This is the flag of Montana, just in case you couldn't tell (of course, if you're reading this, there's no reason for you to not know that). It is boring and though it may be identifiable, that is only because it says "Montana" across the top. As flags using this template go, this one isn't so bad. The landscape look better than most of the "let's throw all our state symbols on it" kind of seal, and it's possible to guess this is Montana's from the imagry and the simple slogan "Oro y Plata" (gold and silver). However, it is just one of the better examples of a bad genre and the huge "Montana" makes any compliments I can give seem hollow.
To improve this flag, we should take the elements the current one gets right. Montana is known for mineral wealth and mountains, among other things, and a new flag should reflect that. We can even incorporate the state slogan without resorting to spelling it out:
This is the flag of Denver, Colorado (yes, I know that isn't in Montana, but Colorado has a great flag that needs no improvement, and I'm sure the good people of Denver wouldn't mind sharing to help out a fellow Western state):
It is simple, it has clean colors and shapes, it is an all-around good flag. It's a shame to waste it on a single city. Now the obvious elements we want to use from this flag are the mountains, which conveniently form a big letter "M." The inclusion of a letter can be hit-or-miss, but if done right, like on Colorado's and Ohio's flag, you don't even notice it half the time (like the arrow between the "E" and "X" on the FedEx logo).
The first thing I'm going to change is the sun floating over the mountains. I have no problem with it on principle, but giving you the flag of another place with no alterations just seems lazy. Montana is also known as "Big Sky Country" and I think that can be reflected on this flag by simply removing the sun. Here's what I've come up with:
I've lightned the blue, to more directy reference "Big Sky," the mountains are now gold and silver, and snowcaps have been added to increase the depiction of mountains and to make the fact that it is a big "M" slightly less obvious. It has simple shapes and colors, and I feel it represents the state better than the current seal and blue combo.