars over the IRS compensation limit.


(7)
Mr. Huston became an executive officer in March 2012. Amounts in the table for 2012 reflect his compensation for the entire 2012 year. Although Mr. Huston was employed by us in 2011, he was not an executive officer at such time. The amounts in the All Other Compensation column for Mr. Huston also reflect income from amounts paid by us for social club dues.


(8)
Mr. Guenthner became an executive officer in March 2012. Amounts in the table for 2012 reflect his compensation for the entire 2012 year. Although Mr. Guenthner was employed by us in 2011, he was not an executive officer at such time. The amounts in the All Other Compensation column for Mr. Guenthner also reflect income from amounts paid by us for 401k match and profit sharing dollars over the IRS compensation limit.


(9)
The amounts in the All Other Compensation column for Mr. Cerkovnik also reflect income from amounts paid by us for social club dues and 401k match and profit sharing dollars over the IRS compensation limit.


(10)
Mr. Moore resigned as CFO effective August 15, 2013, at which time Mr. Riley succeeded him as CFO.




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GRANTS OF PLAN-BASED AWARDS IN 2013




All Other All Other
Stock Option
Awards: Awards:
Estimated Future Payouts Under Number of Number of Exercise or Grant Date
Equity Incentive Plan Awards Shares of Securities Base Price Fair Value of
Committee Stock or Underlying of Option Stock and
Grant Approval Threshold Target Maximum Units Options Awards Option

Name
Date Date (#)(1) (#)(2) (#)(3) (#)(4) (#) ($/Sh) Awards

Edward Garding
2/15/2013 1/23/2013 — — — 3,921 — $ — $ 67,519
2/15/2013 1/23/2013 1,307 5,226 6,533 — — — 89,992
2/15/2013 1/23/2013 — — — — 19,380 17.22 67,499

Kevin P. Riley
7/16/2013 NA — — — 12,000 — 22.24 266,880

Michael G. Huston
2/15/2013 1/23/2013 — — — 1,401 — — 24,125
2/15/2013 1/23/2013 467 1,869 2,336 — — — 32,184
2/15/2013 1/23/2013 — — — — 6,933 17.22 24,147

Kevin J. Guenthner
2/15/2013 1/23/2013 — — — 1,188 — — 20,457
2/15/2013 1/23/2013 396 1,584 1,980 — — — 27,277
2/15/2013 1/23/2013 — — — — 5,878 17.22 20,472

Robert M. Cerkovnik
2/15/2013 1/23/2013 — — — 507 — — 8,731
2/15/2013 1/23/2013 169 675 844 — — — 11,623
2/15/2013 1/23/2013 — — — — 2,503 17.22 8,718



(1)
This represents the threshold payout of 25% of target on the performance shares awarded, one third of which is based on ROA, one third on ROE and the remaining one third on TSR. In order to receive this threshold payout, the Company’s future 3-Year ROA/ROE/TSR must be at the 41st percentile or above when compared to the SNL Index defined earlier.


(2)
This represents the target payout of 100% of target on the performance shares awarded, one third of which is based on ROA, one third on ROE and the remaining one third on TSR. In order to receive this threshold payout, the company’s future 3-Year ROA/ROE/TSR must be at the 70th percentile or above when compared to the SNL Index defined earlier. Dividends are paid out on these shares at the same time and same rate as dividends are paid to other shareholders.


(3)
This represents the maximum payout of 125% of target on the performance shares awarded, one third of which is based on ROA, one third on ROE and the remaining one third on TSR. In order to receive this threshold payout, the company’s future 3-Year ROA/ROE/TSR must be at the 90th percentile or above when compared to the SNL Index defined earlier.


(4)
This represents the shares of time restricted stock that vest at a rate of 33% each year through February 15, 2016, contingent on continued employment. Dividends are paid out on these shares at the same time and same rate as dividends are paid to other shareholders.


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33




OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END




Option Awards Stock Awards
Equity Incentive
Market Equity Incentive Plan Awards:
Number of Number of Number of Value of Plan Awards: Market Value or
Securities Securities Shares or Shares or Number of Payout Value of
Underlying Underlying United of Units of Unearned Shares Unearned Shares
Unexercised Unexercised Option Stock That Stock Units or Other Units or Other
Options Options Exercise Option Have Not That Have Rights That Have Rights That Have
Exercisable Unexercisable Price Expiration Vested Not Vested Not Vested Not Vested

Name
(#) (#)(1) ($) Date (#)(2) ($) (#)(3) ($)

Edward Garding
18,000 — $ 13.87 2/3/2015
18,000 — 17.00 1/26/2016
18,000 — 20.62 1/25/2017
18,000 — 20.87 2/15/2018
6,052 — 15.25 5/15/2019
6,284 — 15.00 2/12/2020
6,992 3,497 14.20 2/14/2021
4,125 8,250 14.37 2/17/2022
— 19,380 17.22 2/15/2020
7,373 $ 209,172 3,702 $ 164,929

Kevin P. Riley
— — NA NA 12,000 340,440 — —

Terrill R. Moore
9,000 — 13.87 2/3/2015
18,000 — 17.00 1/26/2016
18,000 — 20.62 1/25/2017
18,000 — 20.87 2/15/2018
6,100 — 15.25 5/15/2019
6,336 — 15.00 2/12/2020
6,228 3,116 14.20 2/14/2021
3,203 6,405 14.37 2/14/2022
2,801 79,464 1,859 106,104

Michael G. Huston
1,800 — 17.00 1/26/2016
3,600 — 20.62 1/25/2017
3,600 — 20.87 2/15/2018
3,840 — 15.25 5/15/2019
2,576 — 15.00 2/12/2020
2,646 1,325 14.20 2/14/2021
1,389 2,776 14.37 2/17/2022
— 6,933 17.22 2/15/2020
2,607 73,961 1,273 58,790

Kevin J. Guenthner
— 1,449 14.20 2/14/2021
— 2,977 14.37 2/17/2022
— 5,878 17.22 2/15/2020
2,489 70,613 1,260 60,542

Robert M. Cerkovnik
3,600 — 20.62 1/25/2017
3,200 — 20.87 2/15/2018
2,112 1,058 14.20 2/14/2021
1,071 2,141 14.37 2/17/2022
— 2,503 17.22 2/15/2020
1,448 41,080 169 4,787



(1)
All options granted after 2008, all of which expire subsequent to 2018, vest at a rate one-third upon each anniversary of the grant date. All options granted prior to 2009, all of which expire prior to 2018, vest at a rate of 25% upon grant and 25% each year thereafter.




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(2)
Represents unvested time restricted stock which at original issuance vested at a rate of one-third each year, contingent on continued employment.


(3)
Represents the threshold number of performance restricted stock shares that are expected to vest December 31, 2014 or December 31, 2015 based upon achievement of specified performance conditions and continued employment.


OPTION EXERCISES AND STOCK VESTED IN 2013




Option Awards Stock Awards
Number of Shares Value Realized Number of Shares Value Realized
Acquired on Exercise On Exercise Acquired on Vesting On Vesting

Name
(#) ($)(1) (#) ($)(2)

Edward Garding
— $ — 3,112 $ 54,416

Kevin P. Riley
— — — —

Terrill R. Moore
25,000 267,150 2,743 47,799

Michael G. Huston
9,000 56,289 1,159 20,197

Kevin J. Guenthner
64,711 298,336 1,545 26,929

Robert M. Cerkovnik
14,760 74,183 778 13,553



(1)
The amount in the Value Realized On Exercise column reflects the difference between the stock option exercise price and the closing price of the stock on the day prior to exercise multiplied by the number of shares acquired.


(2)
The amount in the Value Realized On Vesting column reflects the closing price of the stock on the day prior to vesting multiplied by the number of shares vesting.


Nonqualified Deferred Compensation

Pursuant to our nonqualified deferred compensation plan described above under “Deferred Compensation Plans,” certain executives, including the NEOs, may defer a portion of base salary and bonus. Deferral elections are made by eligible executives during the last quarter of each year for amounts to be earned in the following year.

Earnings depend on the performance of the specific mutual funds in which the executive invests. Benefits under the plan are generally not paid until the beginning of the year following retirement or termination. Benefits can be received either as a lump sum payment or in annual installments based on the executive’s election made at least one year prior to retirement.

NONQUALIFIED DEFERRED COMPENSATION




Executive
Contributions
in Last Fiscal
Year Registrant
Contributions
in Last Fiscal
Year Aggregate
Earnings In
Last Fiscal
Year
Aggregate
Withdrawals/

Distributions
Aggregate
Balance At
Last Fiscal
Year End

Name
($)(1) ($)(2) ($) ($) ($)

Edward Garding
$ 14,000 $ 3,639 $ (78 ) $ — $ 57,072

Terrill R. Moore
246,982 228 115,101 — 898,919

Kevin J. Guenthner
12,721 59 58,521 — 329,453



(1)
The amounts in the Executive Contributions in Last Fiscal Year column are included as salary and/or bonus for each of the NEOs in the summary compensation table in the year the contribution was earned.


(2)
The amounts in Registrant Contributions in Last Fiscal Year column are included as other compensation for each of the NEOs in the summary compensation table in the year the contribution was earned.




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Potential Payments upon Termination or Change of Control

The amount of compensation payable to the NEOs upon voluntary termination, retirement, involuntary not-for-cause termination, termination following a change of control and in the event of disability or death of the executives is explained below. The amounts shown assume that such termination was effective as of December 31, 2013 and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the NEOs upon their termination. The actual amounts to be paid out can only be determined at the time of separation.

Payments Made Upon Termination. Regardless of the manner in which a NEO’s employment is terminated, he is entitled to receive amounts earned during his term of employment. Such amounts include:




salary;





grants and awards received under our equity plans, subject to the vesting and other terms applicable to such grants and awards;





amounts contributed and vested under our profit sharing plan and deferred compensation plan; and





unused paid time off.


In its discretion, the Board may authorize payment of a bonus on a pro rata or other basis, if at all. The Board may also accelerate the vesting of any unexercisable stock options or restricted stock awards outstanding at the time of termination. The amounts regarding applicable salaries, stock options, restricted stock awards, bonuses and deferred compensation for the most recent fiscal year ended December 31, 2013 are contained in the various tables included above.

Severance Payments. Except for the benefits listed under the heading “Payments Made Upon Termination” above, the NEOs are not entitled to any other severance benefits.

Payments Made Upon Retirement. In the event of retirement, the NEOs would be entitled to the benefits listed under the heading “Payments Made Upon Termination” above.

Payments Made Upon Death. In the event of death, in addition to the benefits listed under the heading “Payments Made Upon Termination” above, the estates or other beneficiaries of the NEOs are entitled to receive benefits under our group life insurance plan equal to the lesser of (i) 2.5 times their respective base salary or (ii) $300,000. For all NEOs, the applicable amount would be $300,000.

Benefits are also available under our endorsement split-dollar plan pursuant to which the estates or other beneficiaries of Messrs. Garding and Moore would also be entitled to receive benefits equal to the lower of the net insurance amount or three times their respective base salary as follows: Mr. Garding, $1,368,000; and Mr. Moore, $840,000.

An additional $100,000 of the policy death benefit under the life insurance policy covering selected officers of First Interstate Bank is available to the beneficiaries of Mr. Garding and Mr. Moore should death occur while they are employed by the Company.

An additional $150,000 of surivor income benefit pursuant to life insurance policies covering selected officers of First Interstate Bank is available to the beneficiaries of Mr. Riley and Mr. Guenthner should death occur while they are employed by the Company.

Payments Made Upon Disability. In the event of disability, in addition to the benefits listed under the heading “Payments Made Upon Termination” above, the NEOs are entitled to receive benefits under our group disability plan which generally provides for 60% of pre-disability earnings up to a maximum of $13,000 per month. For each of the NEOs the applicable amount would be $13,000 per month.

Payments Made Upon a Change of Control. The NEOs are not entitled to any payment resulting from a change in control.

Director Compensation

We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as well as the skill level required by us with respect to members of the Board.



36




During 2013, each director, other than Ed Garding, Thomas W. Scott, and James R. Scott, received an annual retainer valued at $41,750 with at least $21,750 of that being paid in the form of equity. The Directors may elect to receive the other $20,000 in the form of cash, common stock or stock options. The number of options granted was determined based on a value established using the Black-Scholes option pricing model using the Company’s historical volatility and a 7 year life.

Each director, other than Ed Garding, Thomas W. Scott, and James R. Scott, received fees of $1,000 per board meeting attended and $750 per Committee meeting attended. Committee chairpersons also received an additional annual retainer, in cash or equity, of $7,500.

Thomas W. Scott received an annual retainer of $315,000, paid bi-weekly, for his services as Chairman of the Board. James R. Scott received an annual retainer of $330,000, paid bi-weekly, for services as Executive Vice Chairman of the Board. Both Mr. Thomas W. Scott and Mr. James R. Scott received one third of their retainers in the form of stock. These retainers were in lieu of all director fees and other retainers described above. The retainer paid to Mr. Thomas Scott recognizes his work on executive succession planning, assistance provided to Company management in monitoring problem loans and non-performing assets and travel to branch banking offices to meet with and communicate expectations to our advisory boards. The retainer paid to Mr. James Scott recognizes his work in providing an interface between the Board and our management, oversight of strategic planning, leadership of the Board in capital planning, deployment and the creation of shareholder value, work on Board and executive succession planning and community visibility.

Directors are reimbursed for ordinary expenses incurred in connection with attending board and committee meetings. Directors are also eligible for the group medical insurance coverage at the director’s option. Under our deferred compensation plan, directors may elect to defer any portion of director’s fees until an elective distribution date or the director’s retirement, disability or death.

DIRECTOR COMPENSATION





Name
Fees
Earned or
Paid in
Cash
($) Stock
Awards
($)(1) Options
Awards
($)(2) All Other
Compensation
($) Total
($)

Thomas W. Scott
$ 250,385 $ 104,995 $ — $ — $ 355,380

James R. Scott
262,308 109,992 — — 372,300

Ed Garding(3)
— — — — —

Steven J. Corning(4)
46,250 21,736 — 60,000 127,986

David H. Crum
15,750 41,744 — — 57,494

William B. Ebzery
24,750 30,876 10,873 — 66,499

Charles E. Hart, M.D., M.S.
17,250 38,371 10,873 — 66,494

James W. Haugh
36,500 21,736 — — 58,236

Charles M. Heyneman
30,500 21,736 — — 52,236

John M. Heyneman, Jr.
38,000 — 21,747 — 59,747

David L. Jahnke
47,000 21,736 — — 68,736

Ross E. Leckie
41,250 21,736 — — 62,986

Terry W. Payne(5)
6,500 — — — 6,500

Jonathan R. Scott(6)
27,750 21,736 — — 49,486

Randall I. Scott
32,750 21,736 — — 54,486

Michael J. Sullivan
38,000 21,736 — — 59,736

Sandra A. Scott Suzor(7)
5,000 — — — 5,000

Teresa A. Taylor
43,000 21,736 — — 64,736

Theodore H. Williams(8)
33,000 21,736 — — 54,736



(1)
The amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Because of the limited number of stock awards granted to non-employee directors, the number of outstanding stock awards held by the directors at December 31, 2013 was not materially different from the amounts reflected in the relevant footnotes to the Beneficial Ownership Table included herein under the heading “Security Ownership of Certain Beneficial Owners and Management.”




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(2)
The amounts reflect the aggregate grant date fair value, for the periods presented, computed in accordance with FASB ASC Topic 718, all of which were immediately exercisable on the date of grant. For information and assumptions related to the calculation of these amounts, see “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies and Stock-Based Compensation” included in our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2013. Because of the limited number of stock options granted to non-employee directors, all of which are fully exercisable, the number of outstanding options held by the directors at December 31, 2013 was not materially different from the amounts reflected in the relevant footnotes to the Beneficial Ownership Table included herein under the heading “Security Ownership of Certain Beneficial Owners and Management.”


(3)
Mr. Garding received no compensation for serving as a director, but he was compensated in his capacity as our president and CEO through December 31, 2013.


(4)
Mr. Corning received $60,000 in 2013 pursuant to a contractual agreement for management of a construction project on behalf of the Company. The total contracted amount for the project is the lesser of $180,000 or 4% of hard construction costs. These payments are unrelated to his service as a director. For additional information regarding this arrangement, see “Certain Relationships and Related Transactions” below.


(5)
Mr. Payne served as a director through May 2013.


(6)
Mr. Scott began serving as a director in May 2013.


(7)
Ms. Suzor served as a director through May 2013.


(8)
Mr. Williams began serving as a director in May 2013.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, during the year ended December 31, 2013, our directors, executive officers and greater than 10% shareholders complied with all Section 16(a) filing requirements with the following exceptions: Jonathan R. Scott, a director, failed to report on a timely basis the May 22, 2013 award of 1,044 Class A common shares awarded in lieu of director fees. This transaction was subsequently reported on November 20, 2013. Homer R. Scott, Jr., a director, failed to report on a timely basis the May 17, 2013 sale of 1,000 Class A common shares in an open market transaction. This transaction was subsequently reported on May 28, 2013. Kevin P. Riley, an executive officer, failed to report on a timely basis the July 16, 2013 award of 12,000 time restricted shares. This transaction was subsequently reported on November 6, 2013.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We conduct banking transactions in the ordinary course of business with related parties, including directors, executive officers, shareholders and their associates, on the same terms as those prevailing at the same time for comparable transactions with unrelated persons and that do not involve more than a normal risk of collectability or present other unfavorable features. The independent members of our Governance & Nominating Committee review and approve all related party transactions in excess of $120,000.

Certain executive officers, directors and greater than 5% shareholders of ours and certain entities and individuals related to such persons, incurred indebtedness in the form of loans, as customers, of $24,669,000 as of December 31, 2013. During 2013, new loans and advances on existing loans of $16,067,000 were funded and loan repayments totaled $20,058,000. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to us and are allowable under the Sarbanes Oxley Act of 2002. Additionally, during 2013, net loans of $7,407,000 were removed due to changes in related parties from the prior year.

We purchase property, casualty and other insurance through an agency in which Terry W. Payne, a director whose term ended in May 2013, has a controlling ownership interest. We paid insurance premiums to the agency of $764,000 in 2013.



38




We lease an aircraft from an entity wholly-owned by Thomas W. Scott, the chairman of our Board. Under the terms of the lease, we pay a fee for each flight hour plus certain third party operating expenses related to the aircraft. During 2013, we paid total fees and operating expenses of $309,000 for our use of the aircraft. In addition, we lease a portion of our hanger and provide pilot services to the related entity. During 2013, we received payments from the related entity of $61,000 for hanger use, pilot fees and reimbursement of certain third party operating expenses related to Mr. Scott’s personal use of the aircraft.

Thomas W. Scott, chairman of our Board, James R. Scott, executive vice-chairman of our Board, four of our directors, John M. Heyneman, Charles M. Heyneman, Randall I. Scott, Sandra A. Scott Suzor, and one greater than 5% shareholder, Homer A Scott, Jr., each has a 2.5% interest in Scott Family Services, Inc., or SFS, which provides professional services that benefit us and the Scott Family. In addition, Randall I. Scott is the chairman of the board of directors of SFS. Services provided for our benefit include shareholder education and communication, strategic enterprise planning and corporate governance consultation. During 2013, we paid $224,000 for these services. SFS reimburses us for all salaries, wages and employee benefits expenses incurred by us on its behalf for personnel.

During 2012, the Company entered into a contract with an entity wholly-owned by Steven J. Corning, a director of ours, to provide construction management and advisory services related to the construction of a bank office building. We paid the entity $60,000 during 2013.

Conflict of Interest Policy

On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire that requires disclosure of any transactions with our company in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Under our code of personal conduct, all employees, including executive officers, are expected to avoid conflicts of interest. Pursuant to our code of ethics for the chief executive officer and senior finance officers, such officers are prohibited from engaging in activities that are or may appear to be a conflict of interest unless a specific, case-by-case exception has first been reviewed and approved by the Board. All of our directors are subject to the Board’s governance standards that include a code of ethics and conduct guide requiring the directors to avoid conflicts of interest.

On January 28, 2010, the Board adopted a related person transaction policy that is applicable to our executive officers, directors and certain entities and individuals related to such persons. The policy, as amended, generally provides that we will not enter into any transaction or series of transactions in excess of $120,000 with related parties unless such transaction(s) are (1) reviewed after disclosure of the relevant facts and circumstances, including any benefits to the Company and the terms of any comparable products or services provided by unrelated third parties, and (2) determined to be in the best interests of the Company and our shareholders, as approved by the independent directors of our governance & nominating committee. The policy also provides that the chairman of such committee, who is an independent director, has delegated authority to approve such transaction(s) in certain circumstances, subject to ratification by the independent directors. The policy does not apply to loan and credit transactions to directors and executive officers that are covered by Regulation O adopted by the Federal Reserve.

Subsequent to adoption of the related person transaction policy, all of the ongoing related party transactions described above were reviewed and approved by the independent directors of the governance & nominating committee in accordance with the policy.

SHAREHOLDER PROPOSALS

The rules of the SEC permit shareholders of a company, after timely notice to the company, to present proposals for shareholder action in the company’s proxy statement where such proposals are consistent with applicable law, pertain to matters appropriate for shareholder action and are not properly omitted by company action in accordance with the SEC’s proxy rules. Our 2015 annual meeting of shareholders is expected to be held on or about May 20, 2015, and proxy materials in connection with that meeting are expected to be mailed on or about April 10, 2015. The deadline for submission of shareholder proposals pursuant to Rule 14a-8 under the Exchange Act for inclusion in our proxy statement for our 2015 annual meeting of shareholders is December 10, 2014, which is 120 days prior to the anniversary of the mailing date for our proxy materials.



39




Additionally, under the terms of our amended and restated bylaws, shareholders who wish to present an item of business at the 2015 annual meeting must provide notice to the corporate secretary at our principal executive offices not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to May 20, 2015, which will be the one-year anniversary of our 2014 annual meeting. If we do not receive notice of a shareholder proposal in advance of such date, such proposal will be considered untimely pursuant to Rules 14a-4 and 14a-5(e) and the persons named in proxies solicited by the Board for our 2015 annual meeting of shareholders may exercise discretionary voting power with respect to such proposal.

OTHER MATTERS

We know of no matters other than as contained in the Notice of Annual Meeting of Shareholders to be brought before the meeting. The enclosed proxy, however, gives discretionary authority in the event that any additional matters should be duly presented.

Any shareholder may obtain without charge a copy of our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2013, which includes our audited financial statements. Written requests for a copy of our Annual Report on Form 10-K should be addressed to Amy Anderson, Assistant Vice President, First Interstate BancSystem, Inc., 401 North 31st Street, PO Box 30918, Billings, Montana 59116-0918.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ CAROL STEPHENS DONALDSON

Carol Stephens Donaldson

Secretary

Billings, Montana

April 2, 2014



40




ANNUAL MEETING OF SHAREHOLDERS OF

FIRST INTERSTATE BANCSYSTEM, INC.

May 21, 2014







PROXY VOTING INSTRUCTIONS








INTERNET - Access www.voteproxy.com and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.

LOGO




TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.




Vote online/phone until 11:59 PM EST the day before the meeting.





COMPANY NUMBER




MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.



ACCOUNT NUMBER




IN PERSON - You may vote your shares in person by attending the Annual Meeting.




GO GREEN - e–Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.









NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card

are available at http://www.astproxyportal.com/ast/40016/




i Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. i








¢ 00003333333000000000 0
052114


THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” EACH OF THE NOMINEES IN PROPOSAL 1 AND “FOR” PROPOSAL 2.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x



1.
Election of Directors


Nominees

FOR AGAINST ABSTAIN

(1) Steven J. Corning
¨ ¨ ¨

(2) Dana Filip-Crandall
¨ ¨ ¨

(3) Charles E. Hart
¨ ¨ ¨

(4) Charles M. Heyneman
¨ ¨ ¨

(5) Thomas W. Scott
¨ ¨ ¨

(6) Michael J. Sullivan
¨ ¨ ¨







2.







The ratification of McGladrey LLP as our independent registered public accounting firm for 2014.
¨ ¨ ¨



NOTE: Such other business as may properly come before the meeting or any adjournment thereof.










This proxy, when properly executed, will be voted in the manner
directed herein. If no such direction is made, this proxy will be voted in
accordance with the Board of Directors recommendations.


To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
¨

Signature of Shareholder
Date: Signature of Shareholder Date:

Note:

n

Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.

n

https://www.sec.gov/Archives/edgar/data/860413/000119312514129032/d701337ddef14a.htm

<DOCUMENT>
<TYPE>13F-HR
<SEQUENCE>1
<FILENAME>c58380e13fvhr.txt
<DESCRIPTION>FORM 13F-HR
<TEXT>
<PAGE>

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

FORM 13F

FORM 13F COVER PAGE

Report for the Calendar Year or Quarter Ended: March 31, 2010

Check here is Amendment [ ]; Amendment Number: __________

The Amendment (Check only one.): [ ] is a restatement.
[ ] adds new entries.

Institutional Investment Manager Filing this Report:

Name: First Interstate Bank
Address: 401 North 31st Street
Billings, MT 59116

The institutional investment manager filing this report and the person by whom
it is signed hereby represent that the person signing the report is authorized
to submit it, that all information contained herein is true, correct and
complete, and that it is understood that all required items, statements,
schedules, lists, and tables, are considered integral parts of this form.

Person Signing this Report on Behalf of Reporting Manager:

Name: Richard A. McCann
Title: Vice President
Phone: 406-255-5132

Signature, Place, and Date of Signing:


/s/ Richard A. McCann Billings, MT May 21, 2010
------------------------------------ ----------------- ---------------------

Report Type (Check only one.):

[X] 13F HOLDINGS REPORT.

[ ] 13F NOTICE.

[ ] 13F COMBINATION REPORT.

List of Other Managers Reporting for this Manager: None

I AM SIGNING THIS REPORT AS REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934.

<PAGE>

13F SUMMARY PAGE

Report Summary:

Number of Other Included Mangers: 0

Form 13F Information Table Entry Total: 116

Form 13F Information Table Value Total: $373,364,991

List of Other Included Managers: NONE
<PAGE>

13 F REPORT OF MANAGED ASSETS

Date Run: 05/20/2010 Processing Date: 05/20/2010 Time Printed: 3:20:58 PM
As Of Date: 03/31/2010

<TABLE>
<CAPTION>
INVESTMENT DIRECTION VOTING AUTHORITY
------------------------- ---------------------------
MARKET SHARES/
NAME OF ISSUER TYPE CUSIP VALUE PV SOLE SHARED OTHER SOLE SHARED OTHER
-------------- --------------- --------- ----------- --------- --------- --------- ----- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aflac Inc Equity 001055102 297,509 5,480 5,480 0 0 5,480 0 0
AT&T Inc Equity 00206R102 410,391 15,882 15,371 511 0 15,882 0 0
Abbott Laboratories Equity 002824100 4,369,911 82,952 78,346 4,606 0 80,781 1,382 789
Adobe Systems Equity 00724F101 276,240 7,810 7,810 0 0 7,810 0 0
Air Products & Chemicals Equity 009158106 2,663,827 36,022 34,776 1,246 0 35,889 0 133
Altria Group Inc Equity 02209S103 937,518 45,688 44,788 900 0 45,688 0 0
American Creek Recources Ltd Equity 025288101 3,571 25,000 25,000 0 0 25,000 0 0
Amgen Inc Equity 031162100 316,899 5,296 5,296 0 0 5,296 0 0
Apache Corporation Equity 037411105 3,361,274 33,116 31,577 1,539 0 32,734 0 382
Apple Computer Inc Equity 037833100 5,604,750 23,850 22,689 1,161 0 23,403 0 447
Applied Materials Inc Equity 038222105 156,223 11,600 11,600 0 0 11,600 0 0
BP PLC Formerly BP Amoco PLC
Sponsored ADR Equity 055622104 863,983 15,139 13,049 2,090 0 15,139 0 0
Bank America Corporation Equity 060505104 3,401,889 190,582 184,535 6,047 0 188,363 0 2,219
Bank of New York Mellon Corp Equity 064058100 3,182,030 103,045 99,228 3,817 0 102,511 0 534
Berkshire Hathaway Inc Del
Cl A Equity 084670108 487,200 4 0 4 0 4 0 0
Berkshire Hathaway Inc -
Cl B Equity 084670702 3,362,953 41,380 38,450 2,930 0 40,646 200 534
Best Buy Inc Equity 086516101 230,992 5,430 4,400 1,030 0 5,000 0 430
BHP Billiton Limited ADR Equity 088606108 3,199,146 39,830 38,648 1,182 0 39,369 0 461
Boeing Company Equity 097023105 232,352 3,200 3,200 0 0 3,200 0 0
Caterpillar Inc Equity 149123101 4,698,477 74,757 71,636 3,121 0 73,791 0 966
Chevron Corp Equity 166764100 3,942,781 51,995 48,581 3,414 0 50,917 397 681
Cisco Systems Inc Equity 17275R102 4,900,720 188,272 179,519 8,753 0 186,109 0 2,163
Citigroup Inc Equity 172967101 343,590 84,837 73,304 11,533 0 73,837 0 11,000
Coca Cola Company Equity 191216100 382,525 6,955 6,955 0 0 6,955 0 0
Conocophillips Equity 20825C104 342,737 6,698 6,512 186 0 6,698 0 0
Costco Wholesale Corporation Equity 22160K105 3,384,423 56,681 54,775 1,906 0 56,087 0 594
Powder Horn Ranch LLC Equity 2353637 431,690 98 0 98 0 0 0 98
Powderhorn Ranch 2 LLC 20%
Ownership Interest Preferred Stock 2353792 1,000,000 4 1 3 0 0 0 4
Danaher Corporation Equity 235851102 3,560,790 44,560 42,752 1,808 0 44,010 0 550
Brug Land & Livestock Co.,
Inc Preferred Stock 2359748 100,000 100,000 100,000 0 0 100,000 0 0
Powder River Ranch Inc Preferred Stock 2363490 1,161,965 8,157 8,157 0 0 8,157 0 0
</TABLE>


FIBWM PAGE 1 OF 4

<PAGE>

13 F REPORT OF MANAGED ASSETS

Date Run: 05/20/2010 Processing Date: 05/20/2010 Time Printed: 3:20:59 PM
As Of Date: 03/31/2010

<TABLE>
<CAPTION>
INVESTMENT DIRECTION VOTING AUTHORITY
------------------------- ---------------------------
MARKET SHARES/
NAME OF ISSUER TYPE CUSIP VALUE PV SOLE SHARED OTHER SOLE SHARED OTHER
-------------- --------------- --------- ----------- --------- --------- --------- ----- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Deere & Company Equity 244199105 389,463 6,550 6,250 300 0 6,250 0 300
Popelka Enterprises LLC
4.95% Nonvoting Int. Preferred Stock 2478876 589,513 1 1 0 0 1 0 0
Popelka Enterprises LLC
10.79% Voting Int. Preferred Stock 2478877 1,285,020 1 1 0 0 1 0 0
Popelka Enterprises LLC
3.72% Nonvoting Int. Preferred Stock 2478878 443,000 1 1 0 0 1 0 0
Tacitlogic, Inc. Equity 2517782 17,002 70,112 70,112 0 0 0 0 70,112
Disney Walt Co Holdings Equity 254687106 3,062,096 87,714 84,755 2,959 0 86,554 64 1,096
Dominion Res Inc Equity 25746U109 217,554 5,292 5,292 0 0 5,292 0 0
Dow Chemical Company Equity 260543103 242,474 8,200 8,200 0 0 8,200 0 0
Duke Energy Corp Equity 26441C105 348,432 21,350 19,250 2,100 0 21,350 0 0
EMC Corporation Equity 268648102 4,370,154 242,248 229,982 12,266 0 238,679 0 3,569
Emerson Electric Company Equity 291011104 3,967,547 78,815 75,520 3,295 0 77,725 0 1,090
Entergy Louisiana LLC
7.6% PFD Preferred Stock 29364W207 250,900 10,000 10,000 0 0 10,000 0 0
Exelon Corporation Equity 30161N101 1,984,856 45,306 43,224 2,082 0 44,232 0 1,074
Exxon Mobil Corporation Equity 30231G102 6,764,109 100,987 93,982 7,005 0 100,013 0 974
FPL Group Inc Equity 302571104 2,864,326 59,266 55,371 3,895 0 58,140 0 1,126
FPL Group Cap Trust I
5.875% PFD Preferred Stock 30257V207 421,176 16,800 16,800 0 0 16,800 0 0
First Interstate Bancsystem
Inc - Cl B Equity 32055Y300 291,330 17,928 17,928 0 0 12,528 0 5,400
First Interstate Bancsystem
- Cl B RESTRICTED Equity 32055Y30R 143,678,178 8,841,734 2,068,034 6,773,700 0 2,868,390 0 5,973,344
GMAC LLC 7.25% PFD Preferred Stock 36186C400 306,449 14,300 14,300 0 0 14,300 0 0
General Dynamics Corporation Equity 369550108 2,333,602 30,228 28,935 1,293 0 29,612 0 616
General Electric Company Equity 369604103 3,696,293 203,093 189,341 13,752 0 200,884 0 2,209
Genzyme Corporation-General
Division Equity 372917104 2,563,045 49,451 47,238 2,213 0 48,958 0 493
Glacier Bancorp Inc Equity 37637Q105 1,229,579 80,734 80,734 0 0 78,270 0 2,464
Goldcorp Inc Equity 380956409 372,200 10,000 0 10,000 0 0 10,000 0
Goldman Sachs Group Inc Equity 38141G104 214,311 1,256 1,206 50 0 1,256 0 0
Google Inc Equity 38259P508 243,862 430 430 0 0 430 0 0
Hewlett Packard Company Equity 428236103 4,575,524 86,087 82,536 3,551 0 85,154 0 933
Illinois Tool Works Inc Equity 452308109 2,766,771 58,420 56,631 1,789 0 58,213 0 207
Intel Corporation Equity 458140100 4,650,942 208,656 197,797 10,859 0 205,991 0 2,665
International Business
Machines Corporation Equity 459200101 5,039,969 39,298 38,105 1,193 0 38,603 0 695
JP Morgan Chase & Company Equity 46625H100 5,612,590 125,421 120,392 5,029 0 123,610 0 1,811
</TABLE>


FIBWM PAGE 2 OF 4

<PAGE>

13 F REPORT OF MANAGED ASSETS

Date Run: 05/20/2010 Processing Date: 05/20/2010 Time Printed: 3:20:59 PM
As Of Date: 03/31/2010

<TABLE>
<CAPTION>
INVESTMENT DIRECTION VOTING AUTHORITY
------------------------- ---------------------------
MARKET SHARES/
NAME OF ISSUER TYPE CUSIP VALUE PV SOLE SHARED OTHER SOLE SHARED OTHER
-------------- --------------- --------- ----------- --------- --------- --------- ----- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jacobs Engineering Group Inc Equity 469814107 242,444 5,365 5,365 0 0 5,365 0 0
Johnson & Johnson Equity 478160104 5,753,183 88,239 82,930 5,309 0 86,055 800 1,384
Kraft Foods Inc Equity 50075N104 4,411,411 145,880 141,075 4,805 0 144,659 0 1,221
Limoneira Company Equity 532746104 493,000 2,900 2,900 0 0 2,900 0 0
Lowes Cos Inc Equity 548661107 2,359,231 97,328 93,447 3,881 0 96,158 0 1,170
MDU Resources Group Inc Equity 552690109 1,815,094 84,110 16,162 67,948 0 17,549 0 66,561
McDonalds Corporation Equity 580135101 3,405,055 51,035 49,169 1,866 0 49,940 0 1,095
Medtronic Inc Equity 585055106 4,068,731 90,356 85,589 4,767 0 89,372 0 984
Merck & Co Inc Equity 58933Y105 3,219,383 86,195 80,445 5,750 0 83,233 2,500 462
Merrill Lynch Cap Tr III
7.000% PFD Preferred Stock 59021F206 307,190 13,900 13,900 0 0 13,900 0 0
ML Preferred Capital Trust V
7.28% PFD Preferred Stock 59021K205 220,320 9,600 9,600 0 0 9,600 0 0
ML-Lehman Crossroads Equity 590998225 530,010 585 585 0 0 585 0 0
Metlife Inc Equity 59156R108 1,776,810 40,997 40,008 989 0 40,812 0 185
Microsoft Corporation Equity 594918104 2,851,665 97,368 91,259 6,109 0 95,257 1,000 1,111
NAL Oil & Gas Trust Equity 628949109 191,336 15,000 0 15,000 0 0 15,000 0
Northern Trust Corporation Equity 665859104 3,352,348 60,665 58,594 2,071 0 60,360 0 305
Oracle Corporation Equity 68389X105 3,882,030 150,993 146,848 4,145 0 148,889 0 2,104
Orleans Energy Ltd Equity 686586108 75,412 33,000 0 33,000 0 0 33,000 0
PNC Financial Services Group Equity 693475105 202,980 3,400 3,400 0 0 3,400 0 0
Paramount Energy Trust Equity 699219101 46,098 10,000 0 10,000 0 0 10,000 0
Peabody Energy Corporation Equity 704549104 3,257,450 71,279 68,743 2,536 0 70,352 0 927
Penney J C Inc Equity 708160106 324,917 10,100 0 10,100 0 10,100 0 0
Pepsico Inc Equity 713448108 4,347,241 65,708 62,785 2,923 0 64,663 0 1,045
Philip Morris International Equity 718172109 454,887 8,721 8,721 0 0 8,721 0 0
Plum Creek Timber Company
Inc Equity 729251108 208,402 5,356 5,356 0 0 5,356 0 0
Procter & Gamble Company Equity 742718109 5,185,672 81,961 78,766 3,195 0 81,579 0 382
Provident Energy Trust-UTS Equity 74386K104 100,230 13,000 0 13,000 0 0 13,000 0
Qualcomm Inc Equity 747525103 3,185,477 75,917 72,422 3,495 0 75,146 0 771
Schlumberger Limited Equity 806857108 3,544,241 55,850 53,335 2,515 0 54,898 200 752
Silver Wheaton Corporation Equity 828336107 188,160 12,000 0 12,000 0 0 12,000 0
Silvercorp Metals Inc Equity 82835P103 206,400 30,000 0 30,000 0 0 30,000 0
</TABLE>


FIBWM PAGE 3 OF 4

<PAGE>

13 F REPORT OF MANAGED ASSETS

Date Run: 05/20/2010 Processing Date: 05/20/2010 Time Printed: 3:20:59 PM
As Of Date: 03/31/2010

<TABLE>
<CAPTION>
INVESTMENT DIRECTION VOTING AUTHORITY
------------------------- ---------------------------
MARKET SHARES/
NAME OF ISSUER TYPE CUSIP VALUE PV SOLE SHARED OTHER SOLE SHARED OTHER
-------------- --------------- --------- ----------- --------- --------- --------- ----- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ML- BCP V (Offshore) Equity 841S69999 223,820 310 310 0 0 310 0 0
Southwestern Energy Company Equity 845467109 1,923,124 47,228 45,775 1,453 0 47,045 0 183
Staples Inc Equity 855030102 2,598,209 110,999 107,071 3,928 0 109,250 0 1,749
State Street Corporation Equity 857477103 1,592,991 35,290 33,925 1,365 0 35,138 0 152
Stryker Corporation Equity 863667101 232,027 4,055 3,635 420 0 4,055 0 0
Target Corporation Equity 87612E106 3,528,040 67,073 62,720 4,353 0 65,956 0 1,117
Teva Pharmaceutical
Industries Limited ADR Equity 881624209 3,345,700 53,039 50,338 2,701 0 52,224 0 815
3M Company Equity 88579Y101 280,043 3,351 1,926 1,425 0 2,226 0 1,125
Travelers Companies Inc Equity 89417E109 683,690 12,675 12,675 0 0 12,675 0 0
ML Coast Access II Ltd
Class C Equity 8EBS99993 213,543 207,929 207,929 0 0 207,929 0 0
U S Bancorp Del Equity 902973304 3,536,398 136,646 131,536 5,110 0 134,619 0 2,027
United Technologies
Corporation Equity 913017109 3,683,812 50,045 47,986 2,059 0 49,057 0 988
Vanguard Inflation Protected
Fund #119 Equity 922031869 21,661,081 1,728,738 1,631,955 96,783 0 1,708,156 10,190 10,391
Verizon Communications Equity 92343V104 2,389,409 77,028 73,706 3,322 0 75,447 0 1,581
Wal-Mart Stores Inc Equity 931142103 3,603,825 64,817 62,292 2,525 0 64,044 0 773
Washington Real Estate
Investment Trust Equity 939653101 208,962 6,840 6,840 0 0 6,840 0 0
Wells Fargo & Company Equity 949746101 520,326 16,720 14,320 2,400 0 16,720 0 0
Wells Fargo & Company PFD
7.0% Series Preferred Stock 94976Y207 201,520 8,000 8,000 0 0 8,000 0 0
Kinder Morgan Fractional
Shrs (1/100,000) Equity EKE55U103 0 70,605 70,605 0 0 70,605 0 0
Fractional Marriott
International Equity FHB903208 0 14,663 14,663 0 0 14,663 0 0
Singapore Tech Engineering
Ltd Equity Y7996W103 27,840 12,000 0 12,000 0 0 12,000 0
Zhaojin Mining Industry Co
Ltd Equity Y988A6104 165,600 90,000 0 90,000 0 0 90,000 0
Zijin Mining Group Co Ltd Equity Y9892H107 137,600 172,000 0 172,000 0 0 172,000 0
373,364,991
</TABLE>

* * * END OF ASSET REPORT * * *

116 ASSETS REPORTED OF 36279 ASSETS ON FILE


FIBWM PAGE 4 OF 4
</TEXT>
</DOCUMENT>



https://www.sec.gov/Archives/edgar/data/1125727/000095012310051943/c58380e13fvhr.txt