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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. )
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-11(c) or Section 240.14a-12
STERLING BANCSHARES, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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STERLING
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BANCSHARES
1999
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
MONDAY, APRIL 26, 1999
AT 2:00 P.M. LOCAL TIME
DOUBLETREE HOTEL POST OAK
2001 POST OAK BOULEVARD
HOUSTON, TEXAS 77056
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STERLING BANCSHARES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 1999
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Meeting") of Sterling Bancshares,
Inc. (the "Company") will be held at the Doubletree Hotel at Post Oak, 2001 Post
Oak Boulevard, Houston, Texas at 2:00 p.m., local time, on Monday, April 26,
1999, for the following purposes:
1. To elect seven Class I directors for three year terms ending at the
2002 Annual Meeting of Shareholders, or until their successors have
been elected and qualified.
2. To elect four Class II directors for one year terms ending at the
2000 Annual Meeting of Shareholders, or until their successors have
been elected and qualified.
3. To elect two Class III directors for two year terms ending at the
2001 Annual Meeting of Shareholders, or until their successors have
been elected and qualified.
4. To act on such other business as may properly come before the
Meeting or any adjournment thereof.
The close of business on March 1, 1999 has been fixed as the record date
for determining shareholders entitled to notice of and to vote at the Meeting or
at any adjournments thereof. For a period of at least ten days prior to the
Meeting, a complete list of shareholders entitled to vote at the Meeting will be
open to examination by any shareholder during ordinary business hours at the
executive offices of the Company, 15000 Northwest Freeway, Houston, Texas 77040.
Information concerning the matters to be acted upon at the Meeting is set forth
in the accompanying Proxy Statement.
You are cordially invited and urged to attend the Meeting. If, however, you
are unable to attend the Meeting, you are requested to sign and date the
accompanying proxy card and return it promptly in the enclosed envelope. If you
attend the Meeting, you may vote in person regardless of whether you have given
your proxy. In any event, a proxy may be revoked at any time before it is
exercised.
/s/ Michael A. Roy
Michael A. Roy
Secretary
March 24, 1999
YOUR VOTE IS IMPORTANT.
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND TO ASSURE THE PRESENCE OF
A QUORUM. THE PROMPT RETURN OF YOUR SIGNED PROXY CARD, REGARDLESS OF THE NUMBER
OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF ADDITIONAL
PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE
IN PERSON IF YOU ATTEND THE MEETING.
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STERLING BANCSHARES, INC.
PROXY STATEMENT
---------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING OF PROXIES
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of Sterling Bancshares, Inc., a Texas corporation (the "Company"),
for use at the 1999 Annual Meeting of Shareholders (the "Meeting") to be held on
Monday, April 26, 1999, at the time and place and for the purposes set forth in
the accompanying Notice and at any recess or adjournment thereof. Holders of
record of the Company's common stock, par value $1.00 per share ("Common
Stock"), at the close of business on March 1, 1999 (the "Record Date") are
entitled to notice of and to vote at the Meeting. On the Record Date, there were
23,912,830 shares of Common Stock outstanding and entitled to vote.
The Company's principal executive offices are located at 15000 Northwest
Freeway, Houston, Texas 77040. This proxy statement and accompanying proxy are
first being mailed to shareholders of record on or about March 26, 1999.
VOTING
Holders of Common Stock are entitled to one vote per share. The presence at
the Meeting, in person or by proxy, of holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting will constitute a quorum
for the transaction of business. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock represented at the Meeting is
required to elect the Class I, Class II and Class III nominees to the Board of
Directors. If a share of Common Stock is represented for any purpose at the
Meeting, it is deemed to be present for all other matters. Abstentions and
shares held of record by a broker or nominee ("Broker Shares") that are voted on
any matter are included in determining the number of votes present. Shares with
respect to which authority is withheld, abstentions, and Broker Shares that are
not voted are treated as shares as to which voting authority has been withheld
by the holder of those shares and, therefore, as shares not voting on the
proposal.
REVOCABILITY OF PROXIES
The accompanying proxy card, even though executed and returned, may be
revoked at any time prior to being voted by notifying the Secretary in writing
or by appearing in person and voting at the Meeting.
SOLICITATION
The Company will bear the full cost of preparing, assembling, printing, and
mailing this Proxy Statement, the accompanying proxy card, and any additional
materials that may be furnished to shareholders and will reimburse brokerage
firms and other custodians, nominees, and fiduciaries for their reasonable
expenses incurred in forwarding solicitation materials regarding the Meeting to
beneficial owners. The solicitation of proxies will be made by mail. Further
solicitation of proxies may be made by telephone or other form of direct
communication by officers, directors, and regular employees of the Company or
its subsidiaries, who will not be additionally compensated therefor, or by a
proxy solicitation service that may be engaged at the expense of the Company.
1
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ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, is being furnished with this Proxy Statement to shareholders
of record on the Record Date. The Annual Report to Shareholders does not
constitute a part of this Proxy Statement or the proxy solicitation material.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors currently consists of 13 directors. In accordance
with the Company's Restated By-Laws, the members of the Board of Directors are
divided into three classes: Class I, Class II, and Class III, respectively. The
Company's Restated By-Laws provide further that the classes shall be as nearly
equal in number as possible. The term of office of the Class I directors
expires at the Meeting. The Class II and Class III directors are serving terms
that expire at the annual meetings of shareholders in 2000 and 2001,
respectively.
Sterling Bank, the Company's principal banking subsidiary, has a board of
directors that is comprised of two inside directors and eight outside directors.
The two inside directors (George Martinez and J. Downey Bridgwater) and one of
the outside directors (Steven Retzloff) also serve on the Company's Board. The
ownership and supervision of Sterling Bank represents the Company's principal
business activity. Accordingly, a substantial amount of time and attention of
the board of directors of both the Company and Sterling Bank is devoted to
reviewing the financial performance, business activities, strategic
developments, and corporate affairs of Sterling Bank. While this duplication of
effort has effectively represented the interests of the Company's shareholders,
the boards of directors of both the Company and Sterling Bank believe that the
interests of the shareholders of the Company will be better served if the two
boards are consolidated. Under this proposal, the Executive Committee of the
Company's Board of Directors will also serve as the board of directors of
Sterling Bank. The consolidation of the two boards of directors will enable the
Company's directors to (i) develop a better, more comprehensive knowledge of the
Company's business activities and financial performance, (ii) dedicate more
attention to the development and supervision of the Company's business and
strategic plans, and (iii) bring a broader range of experience, knowledge and
skills to representing the interests of the Company's shareholders.
To effectuate the consolidation of the two boards of directors and maintain
reasonable equalization of the three classes of directors, the Board recommends
that the director classes be reconstituted by (i) reelecting four Class I
directors whose terms expire at the Meeting, (ii) electing the seven outside
directors who presently serve solely on the board of directors of Sterling Bank,
and (iii) electing two new directors who have previously served on the boards of
directors of banking companies that have been acquired by the Company. None of
the Class II or Class III directors who are presently serving terms that will
expire at the 2000 and 2001 annual meetings of shareholders, respectively, will
be reassigned to other director classes. If the nominees for election as
directors are elected at the Meeting, the composition of the three classes of
directors will be seven Class I directors, eight Class II directors and seven
Class III directors, or a total of 22 directors.
CLASS I NOMINEES. The Board has nominated seven individuals for election as
Class I directors at the Meeting: L. S. "Pat" Brown, Charles I. Castro, Walter
P. Gibbs, Jr., Paul Michael Mann, M.D., Christian A. Rasch, Thomas A. Reiser,
and Howard T. Tellepsen, Jr. Two of the Class I nominees, Messrs. Gibbs and
Rasch, have served as Class I directors since the 1996 annual meeting of
shareholders. Four of the Class I nominees, Messrs. Brown, Reiser and Tellepsen
and Dr. Mann, presently serve on the board of directors of Sterling Bank. Mr.
Castro was chairman of the board of Hometown Bancshares, Inc. prior to its
acquisition by the Company in November 1998. The seven Class I nominees, if
elected at the Meeting, will serve until the Company's 2002 annual meeting of
shareholders, unless they shall sooner resign or be removed in accordance with
the Company's Restated By-laws.
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CLASS II NOMINEES. The Board has nominated four individuals for election
as Class II directors at the Meeting: F. Richard Drake, G. B. "Bert" Harrop,
David L. Hatcher, and Russell Orr. Mr. Orr has served as a Class I director
since the 1996 annual meeting of shareholders. Messrs. Drake and Harrop
presently serve on the board of directors of Sterling Bank. Mr. Hatcher
previously served on the board of directors of First Houston Bancshares, Inc.,
which was acquired by the Company in September 1997. The four Class II nominees,
if elected at the Meeting, will serve along with the existing four Class II
directors until the Company's 2000 annual meeting of shareholders, unless they
shall sooner resign or be removed in accordance with the Company's Restated
By-laws.
CLASS III NOMINEES. The Board has nominated two individuals for election
as Class III directors at the Meeting: Willis Hargrave and Glenn H. Johnson.
Mr. Johnson has served as a Class I director since the 1996 annual meeting of
shareholders. Mr. Hargrave presently serves on the board of directors of
Sterling Bank. The two Class III nominees, if elected at the Meeting, will
serve along with the existing five Class III directors until the Company's 2001
annual meeting of shareholders, unless they shall sooner resign or be removed in
accordance with the Company's Restated By-laws.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE AS CLASS I, CLASS II AND CLASS III DIRECTORS. UNLESS
OTHERWISE DIRECTED IN THE ACCOMPANYING PROXY CARD, THE PERSONS NAMED THEREIN
WILL VOTE "FOR" THE ELECTION OF THE NOMINEES LISTED ABOVE AS CLASS I, CLASS II
AND CLASS III DIRECTORS.
Shareholders may not cumulate their votes in the election of directors. The
Class I, Class II and Class III nominees receiving the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the Meeting
will be elected to the Board. Shareholders entitled to vote for the election of
directors may withhold authority to vote for any or all nominees for directors.
If any nominee becomes unavailable for any reason, then the shares represented
by the proxy will be voted "FOR" the remainder of the listed nominees and for
such other nominees as may be designated by the Board as replacements for those
who become unavailable. Discretionary authority to do so is included in the
proxy. The following table sets forth certain information concerning the persons
who have been nominated for election as Class I, Class II and Class III
directors and the other current directors of the Company.
<TABLE>
<CAPTION>
POSITION(S) WITH
THE COMPANY AND/OR DIRECTOR
NAME STERLING BANK AGE SINCE DIRECTOR CLASS
- ---- ------------------ --- -------- --------------
<S> <C> <C> <C> <C>
J. Downey Bridgwater President and director 41 1998 Class III
(1)(2)(3)(4)(5)
L. S. "Pat" Brown Director 66 1994 (8) Class I Nominee
John H. Buck (1)(6) Director 56 1996 Class III
Charles I. Castro Director nominee 66 - Class I Nominee
James M. Clepper (5) Director 53 1997 Class II
F. Richard Drake Director 60 1994 (8) Class II Nominee
Walter P. Gibbs, Jr. (5) Director 66 1994 Class I Nominee
Bruce J. Harper (4) Director 64 1996 Class III
Willis Hargrave Director 63 1994 Class III Nominee
G. B. "Bert" Harrop Director 60 1992 (8) Class II Nominee
David L. Hatcher Director nominee 56 - Class II Nominee
Glenn H. Johnson (7) Director 58 1990 Class III Nominee
</TABLE>
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<TABLE>
<CAPTION>
POSITION(S) WITH
THE COMPANY AND/OR DIRECTOR
NAME STERLING BANK AGE SINCE DIRECTOR CLASS
- ---- ------------------ --- -------- --------------
<S> <C> <C> <C> <C>
James J. Kearney (2) Director 55 1995 Class II
Paul Michael Mann, M.D. Director 57 1998 (8) Class I Nominee
George Martinez (1)(2)(3) Chairman, Chief Financial Officer 57 1980 Class III
and director
Russell I. Orr (7) Director 64 1993 Class II Nominee
Christian A. Rasch Director 36 1996 Class I Nominee
Thomas A. Reiser (4) Director 47 1994 (8) Class I Nominee
Steven F. Retzloff (1)(6) Director 42 1988 Class III
Raimundo Riojas Director 59 1994 Class II
Howard T. Tellepsen (1)(6) Director 54 1994 (8) Class I Nominee
Cuba Wadlington, Jr. (2) Director 55 1997 Class II
</TABLE>
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(1) Member of the Executive Committee
(2) Member of the Asset/Liability Management
(3) Member of the Director Compensation Committee
(4) Member of the Service Quality Committee
(5) Member of the Asset Quality Committee
(6) Member of the Compensation Committee
(7) Member of the Audit Committee
(8) Represents service as a director of Sterling Bank.
The following is a brief biographical summary of the directors and
executive officers of the Company.
J. Downey Bridgwater (Class III) was elected President of the Company
and Sterling Bank on December 29, 1997. From January 1996 until his election as
President, he was the Office CEO of Sterling Bank's Memorial Office. Prior to
joining Sterling Bank on January 1, 1996, Mr. Bridgwater was a Senior Vice
President of Corporate Banking with Charter National Bank - Houston from 1990 to
1995.
L. S. "Pat" Brown (Class I Nominee) has been since January 1998 chairman
of Brown & Gay Engineers, Inc., an engineering firm based in Houston, Texas.
From March 1975 to January 1998, Mr. Brown served as president of such firm.
John H. Buck (Class III) has been a partner in the Houston law firm of
Buck, Keenan & Owens, L.L.P since 1990.
Charles I. Castro (Class I Nominee) has been President and CEO of C. I.
Castro Manufacturing, a children's clothing manufacturer, for more than the last
five years. Mr. Castro also served as Chairman of the Board of Hometown
Bancshares, Inc. and its subsidiary bank, Clear Lake National Bank, prior to the
merger with the Company in November 1998.
4
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James M. Clepper (Class II) has been the President, Chief Executive Officer
and sole shareholder of Southwest Solvents & Chemicals, an independent chemical
distributor based in Houston, Texas, for more than the last five years.
F. Richard Drake (Class II Nominee) has been the Chairman and CEO of United
Structures of America, a manufacturer of steel buildings and structural
components based in Houston, Texas, for more than the last five years.
Walter P. Gibbs, Jr. (Class I Nominee) is retired. He was Chairman of
Sterling Bank's Mangum Office from March 1994 to July 1995. From 1970 to March
1994, Mr. Gibbs was the President of Guardian Bancshares, Inc. and its
subsidiary, Guardian Bank, prior to the merger of Guardian Bancshares, Inc. with
the Company.
Bruce J. Harper (Class III) independently advises business owners on
developing strategies to improve operational effectiveness. From formation in
1962 until January 1998, Mr. Harper served as President and Chief Executive
Officer of Harper & Pearson Company, a Houston accounting and consulting firm
with emphasis on serving financial institutions and owner-managed businesses.
Willis Hargrave (Class III Nominee) has been the owner of Harco Insurance
Services, a general insurance agency based in Houston, Texas, for more than the
last five years.
G. B. "Bert" Harrop (Class II Nominee) has been CEO of Harrop Construction,
a commercial general contractor based in Houston, Texas, for more than the last
five years.
David L. Hatcher (Class II Nominee) has been President and CEO of KMG
Chemicals, Inc., a specialty chemical manufacturer, for more than the last five
years. Prior to its acquisition by the Company in September 1997, Mr. Hatcher
served on the board of directors of First Houston Bancshares, Inc. Mr. Hatcher
also serves as a director of KMG Chemicals, Inc., a public company that is
subject to the reporting requirements of the Securities Act of 1934, as amended.
Glenn H. Johnson (Class III Nominee) has been a partner in the Houston law
firm of Johnson & Wurzer, P.C. since 1973.
James J. Kearney (Class II) has been Senior Vice President and Director of
the Private Client Group for the Houston, Texas office of SG Cowen & Co., a New
York Stock Exchange investment banking and securities brokerage firm, for more
than the last five years.
Paul Michael Mann, M.D. (Class I Nominee) has been an eye surgeon with
Mann/Berkley Eye Center, an eye surgery clinic based in Houston, Texas that
specializes in corrective eye surgery, for more than the last five years.
George Martinez (Class III) has been Chairman of the Company since 1994,
Chairman of Sterling Bank since December 1989, and Chief Financial Officer of
the Company and Sterling Bank since January 1997.
Russell I. Orr (Class II Nominee) has been a certified public accountant
practicing in Houston, Texas with his own firm, Orr & Co., for more than the
last five years
Christian A. Rasch (Class I Nominee) has been a Director of Sucsova
Investments Corp., an investment company with interests primarily in
agricultural, trading and financial enterprises, for more than the past five
years.
Thomas A. Reiser (Class I Nominee) has been the Chairman and CEO of
Technical Risks, Inc., a specialized insurance agency based in Houston, Texas,
for more than the last five years. Mr. Reiser also serves as a director of
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Texoil, Inc., which is a public company that is subject to the reporting
requirements of the Securities Act of 1934, as amended.
Steven F. Retzloff (Class III) has been President of Retzloff Industries,
Inc., a manufacturer of trailers based in Houston, Texas, for more than the past
five years.
Raimundo Riojas (Class II) has been the President of Duwest, Inc., a joint
venture of Westrade, Inc. and E. I. Dupont de Nemours, engaged in the
distribution of agricultural chemical products, for more than the past five
years.
Howard T. Tellepsen (Class I Nominee) has been Chairman and CEO of
Tellepsen Corporation, a commercial construction firm based in Houston, Texas,
for more than the last five years.
Cuba Wadlington, Jr. (Class II) has been Senior Vice President, General
Manager and Director of Transcontinental Gas Pipe Line Corporation since 1995.
From 1988 to 1995, he served as Senior Vice President and General Manager of
Williams Western Pipeline Company and Executive Vice President of Kern River Gas
Transmission Company.
ADVISORY DIRECTORS. Thomas B. McDade, who has handled personal investments
since retiring from his position as Vice Chairman and a director of Texas
Commerce Bancshares, Inc., serves as an advisory director of the Company. It
is anticipated that Mr. McDade will be reappointed as an advisory director at
the annual organizational meeting of the Board of Directors that immediately
follows the Meeting.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
COMPENSATION OF DIRECTORS. For the 1998-1999 Board year, which ends on
April 26, 1999, non-employee directors and advisory directors of the Company
received an annual retainer fee of $10,000 paid as 555 shares of Common Stock
(with no additional per-meeting fees), pursuant to the Company's 1995 Non-
Employee Director Stock Compensation Plan (the "Director Stock Plan"). In
addition, members of committees of the Board received an annual committee fee of
$15,000 that was paid in the form of 833 shares of Common Stock, with no
additional per-meeting fees and with no additional fee for serving on more than
one committee. The Company also reimburses the directors for travel expenses
incurred in attending meetings.
For the 1999-2000 Board year, the number of shares of Common Stock issuable
to non-employee directors and advisory directors will be based on an annual
retainer fee of $25,000 for service on the Board of Directors. As a result of
the consolidation of the boards and the anticipated appointment of each director
to at least one committee position, the annual retainer will not be bifurcated
between board and committee service. The amount of the annual retainer fee to be
used in calculating the number of shares issuable to directors as compensation
for their 1999-2000 board service has been determined by the Director
Compensation Committee based upon a number of factors, including available
information for comparable public companies and banking organizations, the
amounts that have been paid in prior years to directors of the Company, the
duties and responsibilities of the directors, and the Company's financial and
stock performance. The actual number of shares to be issued to the directors for
their board service will be determined based upon the closing price of the
Common Stock on April 26, 1999, the date when the 1999-2000 Board year
commences. Directors of the Company who are also employees of the Company do not
receive fees for serving on or attending meetings of the Board of Directors.
BOARD OF DIRECTORS. During 1998, the Board of Directors met five times. All
directors attended 75 percent or more of the meetings of the Board of Directors
and of the committees of the Board on which they served during 1998.
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EXECUTIVE COMMITTEE. The directors who serve on the Executive Committee are
John H. Buck, J. Downey Bridgwater, George Martinez, and Steven F. Retzloff.
In addition, Thomas McDade, an advisory director of the Company, and Howard
Tellepsen, a member of the board of directors of Sterling Bank and a Class I
nominee, serve on the Executive Committee. The primary function of the Executive
Committee is to review the Company's performance and condition between board
meetings, recommend and/or approve mergers and acquisitions, policies and
nominations to the Board, and evaluate management. The Executive Committee met
eight times during 1998. Commencing April 26, 1999, it is anticipated that those
directors serving on the Executive Committee will also serve as the board of
directors of Sterling Bank for purposes of managing the affairs of Sterling Bank
and discharging all duties and responsibilities that are imposed on the board of
directors of a Texas state banking association and a non-member, federally
insured depository institution.
AUDIT COMMITTEE. The directors who serve on the Audit Committee are Glenn
H. Johnson and Russell I. Orr. John B. Carter, Jr., a former director, also
served on the Audit Committee throughout 1998. The primary function of the
Audit Committee is to direct and monitor the internal audit function and to make
recommendations regarding the selection of the Company's auditing firm. The
Audit Committee met eight times during 1998.
COMPENSATION COMMITTEE. The directors who serve on the Compensation
Committee are John H. Buck and Steven F. Retzloff. In addition, Thomas McDade
and Howard Tellepsen also serve on the Compensation Committee. The primary
function of the Compensation Committee is to develop, review, and make
recommendations to the full Board with respect to the Company's executive
compensation policies and to make awards under the 1994 Stock Incentive Plan.
The Compensation Committee met five times during 1998.
ASSET/LIABILITY MANAGEMENT COMMITTEE. The directors who serve on the
Asset/Liability Management Committee are J. Downey Bridgwater, James J. Kearney,
George Martinez and Cuba Wadlington, Jr. In addition, JoAnn Mikula and Joe
Klingen, officers of the Company and/or Sterling Bank, are members of the
Asset/Liability Management Committee. The primary function of the
Asset/Liability Management Committee is to plan and control the process for
matching the mix and maturities of assets and liabilities to manage liquidity
and interest rate risk. The Asset/Liability Management Committee met seven times
during 1998.
DIRECTOR COMPENSATION COMMITTEE. The directors who serve on the Director
Compensation Committee are J. Downey Bridgwater and George Martinez. The primary
function of the Director Compensation Committee is the administration of the
Company's Director Stock Plan. The Director Compensation Committee met once
during 1998.
SERVICE QUALITY COMMITTEE. The directors and director nominees who serve on
the Service Quality Committee are J. Downey Bridgwater, Bruce J. Harper and
Thomas A. Reiser. Bambi McCullough, Norm Miller and Bob Neyland, officers of the
Company and/or Sterling Bank, also serve on the Service Quality Committee. The
primary function of the Service Quality Committee is to monitor the Company's
overall service quality. The Service Quality Committee met four times in 1998.
ASSET QUALITY COMMITTEE. The directors and director nominees who serve on
the Asset Quality Committee are J. Downey Bridgwater, James M. Clepper and
Walter P. Gibbs, Jr. Daryl Bohls, Phil Montgomery and Charles M. Neff, Jr.,
officers of the Company and/or Sterling Bank, also serve on the Asset Quality
Committee. The primary function of the Asset Quality Committee is to provide
oversight and guidance with respect to the Company's loan portfolio, lending
practices, and loan review program, and to monitor compliance with loan policies
and procedures. The Asset Quality Committee met six times in 1998.
7
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EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The following is a report from the Compensation Committee of the Board of
Directors describing the policies pursuant to which compensation was paid to
executive officers of the Company during 1998.
The Compensation Committee of the Board of Directors is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies. John H. Buck, Thomas McDade (advisory
director), Steven F. Retzloff and Howard Tellepsen serve on the Compensation
Committee. The Compensation Committee prepares a report which sets forth the
components of the Company's executive officer compensation program and describes
the basis on which the 1998 compensation determinations were made by the
Compensation Committee with respect to the executive officers of the Company.
The Company believes that compensation of its executive officers should
reflect and support the Company's strategic goals, the primary goal being the
creation of long-term value for the Company's shareholders while protecting the
interests of the depositors of the Company's subsidiary banks. The Compensation
Committee believes that these goals are best served by compensating its
executive officers competitively with similarly situated executive officers in
the banking industry and rewarding individuals for outstanding contributions to
the Company's success.
Under the guidance of the Compensation Committee, the Company currently
employs a base salary structure in concert with an incentive compensation
program which closely aligns compensation with the Company's financial
performance. The base salary levels are determined through comparisons of
salary levels of executive officers of banking organizations of similar size.
In addition, the Compensation Committee takes into account individual experience
and performance and specific issues particular to the Company.
The Company, following the recommendation of the Compensation Committee,
has adopted an incentive compensation program (the "Incentive Program")
primarily for officers of its subsidiary banks, including the named executive
officers of the Company. The Incentive Program, the components of which are
reviewed annually by the Compensation Committee, provides that officers will
receive incentive compensation equal to a designated percentage of the Company's
earnings in excess of earnings needed to provide a minimum specified return on
equity ("ROE"). Since 1995, this minimum threshold of earnings has been a 12%
ROE, with 27% of earnings above the 12% ROE threshold being used to fund the
Incentive Program. Ninety percent of the incentive compensation fund is
allocated among all of the officers based on a point system relating to salary,
level of responsibility, individual performance and, where applicable, bank
office and departmental performance. The remaining ten percent is allocated
among non-officer employees based on bank office, departmental and individual
performance.
In addition, each of the named executive officers participates in the
Company-wide employee savings plan (the "Savings Plan"), which includes matching
of employee contributions and profit sharing contributions by the Company. The
Board of Directors determines the amount, presently set at 10% of net earnings
before taxes, to be contributed to the Savings Plan on behalf of the
participants with respect to a given taxable year. Quarterly, the Company
matches with Common Stock of the Company one-half of each employee's
contributions to the Savings Plan up to 6% of the employee's deferred salary
contributions to the Savings Plan. Profit sharing contributions, which are
applied first to matching contributions, are allocated to participant accounts
based on the ratio which the compensation of each participant bears to the
compensation of all participants eligible to participate in the Savings Plan. In
1996, the Company adopted the Sterling Bancshares, Inc. Deferred Compensation
Plan (the "Deferred Compensation Plan") to enable eligible participants,
including the named executive officers of the Company, to make and receive
contributions on a tax deferred basis which are otherwise precluded from being
credited to their Savings Plan accounts under applicable regulations of the
Internal Revenue Service.
8
<PAGE>
Compensation for each of the named executive officers, as well as other
senior executives, consists of a base salary and incentive compensation. The
Committee will continue to monitor the salary levels of the named executive
officers to ensure that the components of compensation are consistent with the
Company's objectives. Generally, the amounts received by the named executive
officers from the Incentive Program exceeded 20% of their 1998 compensation. The
amounts contributed by the Company to the Savings Plan and the Deferred
Compensation Plan accounts of the named executive officers for fiscal year 1998
totaled $105,043.
Finally, each of the named executive officers may be selected to
participate in the Company's 1994 Stock Incentive Plan. During 1998, pursuant to
the Stock Incentive Plan, options for the purchase of 48,567 shares of the
Company's Common Stock were granted to J. Downey Bridgwater in connection with
his appointment to the position of President of the Company. Each of the other
named executive officers were previously awarded options under the Stock
Incentive Plan.
In reviewing the 1998 compensation of Mr. Martinez, the Company's Chairman,
the Compensation Committee reviewed his compensation history, executive
compensation survey data, and comparative performance information. Based upon
such information, the Compensation Committee determined that a base salary
adjustment was warranted and set Mr. Martinez' salary for 1998 at $220,000, a
13% increase over 1997. Mr. Martinez participates in the Incentive Program
along with all other officers. From the Incentive Program in 1998, Mr. Martinez
earned a bonus of $64,801 resulting in 23% of his 1998 compensation being
dependent on the financial performance of the Company. The amount contributed
by the Company to the Savings Plan and Deferred Compensation Plan accounts of
Mr. Martinez in fiscal year 1998 was $34,302. The Compensation Committee
believes that Mr. Martinez' total compensation is reasonable and competitive
based upon compensation survey data and comparative performance information.
Date: March 15, 1999 Compensation Committee:
----------------------
John H. Buck
Thomas McDade
Steven F. Retzloff
Howard Tellepsen
COMPENSATION COMMITTEE INTERLOCKS
During 1998, no executive officer of the Company served as (i) a member of
the compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Company, (ii) a director of another entity, one of
whose executive officers served on the Compensation Committee of the Company, or
(iii) a member of the compensation committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served as a director of the Company.
9
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the NASDAQ Composite Index and the NASDAQ
Bank Index for the period between December 31, 1993 and December 31, 1998. The
historical stock price performance for the Company's stock shown on the graph
below is not necessarily indicative of future stock performance. The information
on the Company's Common Stock has been adjusted to reflect the three-for-two
stock splits (effected as stock dividends) that were implemented in 1995, 1996,
1997 and 1998.
COMPOSITE OF CUMULATIVE TOTAL RETURN *
STERLING BANCSHARES, INC., THE NASDAQ COMPOSITE INDEX AND THE NASDAQ BANK INDEX
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
Sterling Bancshares $ 100.00 $ 124.18 $ 125.32 $ 188.91 $ 309.29 $ 378.54
NASDAQ Composite Index 100.00 114.75 111.08 155.42 190.71 202.15
NASDAQ Bank Index 100.00 129.37 130.80 189.41 238.95 302.17
</TABLE>
* Assumes that the value of the investment in Sterling Bancshares, Inc., and
each index, was $100 on December 31, 1993 and that all dividends were
reinvested.
10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth for 1998, 1997 and 1996 the compensation of
(i) the Chief Executive Officer of the Company and (ii) the other four most
highly compensated executive officers of the Company or its bank subsidiaries
who were serving as executive officers at the end of 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation (1) Compensation All
Name and ----------------------------- ------------ Other
Principal Position Year Salary Bonus Stock Options (2) Compensation (3)
- ----------------------------- ---- -------- -------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
George Martinez 1998 $220,000 $64,801 0 $34,302
Chairman and Chief 1997 195,000 87,782 0 33,762
Financial Officer 1996 172,000 64,745 90,261 32,051
J. Downey Bridgwater (4) 1998 $150,000 $42,052 48,564 $23,215
President 1997 106,000 38,908 4,041 17,986
1996 100,000 15,630 25,313 16,097
Daryl D. Bohls 1998 $120,000 $35,132 0 $17,673
Chief Credit Officer of 1997 114,400 49,987 0 21,003
Sterling Bank 1996 110,500 37,756 2,250 19,767
Glenn W. Rust 1998 $120,000 $34,414 0 $18,801
Executive Vice President 1997 106,000 45,865 2,933 17,977
1996 100,000 40,714 1,110 18,421
Michael A. Roy (5) 1998 $100,000 $28,185 0 $17,052
Senior Vice President and 1997 95,000 30,528 5,787 12,075
General Counsel 1996 27,708 0 20,520 0
</TABLE>
________________
(1) Other annual compensation provided to the named executive officers during
1998, 1997, or 1996 did not exceed the disclosure requirements of the rules
promulgated by the Securities and Exchange Commission.
(2) Adjusted to reflect the three-for-two stock split that was effected on
February 20, 1998.
(3) The amounts in this column reflect the Company's contribution to the
Employee Savings Plan of the named executive officers during 1998, 1997 and
1996, together with the Company's contribution for 1998 and 1997 to their
401(k) plan matching accounts and their Deferred Compensation Plan
accounts. Such amounts, however, do not include (i) trust forfeitures
occurring under the terms of the Employee Savings Plan, (ii) earnings on
the undistributed balances held pursuant to the Employee Savings Plan for
the benefit of participants, or (iii) term life insurance premiums paid by
the Company for the benefit of the named executive officers. The amount of
such life insurance premiums for 1998 were as follows, with comparable
amounts having been paid in prior reported periods: Martinez ($504),
Bridgwater ($459), Bohls ($399), Rust ($399), and Roy ($333).
(4) Mr. Bridgwater was appointed President of the Company and Sterling Bank on
December 29, 1997. From January 1, 1996 to December 28, 1997, Mr.
Bridgwater served as the Office CEO of Sterling Bank's Memorial Office.
(5) Mr. Roy was not an officer, director or employee of the Company prior to
joining Sterling Bank on September 16, 1996.
STOCK OPTION PLANS
The Company maintains the 1994 Stock Incentive Plan (the "Stock Incentive
Plan") for all of its officers and key employees which is administered by the
Compensation Committee. The Board of Directors recommended and the shareholders
of the Company approved the amendment and restatement of the Stock Incentive
Plan (the "Amended
11
<PAGE>
Plan") at the 1998 Annual Meeting of Shareholders. An aggregate of 2,000,000
shares are presently issuable under the Amended Plan prior to its termination in
April 2004. During 1998, stock options covering approximately 225,000 shares of
the Company's stock were issued to 68 officers.
OPTION GRANTS TABLE
The following table sets forth information concerning the grant of stock
options during 1998 to the Company's Chief Executive Officer and the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF PERCENTAGE VALUE AT ASSUMED
SECURITIES OF TOTAL ANNUAL RATE OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM($)(3)
GRANTED EMPLOYEES PRICE EXPIRATION -----------------------
NAME (SHARES) (1) IN 1998(2) ($/SHARE) DATE 5% 10%
- -------------------- ------------ ---------- --------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
George Martinez - - - - - -
J. Downey Bridgwater 48,564 22% $13.55 12/31/07 $413,580 $1,048,092
Daryl D. Bohls - - - - - -
Glenn W. Rust - - - - - -
Michael A. Roy - - - - - -
</TABLE>
- --------------
(1) The options granted in 1998 vest over four years at the rate of 25% per
year on each anniversary of the date of grant.
(2) The Company granted options representing approximately 225,000 shares to
officers in 1998.
(3) These amounts represent certain assumed rates of appreciation based on
actual option term and annual compounding from the date of grant. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the stock appreciation
amounts reflected in this table will be achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning the exercise of
stock options during 1997 by the Company's Chief Executive Officer and the
executive officers named in the Summary Compensation Table, and the fiscal year-
end value of unexercised options.
OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998 (2)
ACQUIRED ON VALUE ----------------------------- ---------------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------ ----------- ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
George Martinez - - 67,695 22,566 $772,961 $257,666
J. Downey Bridgwater 7,337 $42,375 2 64,254 15 204,488
Daryl D. Bohls - - 9,906 1,125 132,279 10,047
Glenn W. Rust - - 20,272 9,084 218,686 88,194
Michael A. Roy - - 11,706 14,601 96,885 113,537
</TABLE>
- -----------------
(1) In accordance with the terms of the Amended Plan, Mr. Bridgwater exercised
options in a cashless brokered transaction and received the value of the
option shares in lieu of acquiring the shares underlying the options which
he exercised.
12
<PAGE>
(2) An option is "in the money" if the market value of the Common Stock
underlying the option (based on the NASDAQ Stock Market closing price of
$14.875 on December 31, 1998) exceeds the exercise price of the option.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
concerning persons who beneficially owned more than 5% of the outstanding Common
Stock of the Company as of the Record Date. The table also shows information
concerning beneficial ownership by all directors and director nominees, by each
of the executive officers named in the Summary Compensation Table and by all
directors and officers as a group. The number of shares beneficially owned by
each director or officer is determined under the rules of the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which an individual has the sole or shared
voting power or investment power and also shares that the individual has the
sole right to acquire within 60 days through the exercise of any stock option or
right. Unless otherwise noted, each person listed below has sole voting and
investment power (or shares such powers with his or her spouse) with respect to
the shares listed.
Shares Percent
Name of Beneficial Owner Beneficially Owned of Class
------------------------ ------------------ --------
A. F. Retzloff 1,290,981 (1) 5.28%
13955 FM 529
Houston, Texas 77041
Steven F. Retzloff 1,165,641 (2) 4.77%
Daryl D. Bohls 65,053 (3) *
J. Downey Bridgwater 21,247 (4) *
L. S. "Pat" Brown 9,000 *
John H. Buck 6,449 *
Charles I. Castro 254,457 1.04%
James M. Clepper 5,388 *
F. Richard Drake 126,562 *
Walter P. Gibbs, Jr. 226,174 (5) *
Bruce J. Harper 5,500 *
Willis Hargrave 142,897 *
G. B. "Bert" Harrop 9,789 *
David L. Hatcher 4,140 *
Glenn H. Johnson 203,381 (6) *
James J. Kearney 6,168 *
Paul Michael Mann, M.D. 474,504 (7) 1.94%
George Martinez 745,298 (8) 3.05%
Russell I. Orr 40,368 *
Christian A. Rasch 810,400 (9) 3.32%
Thomas A. Reiser 12,775 (10) *
Raimundo Riojas 262,110 (11) 1.07%
Michael A. Roy 14,326 (12) *
Glenn W. Rust 21,689 (13) *
Howard T. Tellepsen, Jr. 3,869 *
Cuba Wadlington, Jr. 3,918 *
All directors and executive 4,769,845 (14) 19.53% (14)
officers as a group (19
persons)
________________
13
<PAGE>
* Indicates less than one percent.
(1) Includes 1,089,088 shares owned of record by Retzloff Industries, Inc., of
which A.F. Retzloff is the Chairman of the Board, and 128,742 shares owned
of record by the Georgia Rainey Retzloff Testamentary Trust, of which Mr.
Retzloff is the trustee.
(2) Includes 1,089,088 shares owned of record by Retzloff Industries, Inc., of
which Steven F. Retzloff is the controlling shareholder, President and CEO
and 73,421 shares owned of record by the A.F. Retzloff Living Trust, of
which Steven F. Retzloff is a trustee.
(3) Includes 2,628 shares held in an individual retirement account by Mr.
Bohls' spouse, 3,767 shares held by Mr. Bohls as custodian for the benefit
of his children, 1,687 shares that can be acquired pursuant to exercise of
fully vested outstanding stock options (562 of which vested after
December 31, 1998), and 451 shares which have been contributed by the
Company to Mr. Bohls' 401(k) plan matching account.
(4) Includes 19,481 shares that could be acquired pursuant to exercise of fully
vested outstanding stock options (19,479 of which vested after December 31,
1998) and 484 shares which have been contributed by the Company to Mr.
Bridgwater's 401(k) plan matching account.
(5) Includes 92,058 shares which are held of record by Mr. Gibbs' spouse.
(6) Includes 30,375 shares owned of record by the Elliott A. Johnson --
Grandchildren Trust, Glenn H. Johnson, Trustee; 30,375 shares owned of
record by the Katherine M. Johnson Marital Trust, Glenn H. Johnson,
Trustee; 121,500 shares owned of record by Katherine M. Johnson, Mr.
Johnson's mother, and managed by Mr. Johnson under a power of attorney; and
8,981 held of record by Johnson & Wurzer, P.C., of which Mr. Johnson is the
controlling shareholder.
(7) Includes 4,960 shares held by Dr. Mann as trustee under certain trusts,
30,180 shares held in certain trusts for the benefit of Dr. Mann's family,
34,282 shares held by a Mann family limited partnership, and 35,141 shares
held of record by Dr. Mann's spouse.
(8) Includes 90,261 shares that could be acquired pursuant to exercise of fully
vested outstanding stock options (22,566 of which vested after December 31,
1998) and 610 shares which have been contributed by the Company to Mr.
Martinez' 401(k) plan matching account.
(9) Represents shares owned of record by either Sucsova Investments Corp. or
Multiflora International, Inc., companies owned by Mr. Rasch and other
members of his family.
(10) Includes 1,500 shares held of record by Technical Risks, Inc., of which Mr.
Reiser is the principal shareholder.
(11) Includes shares owned by Glencox Investments, Inc., which is principally
owned and controlled by Mr. Riojas.
(12) Includes 13,153 shares that can be acquired pursuant to the exercise of
fully vested outstanding stock options (1,447 of which vested after
December 31, 1998) and 173 shares which have been contributed by the
Company to Mr. Roy's 401(k) plan matching account.
(13) Includes 21,282 shares that can be acquired pursuant to the exercise of
fully vested outstanding stock options (1,010 of which vested after
December 31, 1998) and 407 shares which have been contributed by the
Company to Mr. Rust's 401(k) plan matching account.
(14) Includes issued and outstanding shares that are beneficially owned as of
the Record Date and shares issuable upon the exercise of (i) fully vested
outstanding stock options or (ii) stock options that vest within 60 days of
the Record Date.
CERTAIN TRANSACTIONS
Certain of the Company's officers and directors are, or have been in the
past, customers of the Company's subsidiary banks and its predecessor banks, and
some of the Company's officers and directors are directors, officers or
shareholders of entities which are, or have been in the past, customers of such
banks. As such customers, they have had transactions in the ordinary course
14
<PAGE>
of business with such banks, including outstanding loans. All such loans were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unaffiliated persons,
and did not involve more than a normal risk of collectability or present any
other unfavorable features. All credit transactions involving officers and
directors, either of the Company or Sterling Bank, are reviewed and approved by
the Loan Committee of Sterling Bank and are disclosed and reviewed monthly in
the meetings of the Board of Directors of Sterling Bank.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company selected Deloitte & Touche LLP as its independent audit firm
for fiscal year 1998. Deloitte & Touche LLP has served as the Company's
independent audit firm since 1988. Representatives of Deloitte & Touche LLP will
be present at the Meeting and will have an opportunity to make a statement at
the Meeting if they desire to do so. They will also be available to respond to
appropriate questions of shareholders at the Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and holders of more than 10% of the Company's
outstanding Common Stock are required to furnish the Company with copies of all
forms they file pursuant to Section 16(a) of the Exchange Act.
Due to inadvertence in connection with small transactions involving the
Company's Common Stock, one executive officer and two directors, Messrs. Bohls,
Retzloff and Harper, did not timely file reports on Form 4 to reflect changes in
their beneficial ownership during 1998. Upon discovery of such inadvertent
omission, all such transactions have been reported to the SEC. Based solely
upon the information provided to the Company by its directors, executive
officers and ten percent beneficial owners, the Company believes that all other
filings required under Section 16(a) of the Exchange Act have been made.
SHAREHOLDER PROPOSALS AT THE NEXT ANNUAL MEETING OF SHAREHOLDERS
Any proposal of shareholders to be included in the Company's proxy
statement relating to the Company's 2000 Annual Meeting of Shareholders pursuant
to Rule 14a-8 under the Exchange Act must be received by the Company at its
principal executive offices no later than December 24, 1999; such proposal must
also have complied with the Company's Restated By-laws and Rule 14a-8 if the
proposal is to be considered for inclusion in the Company's proxy statement for
such meeting. The Company must receive notice of any shareholder proposal to be
brought before the meeting outside the process of Rule14a-8 at the Company's
principal executive offices not less than 45 days nor more than 180 days prior
to the meeting; provided, if the Company gives notice or prior public disclosure
of the date of the annual meeting less than 50 days before the meeting, such
shareholder's notice must be received not later than the close of business on
the seventh day following the date on which the Company's notice of the date of
the annual meeting was mailed or public disclosure made. The form of such
shareholder notice must also comply with the Company's Restated By-laws.
Shareholder proposals should be submitted to the Secretary of the Company at
15000 Northwest Freeway, Houston, Texas 77040.
15
<PAGE>
OTHER MATTERS
The management of the Company knows of no other matters which may come
before the Meeting. However, if any matters other than those referred to above
should properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy to vote all proxies in accordance with their best
judgment.
By order of the Board of Directors,
/s/ Michael A. Roy
Michael A. Roy
Secretary
16
<PAGE>
PROXY
STERLING BANCSHARES, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for the Annual Shareholders' Meeting April 26, 1999
The undersigned, hereby revoking all prior proxies, hereby appoints George
Martinez and Michael A. Roy, and each of them, his true and lawful agents and
proxies, with full and several power of substitution, to represent and to vote
all the shares of Common Stock of STERLING BANCSHARES, INC. standing in the name
of the undersigned, and with respect to which the undersigned would be entitled
to vote if personally present, at the Annual Meeting of Shareholders of STERLING
BANCSHARES, INC. to be held on April 26, 1999 at the Doubletree Hotel at Post
Oak, 2001 Post Oak Boulevard, Houston, Texas 77056, and at any adjournment(s)
thereof, on all matters coming before the meeting.
(change of address)
___________________________________ PLEASE MARK, SIGN, DATE
___________________________________ AND RETURN THE PROXY CARD
___________________________________ PROMPTLY BY USING THE
___________________________________ ENCLOSED ENVELOPE.
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
<PAGE>
STERLING BANCSHARES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1a. Election of Seven Class I Directors for a three year term For Withhold For All
ending at the 2002 Annual Meeting of Shareholders, All All (Except Nominee(s) written below)
Nominees: L.S. "Pat" Brown, Charles I. Castro, Walter P. [ ] [ ] [ ] __________________________________
Gibbs, Jr., Paul Michael Mann, M.D., Christian A. Rasch,
Thomas A. Reiser, and Howard T. Tellepsen, Jr. 2. In their discretion, the proxies are authorized to
vote upon other business as may properly come
1b. Election of Four Class II Directors for a one year term before the meeting or adjournment thereof. Either
ending at the 2000 Annual Meeting of Shareholders. of the proxies or their respective substitutes,
Nominees: F. Richard Drake, G. Bert Harrop, David L. who shall have and may exercise all the powers
Hatcher, and Russell Orr. hereby granted.
1c. Election of Two Class III Directors for a two year term THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL
ending at the 2001 Annual Meeting of Shareholders. 1 AND UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXY
Nominees: Willis Hargrave and Glenn H. Johnson. WILL BE VOTED FOR THE PROPOSAL.
Change of Address [ ]
Dated:________________________, 1999
Signature(s)___________________________
_______________________________________
(Please sign exactly as name appears at
left. For joint accounts each joint owner
should sign. Executors, administrators,
trustees should also indicate when
(signing.)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT
IN THE ENCLOSED ENVELOPE
4481--Sterling Bancshares, Inc.
