Edgar Filing: FIRST INTERSTATE BANCSYSTEM INC

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).

[X] Definitive proxy statement.

[ ] Definitive additional materials.

[ ] Soliciting material pursuant to Section 240.14a-12

FIRST INTERSTATE BANC SYSTEM, INC.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of filing fee (check the appropriate box):

[X] No fee required.

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

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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
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[ ] 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
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FIRST INTERSTATE BANCSYSTEM, INC.
401 North 31st Street
P.O. Box 30918
Billings, Montana 59116-0918
(406) 255-5390

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
Interstate BancSystem, Inc. (the "Company") will be held on Friday, May 17, 2002
at 8:00 a.m., Mountain Time, at the Sheraton Hotel, 27 North 27th Street,
Billings, Montana 59101, for the following purposes:

1. To elect five (5) directors of the Company.

2. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.

Only holders of record of the Company's Common Stock at the close of
business on February 28, 2002 will be entitled to notice of, and to vote at, the
Annual Meeting and any adjournment or adjournments thereof. Prior to the actual
voting thereof, a proxy may be revoked by the person executing the proxy: (i) by
filing with the Secretary of the Company an instrument of revocation, or (ii) by
voting or delivering a later executed proxy at the Annual Meeting. The giving of
a proxy will not affect your right to vote in person if you attend the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ THOMAS W. SCOTT

Thomas W. Scott
Chief Executive Officer

Billings, Montana
March 25, 2002

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YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
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FIRST INTERSTATE BANCSYSTEM, INC.
401 North 31st Street
P.O. Box 30918
Billings, Montana 59116-0918
(406) 255-5390

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PROXY STATEMENT
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This Proxy Statement is furnished to the shareholders of First
Interstate BancSystem, Inc. (the "Company" or "FIBS") in connection with the
solicitation of proxies of the Company's shareholders by the Board of Directors
to be voted at the Annual Meeting of Shareholders (the "Annual Meeting") of the
Company to be held on May 17, 2002 at 8:00 a.m., Mountain Time, at the Sheraton
Hotel, 27 North 27th Street, Billings, MT 59101, or any adjournment or
adjournments thereof.

February 28, 2002 (the "Record Date") is the Record Date for
determining the holders of record of shares of the Common Stock of the Company
(the "Common Stock") entitled to notice of and to vote at the Annual Meeting of
the Company and any adjournments thereof.

The mailing of the Proxy Statement to shareholders of the Company
commenced on or about April 15, 2002. The Company's Annual Report on Form 10-K
(the "Annual Report"), which includes audited financial statements for the
fiscal year ended December 31, 2001, is being mailed to shareholders of the
Company simultaneously with this Proxy Statement.

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INFORMATION CONCERNING SOLICITATION AND VOTING
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Only holders of record of Common Stock at the close of business on the
Record Date are entitled to vote at the Annual Meeting. A quorum for the
purposes of conducting business at the Annual Meeting is a majority of the
outstanding shares of Common Stock entitled to vote. As of the Record Date, the
Company had 7,844,056 shares of Common Stock outstanding and entitled to vote.
Holders of Common Stock are entitled to one vote per share of Common Stock at
the Annual Meeting.

All proxies that are properly executed and received in a timely manner
will be voted in accordance with the instructions noted thereon. Any proxy which
does not specify to the contrary will be voted in favor of the directors
nominated by management. A shareholder granting a proxy in the form enclosed has
the right to revoke it any time before it is voted by filing with the Secretary
of the Company an instrument of revocation or by voting or delivering a later
executed proxy at the Annual Meeting.

If a shareholder abstains from voting on any matter, the Company
intends to count the abstention as present for purposes of determining whether a
quorum is present at the Annual Meeting for the transaction of business.
Additionally, the Company intends to count broker "non-votes" as present for
purposes of determining the presence or absence of a quorum for the transaction
of business. A "non-vote" occurs when a nominee does not have discretionary
voting power, and has not received instructions from the beneficial owner.
Therefore, abstentions and broker "non-votes" have the same effect as votes
against the proposals.

When a quorum is present in the election of directors, the nominees
receiving the greatest number of votes will be elected to the Company's Board of
Directors. With respect to any other matter which may properly come before the
Annual Meeting, unless a greater number of votes is required by law or by the
Company's Articles of Incorporation, a matter will be approved by the
shareholders if the votes cast in favor of the matter exceed the votes cast in
opposition.

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PROPOSAL ONE
ELECTION OF DIRECTORS
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In accordance with the Company's amended Bylaws, the number of
directors of the Company shall be at least five and not more than eighteen.
There are currently eighteen directors. The Board is divided into three groups
with staggered three-year terms. Robert H. Waller's term as director ends May
17, 2002. The Company does not presently plan to elect a replacement for Mr.
Waller.

Five directors will be elected at the Annual Meeting to serve
three-year terms, or until their respective successors have been elected and
qualified. The Board of Directors has nominated for election as directors, James
W. Haugh, C. Gary Jennings, Robert L. Nance, Dan S. Scott and Thomas W. Scott.
All nominees are current members of the Board of Directors of the Company.

Unless authority to vote is withheld, the person named in the enclosed
Form of Proxy will vote the shares represented by such proxy for the election of
the nominees named herein. If, at the time of the Annual Meeting, any nominee
shall become unavailable for any reason for election as a director, the person
entitled to vote the proxy will vote for the election of such substitute(s) as
the Board of Directors may recommend. At this time, the Board of Directors knows
of no reason why any nominee might be unavailable to serve.

The following table sets forth certain information regarding the
nominees for election at the Annual Meeting and the directors continuing in
office after the Annual Meeting.

BOARD OF DIRECTOR NOMINEES

Name and Age Director Since Principal Occupation
------------ -------------- --------------------

James W. Haugh, 64 1997 Financial Consultant and Founder of American
Capital, L.L.C.

C. Gary Jennings, 63 2001 President, Jennings Farms, Inc.

Robert L. Nance, 65 2001 President and Chief Executive Officer,
Nance Petroleum Corporation.

Dan S. Scott, 70 1971 President and General Manager, Padlock Ranch Co.

Thomas W. Scott, 58 1971 Chief Executive Officer, First Interstate
BancSystem, Inc.

DIRECTORS CONTINUING IN OFFICE AFTER ANNUAL MEETING

Director Term
Name and Age Since Expires Principal Occupation
------------ ----- ------- --------------------

Elouise C. Cobell, 56 2001 2003 Executive Director, Blackfeet Reservation Development Fund, Inc.

David H. Crum, 57 2000 2004 President and Chief Executive Officer, Crum
Electric Supply Co., Inc.

Richard A. Dorn, 49 2001 2003 Owner, Richard A. Dorn Farms and Dorn
Property X-change; President, Murdock
Realty, P.C.

DIRECTORS CONTINUING IN OFFICE AFTER ANNUAL MEETING, continued

Director Term
Name and Age Since Expires Principal Occupation
------------ ----- ------- --------------------

William B. Ebzery, 51 2001 2004 Partner of Pradere, Ebzery, Mohatt &
Rinaldo, Certified Public Accountants.

John M. Heyneman, Jr., 34 1998 2004 Assistant Manager, Padlock Ranch Co.

Lyle R. Knight, 56 1998 2003 President and Chief Operating Officer, First
Interstate BancSystem, Inc.

Joel T. Long, 61 1996 2004 President of JTL Group, Inc., a construction firm.

Terry W. Payne, 60 2000 2004 President and Chief Executive Officer,
Terry Payne & Co., Inc.

Homer A. Scott, Jr., 67 1971 2004 Majority owner and developer of Powder Horn Golf
Course and real estate development.

James R. Scott, 52 1972 2003 Chairman, First Interstate BancSystem Foundation.

Larry F. Suchor, 57 2001 2003 President, Larry's, Inc., a road construction and
earth moving firm.

Sandra A. Scott Suzor, 42 2000 2003 Partner and Director of Sales and Marketing, Powder
Horn Ranch and Golf Course.

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SECURITY OWNERSHIP OF
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
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The following table sets forth information as of December 31, 2001 with
respect to the beneficial ownership of the Common Stock for (i) each person who
is known by the Company to own beneficially more than 5% of the Common Stock,
(ii) each of the Company's directors, (iii) each of the executive officers named
in the Summary Compensation Table, and (iv) all directors and executive officers
as a group. Unless otherwise indicated in the notes to the table, all shares
shown in the following table are owned both of record and beneficially and each
of the following parties has sole voting and investment power with respect to
such shares.

BENEFICIAL OWNERSHIP TABLE

Number of Percent
Shares Beneficially
Beneficial Owner(1) Beneficially Owned Owned
------------------- ------------------ ------------

James R. Scott(2) 1,270,668 16.19%
439 Grandview Blvd.
Billings, Montana 59102

Randall I. Scott(3) 1,154,590 14.71%
521 Freedom Avenue
Billings, Montana 59105

BENEFICIAL OWNERSHIP TABLE, continued

Number of Percent
Shares Beneficially
Beneficial Owner(1) Beneficially Owned Owned
------------------- ------------------ ------------

Thomas W. Scott(4) 951,806 12.13%
P.O. Box 30876
Billings, Montana 59107

Homer A. Scott, Jr. (7) 739,594 9.42%
122 Scott Drive
Sheridan, Wyoming 82801

Dan S. Scott(6) 384,420 4.90%

John M. Heyneman, Jr.(5) 349,634 4.45%

Sandra A. Scott Suzor(7) 85,011 1.08%

Terry W. Payne(7) 20,133 0.26%

William B. Ebzery(7) 18,181 0.23%

Edward Garding 17,211 0.22%

Robert L. Nance(7) 15,725 0.20%

Terrill R. Moore 13,144 0.17%

Robert A. Jones 11,573 0.15%

Joel T. Long 9,323 0.12%

Lyle R. Knight 8,733 0.11%

James W. Haugh(7) 6,778 0.09%

Larry F. Suchor(7) 4,846 0.06%

Richard A. Dorn(7) 2,498 0.03%

David H. Crum(8) 1,900 0.02%

C. Gary Jennings(7) 1,778 0.02%

Robert H. Waller (7)(10) 1,098 0.01%

Elouise C. Cobell(7) 818 0.01%

All directors and executive officers
as a group (21 persons)(9) 3,914,872 49.87%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the securities owned. Shares of Common
Stock subject to options currently exercisable or exercisable within 60
days of December 31, 2001, are deemed outstanding for purposes of
computing the percentage owned by the person or entity holding such
securities but are not deemed outstanding for purposes of computing the
percentage owned by any other person or entity.

(2) Includes 560,068 shares owned beneficially as managing partner of J.S.
Investments Limited Partnership; 8,810 shares owned beneficially as
President of the James R. and Christine M. Scott Family Foundation;
36,008 shares owned beneficially as trustee for Scott family members;
and, 678 shares issuable under stock options.

(3) Includes 1,119,792 shares owned beneficially as managing partner of
Nbar5 Limited Partnership.

(4) Includes 227,827 shares owned beneficially as trustee for Scott family
members.

(5) Includes 323,060 shares owned beneficially as managing partner of
Towanda Investments, Limited Partnership and 678 shares issuable under
stock options.

(6) Includes 68,960 shares owned beneficially as managing partner of Nbar5
A; 45,452 shares as managing partner of Nbar5 O; 37,700 shares as
managing partner of Nbar5 K; 33,944 shares as managing partner of Nbar5
S; and, 33,944 shares as managing partner of Nbar5 T. Also includes 678
shares issuable under stock options.

(7) Includes 678 shares issuable under stock options.

(8) Includes 1,222 shares held in trust for Crum family members and 678
shares issuable under stock options.

(9) Includes 10,170 shares issuable under stock options.

(10) Term expires May 17, 2002. Not a nominee for re-election.

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DIRECTORS AND EXECUTIVE OFFICERS
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The following table sets forth information concerning each of the
directors and executive officers of the Company:

DIRECTORS AND EXECUTIVE OFFICERS

Name Age Position
---- --- --------

Homer A. Scott, Jr. 67 Chairman of the Board
James R. Scott 52 Vice Chairman of the Board
Thomas W. Scott 58 Chief Executive Officer and Director
Lyle R. Knight 56 President, Chief Operating Officer and Director
Terrill R. Moore 49 Senior Vice President and Chief Financial Officer
Edward Garding 52 Senior Vice President and Chief Credit Officer
Robert A. Jones 55 Senior Vice President
Elouise C. Cobell 56 Director
David H. Crum 57 Director
Richard A. Dorn 49 Director
William B. Ebzery 51 Director
James W. Haugh 64 Director
John M. Heyneman, Jr. 34 Director
C. Gary Jennings 63 Director
Joel T. Long 61 Director
Robert L. Nance 65 Director
Terry W. Payne 60 Director
Dan S. Scott 70 Director
Larry F. Suchor 57 Director
Sandra A. Scott Suzor 42 Director
Robert H. Waller 73 Director(1)

(1) Term expires May 17, 2002. Not a nominee for reelection.

BUSINESS BIOGRAPHIES

Homer A. Scott, Jr. has been a director of FIBS since 1971 and the
Chairman of the FIBS Board since 1988. Mr. Scott has served as a director of
Montana-Dakota Utilities Resources Group, Inc. since 1983. Mr. Scott is the
majority owner and developer of Powder Horn Golf Course and real estate
development. Mr. Scott is the brother of James R. Scott, Thomas W. Scott and Dan
S. Scott, the uncle of John M. Heyneman, Jr., and the father of Sandra A. Scott
Suzor.

James R. Scott has been a director of FIBS since 1972 and the Vice
Chairman of the Board since 1990. Currently, Mr. Scott is Chairman of First
Interstate BancSystem Foundation and Padlock Ranch Co. Mr. Scott is the brother
of Homer A. Scott, Jr., Thomas W. Scott and Dan S. Scott, and the uncle of John
M. Heyneman, Jr. and Sandra A. Scott Suzor.

Thomas W. Scott has been a director of FIBS since 1971, has served as
Chief Executive Officer of FIBS since 1978 and has been Chairman of the Board of
First Interstate Bank "(FIB") since January 2002. Mr. Scott is the brother of
Homer A. Scott, Jr., James R. Scott and Dan S. Scott, and the uncle of John M.
Heyneman, Jr. and Sandra A. Scott Suzor.

Lyle R. Knight has been a director of FIBS and has served as President
and Chief Operating Officer of FIBS since 1998. Mr. Knight has also been the
President and Chief Operating Officer of FIB since January 2002. Prior to FIBS,
Mr. Knight has 28 years of bank management experience with multi-branch banks in
Arizona and Nevada, most recently as President of a large Arizona-based bank.
From 1995 to 1997 Mr. Knight was a bank consultant responsible for business and
community development, strategic planning and other special projects for a large
Arizona-based bank.

Terrill R. Moore has been a Senior Vice President and Chief Financial
Officer of FIBS since 1989. Prior to joining the FIBS management team, Mr. Moore
served in various finance and accounting positions within the Company since
1979.

Edward Garding has been a Senior Vice President of FIBS since 1996 and
Chief Credit Officer since 1999. In addition, Mr. Garding served as President of
FIB from 1998 to 2001 and President of the Sheridan branch of FIB from 1988 to
1996. Prior to joining the FIBS management team in 1996, Mr. Garding served in
various management positions within the Company since 1971.

Robert A. Jones has been a Senior Vice President and Director of the
Human Asset Management Group of FIBS since 1996. Prior to this appointment, Mr.
Jones was the General Auditor of FIBS since 1980.

Elouise C. Cobell has been a director of the Company since 2001. Ms.
Cobell has been the Director of the Blackfeet Reservation Development Fund, Inc.
since 1991 and the Project Director of the Individual Monies Trust Correction
and Recovery Project since 1996. In addition, Ms. Cobell has served as Chairman
of the Board of Directors of Blackfeet National Bank since 1987.

David H. Crum has been a director of the Company since 2000. Mr. Crum
founded Crum Electric Supply, a distributor of electrical equipment, in 1976 and
has acted as President and Chief Executive Officer of that company since its
inception.

Richard A. Dorn has been a director of the Company since 2001. Mr. Dorn
has owned and operated Richard A. Dorn Farms since 1973. In addition, Mr. Dorn
formed Dorn Property X-change, a real estate holding, investment, construction
and rental management company, in 1978 and has been President of Murdock Realty,
P.C. since 1981. Mr. Dorn is a licensed real estate broker.

William B. Ebzery has been a director of the Company since 2001. Mr.
Ebzery is a certified public accountant and has been a partner in the certified
public accounting firm of Pradere, Ebzery, Mohatt & Rinaldo since 1975. Mr.
Ebzery is also a registered investment advisor and stockbroker.

James W. Haugh has been a director of the Company 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.

John M. Heyneman, Jr. has been a director of the Company since 1998.
Mr. Heyneman has been the Assistant Manager for Padlock Ranch Co. since 1999.
Prior to his employment with Padlock Ranch Co., Mr. Heyneman attended Montana
State University from 1995 through 1998 when he graduated with a masters of
science degree. Mr. Heyneman is the nephew of Homer A. Scott, Jr., James R.
Scott, Thomas W. Scott and Dan S. Scott, and the cousin of Sandra A. Scott
Suzor.

C. Gary Jennings has been a director of the Company since 2001. Mr.
Jennings has served as President of Jennings Farms, Inc., a farming and ranching
operation located in Wyoming, since 1970.

Joel T. Long has been a director of FIBS since 1996. Mr. Long has been
the majority owner and Chairman of the Board of JTL Group, Inc., a construction
firm doing business in Montana and Wyoming, since 1990. In 1999, Mr. Long sold
his interest in JTL Group, Inc. but continues as President of that company.

Robert L. Nance has been a director of the Company since 2001. Mr.
Nance has been the owner and President of Nance Petroleum Corporation, an oil
and gas exploration and production company, since 1969. In 1999, Mr. Nance sold
his interest in Nance Petroleum Corporation but continues as President and Chief
Executive Officer of the Company.

Terry W. Payne has been a director of the Company since 2000. Mr. Payne
has served as President and Chief Executive Officer of Terry Payne & Co., Inc.,
an insurance agency, since its inception in 1972. Mr. Payne has also been
part-owner and Chairman of the Board of Directors of Payne Financial Group, Inc.
since 1993.

Dan S. Scott has been a director of the Company since 1971. Mr. Scott
has served as President and General Manager of Padlock Ranch Co. since 1970. Mr.
Scott is the brother of Homer A. Scott, Jr., James R. Scott and Thomas W. Scott,
and the uncle of John M. Heyneman, Jr. and Sandra A. Scott Suzor.

Larry F. Suchor has been a director of the Company since 2001. Mr.
Suchor has been the owner and President of Larry's, Inc., a road construction
and earth moving firm based in Wyoming, since 1976.

Sandra A. Scott Suzor has been a director of the Company since 2000.
Ms. Suzor has been a partner and the Director of Sales and Marketing for Powder
Horn Ranch and Golf Course since 1995. Ms. Suzor is the daughter of Homer A.
Scott, Jr., the niece of James R. Scott, Thomas W. Scott and Dan S. Scott, and
the cousin John M. Heyneman, Jr.

OTHER INFORMATION REGARDING THE BOARD

Board of Director Meetings. During 2001, the Board of Directors met six
times with each Director attending at least 75% of the meetings with the
exceptions of David H. Crum who attended 67% of the meetings, Elouise C. Cobell
who attended 50% of the meetings, and Robert L. Nance who attended 50% of the
meetings.

Committees. The Company has a Compensation Committee, a Governance
Committee, a Credit Committee, an Executive Committee and an Audit Committee,
all established by the Board of Directors and each of which consists of members
of the Board of Directors.

The Compensation Committee, which consists of James W. Haugh, John M.
Heyneman, Jr., Terry W. Payne, Dan S. Scott, Homer A. Scott, Jr. and James R.
Scott, assists the Board in developing personnel and compensation policies and
administers certain incentive, compensation and stock option plans. The
Compensation Committee met five times during 2001 with each serving committee
member attending at least 80% of the meetings.

The Governance Committee, which consists of James W. Haugh, Lyle R.
Knight, Terry W. Payne, Homer A. Scott, Jr., James R. Scott, Thomas W. Scott and
Sandra A. Scott Suzor, assists in maintaining quality governance through Board
recruitment, orientation, development and evaluation. The Governance Committee
met five times in 2001 with each serving committee member attending at least 80%
of the meetings. The Governance Committee does not accept nominees recommended
by shareholders.

The Credit Committee, which consists of Richard A. Dorn, William B.
Ebzery, John M. Heyneman, Jr., Lyle R. Knight, Robert L. Nance, James R. Scott,
Thomas W. Scott and Robert H. Waller, assists the Board in ensuring that Company
management establishes a loan portfolio that will assure the safety of
depositors' money, earn sufficient income to provide an adequate return on
capital and enable communities in the Company's trade area to prosper. The
Credit Committee met ten times in 2001 with each serving committee member
attending at least 80% of the meetings with the exception of John M. Heyneman,
Jr. who attended 70% of the meetings.

The Executive Committee, which consists of James W. Haugh, John M.
Heyneman, Jr., Lyle R. Knight, Terry W. Payne, Dan S. Scott, Homer A. Scott, Jr.
and Thomas W. Scott, assists the Board by conducting long term planning. The
Executive Committee met two times in 2001 with each serving committee member
attending all meetings.

The Audit Committee, which consists of Elouise C. Cobell, David H.
Crum, Richard A. Dorn, William B. Ebzery, James W. Haugh, C. Gary Jennings, Joel
T. Long, Robert L. Nance, and Larry F. Suchor, reviews the Company's external
and internal auditing systems, monitors compliance with prescribed accounting
and regulatory procedures, and meets with the Company's external auditors to
discuss the results of the annual audit and any related matters. The Audit
Committee met five times during 2001 with each serving committee member
attending at least 80% of the meetings, with the exception of Richard A. Dorn,
Robert L. Nance and C. Gary Jennings, each of whom attended 67% of the meetings,
and Elouise C. Cobell who did not attend any meetings.

The Board of Directors has determined that each Audit Committee member
is independent in accordance with the corporate governance standards of the New
York Stock Exchange. The Board of Directors has reviewed, assessed the adequacy
of and approved a written charter for the Audit Committee. The full text of the
Audit Committee Charter, which was approved January 31, 2002, is attached as
Appendix A to this Proxy Statement.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

March 8, 2002

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

We have reviewed and discussed with management the Company's audited financial
statements as of and for the year ended December 31, 2001.

We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.

We have received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.

Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2001.

SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:

Richard A. Dorn Robert L. Nance C. Gary Jennings
Elouise C. Cobell James W. Haugh Larry F. Suchor
Joel T. Long David H. Crum William B. Ebzery

AUDIT FEES

The following table shows the fees paid or accrued by the Company for
audit and other services provided by Ernst & Young, LLP for fiscal year
2001.

Audit services $ 280,351
Audit-related services 25,275
Other services 13,500
----------
Total $ 319,126
==========

Audit-related services include the review of stock option plans and
registration statements. Other services include advisory services related to
insurance products. The Audit Committee has considered whether the non-audit
services provided are compatible with maintaining the independence of Ernst &
Young LLP.

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DIRECTOR AND EXECUTIVE COMPENSATION
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DIRECTOR COMPENSATION

During 2001, each director other than Thomas W. Scott and Lyle R.
Knight received an annual retainer of $10,000 and fees of $625 per board meeting
attended and $400 per committee meeting attended. Committee chairs also received
an annual fee of $1,000 in 2001. Directors are reimbursed for ordinary expenses
incurred in connection with attending board and committee meetings. In addition,
James R. Scott and Homer A. Scott, Jr. were paid salaries of $102,250 and
$99,000, respectively, during 2001. In 1998, the Board of Directors adopted a
deferred compensation plan under which directors may elect to defer any portion
of director's fees until an elective distribution date or the director's
retirement, disability or death.

Each director, other than Thomas W. Scott and Lyle R. Knight, elected
at or continuing as a director after the 2001 annual meeting of shareholders was
granted stock options to purchase 678 shares of Company Common Stock at the most
recent minority appraised value per share. Options granted during 2001 had an
aggregate fair value of $160,000 at the date of grant based on the Black-Scholes
option pricing model.

EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table shows, for the fiscal years ended December 31,
2001, 2000, and 1999, the cash compensation paid by the Company, as well as
certain other compensation paid or accrued for those years, to Thomas W. Scott,
the Company's Chief Executive Officer, and each of the other four most highly
compensated executive officers of the Company (the "Named Executives"), in all
capacities in which they served:

SUMMARY COMPENSATION TABLE

Other Long-Term
Name and Annual Compensation All Other
Principal Position Year Salary Bonus Compensation Options(1) Compensation(2)
------------------ ---- -------- --------- ------------ ------------ ---------------

Thomas W. Scott 2001 $335,000 $ 175,000 $ -- 9,000 $ 24,923
Chief Executive Officer 2000 308,000 152,000 -- 9,000 31,184
1999 275,000 150,000 -- 9,500 34,676

SUMMARY COMPENSATION TABLE, continued

Lyle R. Knight 2001 268,000 130,000 -- 10,000 22,878
President & Chief 2000 252,000 124,000 -- 10,000 26,962
Operating Officer(4) 1999 240,000 120,000 -- 9,500 14,172

Edward Garding 2001 169,900 61,164 -- 3,000 19,536
Sr. Vice President 2000 158,288 50,815 -- 3,000 17,288
& Chief Credit Officer 1999 152,200 45,660 -- 5,000 17,164

Terrill R. Moore 2001 169,500 61,020 -- 4,000 19,586
Sr. Vice President & 2000 157,500 50,675 -- 5,000 17,349
Chief Financial Officer 1999 147,200 48,500 -- 6,000 16,833

Robert A. Jones 2001 130,000 46,800 -- 3,000 16,193
Sr. Vice President 2000 119,775 38,340 -- 3,000 13,852
1999 109,700 33,000 -- 5,000 13,249

(1) Includes stock options issued in a one-for-one exchange for stock
appreciation rights ("SARs") during January 1999.

(2) All other compensation includes (i) premiums paid by the Company on
health and group life insurance policies, (ii) contributions by the
Company to the Company's noncontributory qualified profit sharing plan,
(iii) contributions by the Company to the Company's contributory
qualified employee savings plan, qualified under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code") and (iv)
contributions by the Company to the Company's executive non-qualified
deferred compensation plan.

STOCK OPTIONS

The following table contains information concerning grants of Company
stock options to the Named Executives during 2001:

OPTION GRANTS IN 2001

Individual Grants Potential Realizable
-------------------------------------------------------- Value at
% of Total Assumed Annual
Options Rates of Stock
Granted to Exercise Price Appreciation
Options Employees in Price Expiration for Option Term
Name Granted(#) Fiscal Year ($/sh) Date 5% 10%
--------------------- ---------- ------------ -------- ---------- ----------- ------------

Thomas W. Scott 9,000 7.85% $ 38.00 1/24/11 $ 215,082 $ 545,060

Lyle R. Knight 10,000 8.72 38.00 1/24/11 238,980 605,622

Edward Garding 3,000 2.62 38.00 1/24/11 71,694 181,687

Terrill R. Moore 4,000 3.49 38.00 1/24/11 95,592 242,249

Robert A. Jones 3,000 2.62 38.00 1/24/11 71,694 181,687

The following table sets forth information with respect to the Named
Executives concerning the exercise of options during 2001 and unexercised
options held as of December 31, 2001:

AGGREGATED OPTION EXERCISES AND DECEMBER 31, 2001 OPTION VALUES

Number of Value of Unexercised
Shares Unexercised In-The-Money
Acquired Value Options at Options at
Name on Exercise Realized 12/31/01 12/31/01
----------------------- ----------- ---------- ----------- --------------------

Thomas W. Scott 21,500 $ 108,780 -- $ --

Lyle R. Knight 44,500 242,000 -- --

Edward Garding 18,600 254,024 -- --

Terrill R. Moore 20,900 269,304 -- --

Robert A. Jones 13,150 124,594 -- --

EMPLOYMENT CONTRACTS

Under an Employment Agreement (the "Agreement") dated May 18, 1998,
Lyle R. Knight is employed as President and Chief Operating Officer of the
Company for a ten year period ending May 18, 2008. During the term of the
Agreement, Mr. Knight is entitled to base compensation and additional benefits
as are customarily offered to Company executives. Pursuant to the terms of the
Agreement, the Company is required to pay specified benefits if Mr. Knight is
involuntarily terminated without cause or elects termination in the event of a
change in control.

Upon early termination by the Company without cause, Mr. Knight is
entitled to receive severance pay equal to five times his base salary then in
effect, bonus compensation and reimbursement of all premiums for group health
insurance coverage for a period not exceeding five years. In the event of a
change in control, Mr. Knight may elect to terminate the Agreement by giving 90
days written notice at any time on or after the first anniversary, but on or
prior to the second anniversary of the change in control. Upon proper
termination of the Agreement, Mr. Knight is entitled to severance pay as
described above.

In the event Mr. Knight is unable to perform his duties due to physical
or mental disability, the Company may, at its option, terminate the Agreement.
Upon termination of the Agreement, Mr. Knight is entitled to reimbursement of
all premiums for group health insurance coverage for a period not to exceed five
years.

The Agreement also restricts Mr. Knight's right to compete against the
Company for a period of five years from the date of termination.

ENDORSEMENT SPLIT DOLLAR BENEFIT

The Company has obtained life insurance policies covering certain
selected executive officers. Under these policies, the Company receives the net
cash surrender value if the policy is terminated, or receives 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 their designated beneficiary. The
endorsement split dollar agreement will provide post retirement coverage for
those selected key officers meeting specified retirement qualifications. The
Company has entered into this type of endorsement split dollar agreement with
Lyle R. Knight, Edward Garding, Terrill R. Moore and Robert A. Jones.

STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN

The Company has two non-qualified stock option plans for executive
officers and certain other officers of the Company: the 2001 Stock Option Plan
("2001 Plan") and Stock Option and Stock Appreciation Rights Plan ("Old Plan").
Both the 2001 Plan, adopted by the Company in July 2001, and the Old Plan
provide for granting of stock options which may be exercised within a maximum
period of ten years from the date of grant. The Old Plan provides for granting
SARs in tandem with options granted, however, in December 1998, the Company
determined that future grants of stock options under the Old Plan would no
longer include SARs and all outstanding SARs would be converted to stock options
at the grantees' election. Subsequent to May 2001, the Company discontinued the
granting of stock option awards under the Old Plan entirely.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

James R. Scott, Homer A. Scott, Jr., John M. Heyneman, Jr., Terry W.
Payne and James W. Haugh serve on the Compensation Committee of the Board of
Directors. James R. Scott and Homer A. Scott, Jr. received compensation from
FIBS for services rendered in 2001.

INDEMNIFICATION

Officers and directors of FIBS are entitled to indemnification under
the Montana Business Corporation Act and pursuant to a Resolution of the Board
of Directors dated January 12, 1987. A summary of the indemnification provision
in such resolution follows:

Pursuant to a resolution of the Board of Directors dated January 12, 1987,
and under the authority of Section 35-1-414 of the Montana Business
Corporation Act, the Company shall indemnify each director and officer of
the Company (including former officers and directors) and each agent of the
Company serving as a director or officer of a Bank, serving at the specific
direction or request of the Company (but only to the extent that such
director, officer or agent is not indemnified by the Bank or by insurance
provided by the Company), against judgments, penalties, fines, settlements
and reasonable expenses actually and reasonably paid by such director,
officer or agent by reason of the fact that he or she is or was a director
or officer of the Company or such Bank, to the extent provided by and
subject to the limitations of the Montana Business Corporation Act.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Compensation Policy. The Company's executive compensation policy is
designed to establish an appropriate relationship between executive pay and the
Company's annual performance, its long-term growth objectives and its ability to
attract and retain qualified executive officers. The Compensation Committee (the
"Committee") attempts to achieve these goals by integrating competitive annual
base salaries with (a) bonuses based on corporate performance and on the
achievement of specified performance objectives, and (b) key officer options
awarded through the Company's stock option plans. The Committee believes that
cash compensation in the form of salary and bonus provides Company executives
with short-term rewards for success in operations, and that long-term
compensation through the award of stock options encourages growth in management
stock ownership which leads to expansion of management's stake in the long-term
performance and success of the Company.

Base Salary. The Committee approved 2001 base salaries of executive
officers. In determining the base salary of each executive officer, the Company
relied on industry surveys of salaries paid to executive officers of financial
institutions with comparable asset size and similar operating regions to that of
FIBS. The Committee set the base salaries of the Company's executive officers
within a reasonable range of the salaries reflected in surveys.

Bonuses. Annual incentives for the executive officers are intended to
reflect the Company's belief that management's contribution to return on assets
and shareholders' equity comes from maximizing earnings and the quality of those
earnings. Awards are based on the attainment of specified performance
objectives, and the bonus amount is determined as a percentage of the
recipient's base salary. For 2001, executive officers were assigned bonus
amounts ranging from 36% to 55% of their base salaries. The varying percentages
reflect the Committee's belief that as an executive officer's duties and
responsibilities in the Company increase, the officer will be increasingly
responsible for the performance of the Company. Accordingly, a significant
portion of the officer's compensation should be incentive compensation. Actual
bonuses payable depend on the level of achievement of specified performance
objectives established for each executive officer. Performance objectives
evaluated in determining 2001 executive officer bonuses included attainment of
return on equity and related growth in earnings per share goals. In addition,
selected executive officers were responsible for the continuation of a
Company-wide sales and service culture, initiation of a formal succession
planning process, continuation of the strategic planning process and management
of capital investments.

Stock Options. The executive officers as well as certain other officers
of the Company and its subsidiaries were granted options under the Company's
stock option plans to purchase a specified number of shares of FIBS Common
Stock. The number of shares each officer was granted an option to purchase was
based primarily on the individual's ability to influence the Company's long term
growth and profitability as well as the number of options previously granted.
The Committee believes stock option grants afford a desirable long term
compensation method because they closely ally the interest of management with
shareholder value and the grants of stock options are the best way to link
directly the financial interest of management with those of shareholders.
Options granted in 2001 vest over a three-year period and are exercisable within
a period of ten years from the date of grant.

Compensation of Chief Executive Officer. In 2001, the Company paid
Thomas W. Scott, Chief Executive Officer of the Company, a salary of $335,000,
and he received a bonus of $175,000. The Company also granted to him options to
buy 9,000 shares of the FIBS' Common Stock at the most recent minority appraised
value per share. Mr. Scott's compensation package was determined to be
appropriate by the Committee based on compensation surveys for chief executive
officers of financial institutions of comparable size, type and profile,
achievement of work plan objectives and improvements in the Company's financial
performance from 2001. Mr. Scott's compensation package, including bonus and
number of options granted, was higher than those granted to other executives of
the Company in recognition of his responsibilities and his performance in his
position. Financial performance indicators and work plan objectives reviewed in
establishing Mr. Scott's compensation package include attainment of return on
equity goals and related growth in earnings per share, continuation of a
Company-wide sales and service culture, initiation of a formal succession
planning process, continuation of the strategic planning process and management
of capital investments.

SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:

James R. Scott James W. Haugh
Homer A. Scott, Jr. John M. Heyneman, Jr.
Terry W. Payne

--------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
("EXCHANGE ACT")
--------------------------------------------------------------------------------

As of December 31, 2001, the Company did not have a class of equity
securities registered under the Exchange Act, therefore, officers, directors and
shareholders owning more than 10% of the common stock were not required to file
any reports pursuant to Section 16 of the Exchange Act. The Company will file a
registration statement for the registration of its common stock under the
Exchange Act prior to April 30, 2002. At such time officers, directors and
shareholders owning more than 10% of the common stock will be required to file
reports concerning their beneficial ownership of the Company's common stock
pursuant to Section 16 of the Exchange Act.

--------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

The Company has had, and expects to have in the future, banking
transactions in the ordinary course of business with related parties, including
business with directors, officers, stockholders and their associates, on the
same terms as those prevailing at the same time for comparable transactions with
unrelated persons and that did not involve more than a normal risk of
collectibility or present other unfavorable features. To the extent that such
transactions consisted of extensions of credit to Company executive officers and
directors and to certain members of the Scott family, such extensions of credit
were made in the ordinary course of business, were made on substantially the
same terms, including interest rates and collateral on loans, as those
prevailing at the same time for comparable transactions with unrelated persons
and did not involve more than a normal risk of collectibility or present other
unfavorable features. Loans to FIBS' executive officers, directors and their
related interests represented approximately 10.1% of the Company's shareholders'
equity as of December 31, 2001.

The Company purchases property and casualty insurance from Terry Payne
& Co., Inc., an insurance agency owned by Terry W. Payne, a director of the
Company. The Company paid insurance premiums of $279,440 to Terry Payne & Co.,
Inc. in 2001.

The Company is the anchor tenant in a commercial building in which the
Company's principal executive offices and largest banking office are located in
Billings, Montana. The building is owned by a joint venture partnership in which
FIB is one of the two partners, owning a 50% interest in the partnership. The
other 50% interest in the partnership is owned by a company in which Joel T.
Long, a director of the Company, owns beneficially an equity interest of
approximately 33%. Indebtedness of the partnership ($8.3 million as of December
31, 2001) is recourse to the partners and guaranteed by the Company. The Company
paid rent to the partnership of $1.5 million in 2001.

In January 2002, the Company entered into a lease for the use of a
Citation 550 aircraft with a company wholly-owned by Thomas W. Scott, President
and Chief Executive Officer of the Company. Under the terms of the lease, the
Company pays $1,250 per hour for its use of the aircraft. Thomas W. Scott
reimburses the Company for fixed costs related to his personal use of the
aircraft at the same rate.

In February 2002, the Company sold a Cessna 340 aircraft to Dan S.
Scott, a director of the Company, for fair value determined by independent
appraisal of $375,000.

--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
--------------------------------------------------------------------------------

The rules of the Securities and Exchange Commission 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
proxy rules. The Company's 2003 Annual Meeting of Shareholders is expected to be
held on or about May 16, 2003, and proxy materials in connection with that
meeting are expected to be mailed on or about March 28, 2003. The deadline for
submission of shareholder proposals pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, for inclusion in the Company's proxy statement
for its 2003 Annual Meeting of Shareholders is November 28, 2002. Additionally,
if the Company receives notice of a shareholder proposal after February 11,
2003, 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 of Directors of
the Company for its 2003 Annual Meeting of Shareholders may exercise
discretionary voting power with respect to such proposal.

--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------

The Board of Directors of the Company knows of no matters other than
the foregoing to be brought before the meeting. However, the enclosed proxy
gives discretionary authority in the event that any additional matters should be
presented.

The Proxy Statement incorporates information from the Company's Annual
Report on Form 10-K (the "Annual Report"). The Company's Annual Report, which
includes audited financial statements for the fiscal year ended December 31,
2001 and a listing of Exhibits, is enclosed herewith. Exhibits to the Annual
Report will be furnished at a charge of $0.20 per page to any shareholder who
requests them in writing from Laura Bailey, Vice President, Finance Division,
First Interstate BancSystem, Inc., 401 North 31st Street, Billings, Montana
59116-0918.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ CAROL STEPHENS DONALDSON

Carol Stephens Donaldson
Secretary

Billings, Montana
March 25, 2002

APPENDIX A

FIRST INTERSTATE BANCSYSTEM, INC.
AUDIT COMMITTEE CHARTER

PURPOSE:

The Audit Committee of First Interstate BancSystem, Inc. (the
"Company") will assist the Board of Directors in fulfilling its oversight
responsibilities. The Audit Committee (the "Committee") will review the
financial reporting process, the system of internal control, the audit process
and the Company's process for monitoring compliance with laws, regulations and
the Company's code of conduct. In performing its duties, the Audit Committee
will maintain effective working relationships with the Board of Directors,
management, and the internal and external auditors.

ORGANIZATION:

The Audit Committee will be organized consistent with the following
significant parameters:

1. SIZE OF THE AUDIT COMMITTEE:

The Audit Committee will have no less than three and no more than nine
members.

2. QUALIFICATIONS OF AUDIT COMMITTEE MEMBERS:

Committee members must be "Independent Directors" of the Company.
Members of the Committee will not be considered independent if they are:

o Currently employed by: (i) the Company; (ii) an affiliate of the
Company; or (iii) a current parent or predecessor company, or
were so employed in the past three years;

o Currently, or have been within the past three years, a member of
the immediate family of a current executive officer of the
Company or an affiliate;

o An executive of another business organization where any of the
Company's executives serve on the organization's compensation
committee;

o A partner, controlling shareholder, or executive officer of a
business organization that has a material business relationship
with the Company; or

o An individual who has a direct material business relationship
with the Company.

Under exceptional and limited circumstances the Board may appoint to
the Committee one Board member who is not independent, if the Board determines
that membership of this individual is in the best interest of the corporation
and shareholders. If such an appointment is deemed necessary, the nature and
reasons for this determination should be disclosed in the annual proxy statement
(see below).

In addition, each member of the Audit Committee must be "Financially
Literate" or must have achieved this status through training within six months
of being appointed to the Committee (for these purposes, "Financial Literacy"
entails the ability to read and understand fundamental financial statements,
including the balance sheet, income statement and cash flow statement of the
Company).

3. FREQUENCY OF AUDIT COMMITTEE MEETINGS:

The Audit Committee will have three scheduled meetings each fiscal
year, in March, July and November. In addition, the Committee will meet at other
times if deemed necessary to completely discharge its duties and
responsibilities as outlined in this Charter.

4. APPOINTMENT OF AUDIT COMMITTEE MEMBERS AND CHAIRPERSON:

Each Committee member will be selected by the Board of Directors and
will serve a term of one year. Committee members can serve successive one-year
terms without limitation. The Chairperson of the Audit Committee will be
selected by the Board of Directors of the Company and will serve in that
capacity for one year. The Chairperson can serve successive terms in this
capacity without limitation.

At least one member of the Committee must have academic training in
finance or accounting, requisite professional certification in accounting or
comparable experience, or current or past experience in the positions of senior
financial management that result in financial sophistication (for example,
currently or previously held the position of Chief Financial Officer, Chief
Executive Officer or Chairman of a corporation).

ROLES AND RESPONSIBILITIES OF AUDIT COMMITTEE:

A broad outline of the roles and responsibilities of the Audit
Committee is presented below.

1. INTERNAL CONTROL:

a. Evaluate whether senior management has established and appropriately
maintained processes to assure the reliability and integrity of
internal accounting policies and financial reporting and disclosure
practices of the Company;

b. Review and recommend to the Board of Directors the appointment,
reassignment, or dismissal of the General Auditor selected to develop
and carry out the annual internal audit plan.

c. Review the internal audit department's budget and staffing levels to
ensure that the resources provided are adequate to allow successful
completion of the departments responsibilities.

d. Evaluate the scope, effectiveness and significant findings of the
internal audit process for the Company's operations;

e. Review the internal auditor's report on the results of the annual
audit plan;

f. Evaluate whether recommendations for improved internal control are
effectively implemented by management; and

g. Evaluate, annually, the adequacy of the Audit Committee Charter and
the performance of the Committee thereunder.

2. FINANCIAL REPORTING:

a. Annually review the significant risks the Company is exposed to and
evaluate management's plan to manage these uncertainties;

b. Review and evaluate management's interpretation and implementation of
mandated changes to accounting and reporting requirements;

c. Review the annual financial statements for accuracy and completeness;

d. Evaluate the accounting treatment of unusual and non-recurring
transactions such as restructuring charges and acquisitions;

e. Evaluate significant income statement and balance sheet items which
require management judgment;

f. Review and approve the annual 10-K filing, including the Management
Discussion and Analysis (MD&A), before public release; and

g. Review and approve the process for preparing interim, unaudited
(quarterly) financial statements.

3. COMPLIANCE WITH LAWS, REGULATIONS AND COMPANY POLICIES:

a. Review the effectiveness of the system for monitoring compliance with
laws and regulations;

b. Review the significant findings from the annual self-audit survey of
compliance matters; and

c. Ensure that the Company's compliance manual, code of conduct, and
corporate policy statements are kept up to date and are accessible to
and usable by the entire organization.

d. Review and approve all management and independent auditor reports in
accordance with the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) within in 90 days of year end.

4. RELATIONSHIP WITH EXTERNAL AUDITOR:

a. Recommend the external auditor appointment to the Board of Directors;

b. When and if appropriate, recommend removal and replacement of the
external auditor to the Board of Directors;

c. Review and approve the scope of the external audit to be performed
each fiscal year;

d. Confirm the independence of the external auditor;

e. Meet with the external auditors to review the accuracy, completeness
and overall quality of the Company's accounting principles as applied
in its annual financial reporting; and

f. The Committee Chairman, or any two other members, shall meet with the
external auditor to discuss and review significant events, transaction
and changes in accounting estimates deemed by the external auditor to
affect the quality of the Company's financial reportings prior to the
filing of the Company's 10-Q.

REPORTING REQUIREMENTS:

The Audit Committee Chairperson will update the full Board of Directors
regarding the significant items of discussion at each Committee meeting.
Additional reports on matters of special interest will be submitted to the Board
of Directors as appropriate.

ANNUAL PROXY STATEMENT

In addition to Board of Directors communication, the following
information will be reported to the shareholders of the Company in the annual
proxy statement:

o Confirmation that the Company has a formal, documented Audit
Committee Charter;

o Confirmation that the Audit Committee satisfied its obligations
under the Charter in the prior year; and

o The full text of the Audit Committee Charter at least once every
three years and after any significant modification is approved by
the Board of Directors.

--------------------------------------------------------------------------------
PROXY
--------------------------------------------------------------------------------

First Interstate BancSystem, Inc.
401 North 31st Street
P.O. Box 30918
Billings, Montana 59116-0918

The undersigned hereby appoints THOMAS W. SCOTT, proxy of the undersigned, with
full power of substitution, to vote all shares of common stock of First
Interstate BancSystem, Inc. ("FIBS"), which the undersigned is entitled to vote
at the Annual Meeting of Shareholders of FIBS to be held on Friday, May 17,
2002, at 8:00 a.m., Mountain Time, at the Sheraton Hotel, Billings, Montana
59101 or at any adjournment or adjournments thereof for the following purposes:

1. To elect as directors the nominees proposed by the Board of Directors
of FIBS to serve a three-year term, or until their respective
successors have been elected and qualified.

Please mark only one of the following options:

FOR ALL NOMINEES LISTED BELOW
-------

WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEE(S) LISTED BELOW:
------- (Instruction: To withhold authority to vote for any
nominee(s), write the name of the nominee(s) on the line
immediately below.

--------------------------------------------------------------

NOMINEES: JAMES W. HAUGH, C. GARY JENNINGS, ROBERT L. NANCE,
DAN S. SCOTT, THOMAS W. SCOTT

2. IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF.

This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEES FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS.

The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished therewith. The undersigned hereby
revokes any proxies given prior to the date reflected below.

Please sign exactly as your name appears below. When signing as attorney,
executor, administrator, trustee, guardian, or corporate official, please add
your title.

Dated: , 2002
----------------------------- ------------------------------------
(Name)

Shares owned as of Record Date:

--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. YOUR VOTE IS
IMPORTANT. PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED,
SELF-ADDRESSED ENVELOPE.
--------------------------------------------------------------------------------