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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-46345
4,000,000 SHARES
[STERLING BANCSHARES, INC. LOGO]
COMMON STOCK
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This Prospectus relates to the offer and sale from time to time by Sterling
Bancshares, Inc. (the "Company" or "Sterling") of up to 4,000,000 shares of
common stock, $1.00 par value (the "Common Stock"), in connection with
acquisitions, directly or indirectly by the Company, of other businesses,
properties, or securities.
The Company intends to concentrate on acquisitions that it believes would
complement its current banking franchise and increase or expand its competitive
position in existing or new markets. The consideration for any such acquisitions
may consist of Common Stock, cash, notes or other evidences of debt, convertible
or exchangeable securities, assumptions of liabilities or a combination thereof.
The Common Stock covered by this Prospectus may be issued in exchange for shares
of capital stock, partnership interests or other assets representing an
interest, direct or indirect, in other companies or other entities, in exchange
for assets used in or related to the business of such entities, in exchange or
conversion of other securities issued in any such acquisitions or otherwise
pursuant to the agreements providing for such acquisitions. The terms of such
acquisitions and of the issuance of Common Stock under acquisition agreements
will generally be determined by direct negotiations with the owners or
controlling persons of the business or properties to be acquired or, in the case
of entities that are more widely held, through exchange offers to stockholders
or documents soliciting the approval of statutory mergers, consolidations or
sales of assets. The Company anticipates that the Common Stock issued in any
such acquisition will be valued at a price reasonably related to the market
value of the Common Stock either at the time of agreement on the terms of an
acquisition or at the time of delivery of the Common Stock.
The Company does not expect that an underwriting discount or commission
will be paid by the Company in connection with issuances of Common Stock under
this Prospectus. However, finders' fees, brokers' commissions or financial
advisory fees may be paid from time to time in connection with specific
acquisitions, and such fees may be paid through the issuance of Common Stock
covered by this Prospectus. Any person receiving such a fee may be deemed to be
an underwriter within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
As of December 31, 1997, 13,760,320 shares of the Common Stock were
outstanding. The shares of Common Stock offered hereby have been approved for
trading on the Nasdaq National Market. On February 9, 1998, the closing price of
the Common Stock on the Nasdaq National Market was $22 per share as published in
The Wall Street Journal on February 10, 1998.
The Company is a Texas corporation and all references herein to the Company
refer to the Company and its subsidiaries.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED CAREFULLY BY PROSPECTIVE INVESTORS IN THE COMMON STOCK
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 20, 1998.
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza Building, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and its regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such materials can be obtained from the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains an Internet Web site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The address of that site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is made
to such Registration Statement and exhibits. A copy of the Registration
Statement on file with the Commission may be obtained from the Commission's
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission or through the Commission's Internet Web site.
The Company's Common Stock is traded on the Nasdaq National Market. Proxy
statements and other information concerning the Company can also be inspected at
the offices of the Nasdaq National Market, 173 K Street, N.W., Washington, D.C.
20006-1500.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated herein by reference.
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996 filed on March 26, 1997;
2. The Company's Current Report on Form 8-K filed on April 3, 1997 and
the amendments thereto on Form 8-K/A filed on April 7, 1997 and on July 28,
1997;
3. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997 filed on May 9, 1997 and the amendment thereto
on Form 10-Q/A filed on May 24, 1997;
4. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997 filed on August 15, 1997;
5. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1997 filed on November 15, 1997 and the
amendment thereto on Form 10-Q/A filed on December 4, 1997; and
6. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed on October 21, 1992.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the shares of Common
Stock shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
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incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of the documents, including exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
made to: Sterling Bancshares, Inc., 15000 Northwest Freeway, Houston, Texas
77040, Attention: Corporate Secretary; telephone (713) 466-8300.
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THE COMPANY
Sterling is a bank holding company that provides commercial and retail
banking services through the community banking offices of Sterling Bank, a
banking association chartered under the laws of the State of Texas and
headquartered in Houston, Texas (the "Bank"). The Bank has 16 community banking
offices, all of which are located in the greater Houston metropolitan area. The
Company was incorporated under the laws of the State of Texas in 1980 and became
the parent bank holding company of the Bank in 1981. The Bank was chartered in
Texas in 1974. The Company completed its initial public offering on October 22,
1992.
The Bank provides a wide range of retail and commercial banking services,
including demand, savings and time deposits; commercial, real estate and
consumer loans; merchant credit card services; letters of credit; cash
management services; and drive-in banking services. In addition, the Bank
facilitates sales of brokerage, mutual funds, and insurance products through
third-party vendors. The primary lending focus of the Bank is on commercial
loans and owner-occupied real estate loans to local businesses with annual sales
ranging from $300,000 to $30 million. Typically, borrowers' financing
requirements are between $100,000 and $500,000. The Bank does not seek loans
larger than $2 million per relationship, but will consider larger lending
relationships in cases involving exceptional levels of credit quality. The Bank
believes that its self-imposed lending limits allow for greater diversity in the
loan portfolio, less competition from large banks and better pricing
opportunities.
The Bank employs a business strategy that is generally known in the
industry as supercommunity banking. Under this strategy, the Bank provides a
broad line of financial products and services to small and medium-sized
businesses and consumers through full service community banking offices. Each
banking office has senior management, with significant lending experience, who
exercise substantial autonomy over credit and pricing decisions, subject to loan
committee approval for larger credits. This decentralized management approach,
coupled with continuity of service by the same staff members, enables the Bank
to develop long-term customer relationships, maintain high quality service and
respond quickly to customer needs. As a result of the development of broad
banking relationships with their customers and the convenience and service of
the Bank's 16 full-service banking offices, lending and investing activities are
funded almost entirely by core deposits, approximately three-fourths of which
are demand and savings deposits.
The Bank's growth strategy has been concentrated on increasing its
community banking presence in its existing Houston markets, and expanding into
new markets within the greater Houston area in response to the expressed needs
of those markets. The Bank has grown through a combination of internally
generated growth, mergers and acquisitions of additional banking operations, and
the opening of new banking offices.
During 1996, the Bank opened two new community banking offices: one in the
Upper Kirby district of central Houston, and the other in the Galleria area of
Houston. In January 1997, the Bank opened a banking office in the Cypress
Station area, north of Houston. On September 30, 1997, the Company acquired
First Houston Bancshares, Inc. and its wholly owned subsidiary Houston National
Bank, which was subsequently merged into the Bank. This community banking office
is located in the Memorial Drive area just west of downtown Houston. In January
1998, the Company opened its sixteenth banking office on Spencer Highway in
Pasadena, southeast of Houston. The Company intends to pursue selected
acquisitions of existing banking operations where available and consistent with
its supercommunity banking philosophy. To accommodate anticipated growth, the
Company continues to upgrade its data processing and telecommunication systems
in order to provide the Company with the technological capacity necessary to
meet the needs and expectations of its customers and accommodate growth in the
Company's assets and number of offices.
The principal executive office of the Company is located at 15000 Northwest
Freeway, Houston, Texas 77040, and its telephone number is (713) 466-8300.
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RISK FACTORS
An investment in the Company involves a significant degree of risk.
Prospective investors should consider carefully the following factors in
addition to other information included in this Prospectus before making an
investment in the Common Stock. This Prospectus contains "forward-looking
statements" concerning the Company's operations within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act, economic
performance and financial condition, including, in particular, the likelihood of
the Company's success in developing and expanding its business. These statements
are based upon a number of assumptions and estimates that are inherently subject
to significant uncertainties and contingencies, many of which are beyond the
control of the Company, and reflect future business decisions that are subject
to change. Some of these assumptions inevitably will not materialize, and
unanticipated events will occur that will affect the Company's results.
DEPENDENCE UPON LOCAL ECONOMIC CONDITIONS
Sterling's profitability is dependent on the profitability of the Bank. The
Bank derives substantially all of its loans, deposits and other business from
the greater Houston metropolitan area. The banking industry in Texas and Houston
is affected by general economic conditions such as inflation, recession,
unemployment and other factors beyond Sterling's control. During the mid-1980's,
severely depressed oil and gas and real estate prices materially and adversely
affected the Texas and Houston economies, causing a severe recession and
significant unemployment in the region. More recently, the Houston and Texas
economies have improved considerably which has been partially attributable to
expansion into non-energy related industries. As Houston has diversified, its
economy has become more susceptible to adverse developments affecting the
national economy. There can be no assurance, however, that Sterling will be able
to withstand adverse changes in the Houston economy should they occur, or that
adverse developments in general economic conditions in the national or local
economy will not adversely affect Sterling's financial condition or results of
operations. Accordingly, Sterling will remain subject to risks associated with
prolonged declines in either the local or national economies.
RELIANCE ON OWNER-OPERATED BUSINESS MARKET
Sterling's business development and marketing strategy is primarily
targeted toward serving the banking and financial services needs of
owner-operated businesses. The owner-operated business market, which Sterling
defines as businesses with annual sales between $300,000 and $30 million,
represents a major sector of the Houston economy that has played an important
role in recent years in generating job growth and improving the overall health
of the Houston economy. While Sterling believes that this market niche will
continue to play a key role in the future success of the Houston economy, there
can be no assurances that economic conditions affecting this market will
continue to be favorable or that this market will not experience any adverse
developments, which, in time, could adversely affect Sterling's financial
condition or results of operations. In addition, no assurance can be given that
Sterling's financial condition or results of operations will not be adversely
affected if Sterling is unable to maintain or expand its share of the
owner-operated business market or is required, due to changing business and
economic conditions, to serve other market sectors.
INDEBTEDNESS OF STERLING
Like most banks, Sterling realizes income primarily from the spread between
interest earned on loans and investments and the interest paid on deposits and
borrowings. Sterling expects that, from time to time, it will experience "gaps"
in the interest rate sensitivities of its assets and liabilities, meaning that
either its interest-bearing liabilities will be more sensitive to changes in
market interest rates than its interest-earning assets, or vice versa. In either
event, if market interest rates should move contrary to Sterling's position, the
"gap" will work against Sterling, and its earnings may be negatively affected.
Management actively monitors the interest rate sensitivities of the assets and
liabilities of Sterling, and works to prevent any gaps from approaching
imprudent levels.
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RESTRICTIONS ON PAYING DIVIDENDS
Sterling's ability to pay dividends to its shareholders depends to a large
extent upon the dividends Sterling receives from the Bank. Dividends paid by the
Bank are subject to restrictions under various federal and state banking laws.
In addition, both Sterling and the Bank must maintain certain capital levels
which may restrict the ability of the Bank to pay dividends to Sterling and
Sterling to pay dividends to its shareholders. See "Market Price of Sterling
Common Stock and Dividend Policy of Sterling."
PREEMPTIVE RIGHTS DENIED AND DILUTION
Sterling's Articles of Incorporation (the "Sterling Charter") do not
provide shareholders with a preemptive right to subscribe for additional shares
of Common Stock upon any increase thereof. Thus, upon the issuance of any
additional shares of Common Stock or other voting securities of Sterling, or
securities convertible into Common Stock or other voting securities of Sterling,
persons who receive shares of Common Stock in transactions may be unable to
maintain their pro rata voting or ownership interest in Sterling.
ANTI-TAKEOVER PROVISIONS
The Sterling Charter, as well as Texas and certain federal laws and
regulations, will assist Sterling in maintaining its status as an independent
publicly-owned corporation. The Sterling Charter provides for noncumulative
voting for directors and authorizes the Board of Directors to issue shares of
preferred stock without shareholder approval. Shares of preferred stock may be
issued by Sterling in the future without shareholder approval and upon such
terms as the Board of Directors may determine. The rights of the holders of
Sterling Common Stock will be subject to, and may be adversely affected by, the
rights of the holders of any preferred stock of Sterling that may be issued in
the future. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisition, financings and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
controlling interest in Sterling.
The Sterling Charter provides that the number of directors will be fixed
by, or in the manner provided in, the Bylaws. The Bylaws provide that the number
of directors may be fixed from time to time by resolution of the Board of
Directors. Currently, the Board of Directors of Sterling consists of 15 members.
The Board of Directors of Sterling will be divided into three classes as nearly
equal in number as possible serving staggered three-year terms such that
approximately one-third of the Company's Board of Directors is elected each
year.
These provisions in Sterling's governing instruments may discourage
potential proxy contests and other takeover attempts, particularly those which
have not been negotiated with the Board of Directors of Sterling. Accordingly,
holders of Common Stock may be deprived of an opportunity to sell their shares
of Common Stock at a substantial premium over the market price of such shares.
In addition, federal law also requires the approval of the Federal Reserve Board
prior to the acquisition of "control" of a bank holding company.
GOVERNMENTAL REGULATION
Sterling and its subsidiaries will continue to be subject to extensive
federal and state governmental supervision and regulation, which are intended
primarily for the protection of depositors. In addition, Sterling and its
subsidiaries are subject to changes in federal and state law, as well as changes
in regulations, governmental polices and accounting principles. The effects of
any such potential changes cannot be predicted but could adversely affect the
business and operations of Sterling and its subsidiaries in the future.
FISCAL AND MONETARY POLICIES
The Company's business and earnings are affected significantly by the
fiscal and monetary policies of the federal government and its agencies. The
Company is particularly affected by the policies of the Federal Reserve Board,
which regulates the supply of money and credit in the United States. Among the
instruments of monetary policy available to the Federal Reserve Board are (i)
conducting open market operations in United States government securities, (ii)
changing the discount rates of borrowings of depository institutions,
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(iii) imposing or changing reserve requirements against depository institutions'
deposits, and (iv) imposing or changing reserve requirements against certain
borrowing by banks and their affiliates. These methods are used in varying
degrees and combinations to directly affect the availability of bank loans and
deposits, as well as the interest rates charged on loans and paid on deposits.
For that reason alone, the policies of the Federal Reserve Board have a material
effect on the earnings of the Bank and, thus, those of the Company.
COMPETITION
Sterling and its subsidiaries are subject to vigorous competition in all
aspects and areas of its business from banks and other financial institutions,
including savings and loan associations, savings banks, finance companies,
credit unions and other providers of financial services, such as money market
mutual funds, brokerage firms, consumer finance companies and insurance
companies. Sterling also competes with non-financial institutions, including
retail stores that maintain their own credit programs and governmental agencies
that make available low cost or guaranteed loans to certain borrowers. Sterling
competes in its market area with a number of much larger financial institutions
with substantially greater resources, lending limits, larger branch systems and
a wider array of commercial banking services.
Sterling has been able to compete effectively with other financial
institutions by emphasizing customer service, including local office
decision-making on loans, by establishing long term customer relationships and
building customer loyalty and by providing products and services designed to
address the specific needs of its customers. No assurances may be given,
however, that Sterling will continue to be able to compete effectively with
other financial institutions in the future.
The financial services industry is likely to become even more competitive
as further technological advances enable more companies to provide financial
services. These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.
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SECURITIES COVERED BY THIS PROSPECTUS
The Common Stock covered by this Prospectus are available for use in future
acquisitions of businesses, properties or securities of entities or persons
engaged in banking and other related financial institution businesses. The
consideration offered by the Company in such acquisitions, in addition to the
Common Stock offered by this Prospectus, may include cash, debt or other Company
securities, or assumption by the Company of liabilities of the businesses being
acquired, or a combination thereof. It is contemplated that the terms of each
acquisition will be determined by negotiations between the Company and the
management or the owners of the assets to be acquired or the owners of the
securities (including newly issued securities) to be acquired, with the Company
taking into account the quality of management, the past and potential earning
power and growth of the assets or securities to be acquired, and other relevant
factors. It is anticipated that the Common Stock issued in acquisitions
hereunder will be valued at a price reasonably related to the market value of
the Common Stock either at the time the terms of the acquisition are tentatively
agreed upon or at or about the time or times of delivery of the shares.
VALIDITY OF SECURITIES
The validity of the issuance of the shares of Common Stock offered by this
Prospectus has been passed upon for the Company by Andrews & Kurth L.L.P.,
counsel to the Company.
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PLAN OF DISTRIBUTION
The Common Stock covered by this Prospectus may be issued in exchange for
shares of capital stock, partnership interests or other assets representing an
interest, direct or indirect, in other companies or other entities, in exchange
for assets used in or related to the business of such entities, in exchange or
conversion of other securities issued in any such acquisitions or otherwise
pursuant to the agreements providing for such acquisitions. The terms of such
acquisitions and of the issuance of Common Stock under acquisition agreements
will generally be determined by direct negotiations with the owners or
controlling persons of the business or properties to be acquired or, in the case
of entities that are more widely held, through exchange offers to stockholders
or documents soliciting the approval of statutory mergers, consolidations or
sales of assets. The Company anticipates that the Common Stock issued in any
such acquisition will be valued at a price reasonably related to the market
value of the Common Stock either at the time of agreement on the terms of an
acquisition or at the time of delivery of the Common Stock.
The Company does not expect that an underwriting discount or commission
will be paid by the Company in connection with issuances of Common Stock under
this Prospectus. However, finders' fees, brokers' commissions or financial
advisory fees may be paid from time to time in connection with specific
acquisitions, and such fees may be paid through the issuance of Common Stock
covered by this Prospectus. Any person receiving such a fee may be deemed to be
an underwriter within the meaning of the Securities Act.
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NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 4
Risk Factors........................... 5
Securities Covered by this
Prospectus........................... 8
Validity of Securities................. 8
Plan of Distribution................... 9
</TABLE>
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4,000,000 SHARES
[STERLING BANCSHARES, INC. LOGO]
COMMON STOCK
------------------------
PROSPECTUS
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MARCH 20, 1998
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