<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Sterling Bancshares
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] 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:
-----------------------------------------------------------------------
(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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<PAGE> 2
[STERLING BANCSHARES LOGO]
2000
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
MONDAY, APRIL 24, 2000
AT 2:00 P.M. LOCAL TIME
DOUBLETREE HOTEL POST OAK
2001 POST OAK BOULEVARD
HOUSTON, TEXAS 77056
<PAGE> 3
STERLING BANCSHARES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 2000
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 24, 2000, for the following purposes:
1. To elect six Class II directors for three year terms ending
at the 2003 Annual Meeting of Shareholders, or until their
successors have been elected and qualified.
2. To act on such other business as may properly come before the
Meeting or any adjournment thereof.
The close of business on March 1, 2000 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 22, 2000
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.
<PAGE> 4
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 2000 Annual Meeting of Shareholders (the "Meeting")
to be held on Monday, April 24, 2000, 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, 2000 (the "Record
Date") are entitled to notice of and to vote at the Meeting. On the Record
Date, there were 26,084,853 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 22,
2000.
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 each of the Class II 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
<PAGE> 5
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, 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 23 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
II directors expires at the Meeting. The Class I and Class III directors are
serving terms that expire at the annual meetings of shareholders in 2002 and
2001, respectively.
Sterling Bank, the Company's principal banking subsidiary, has a board
of directors that is comprised of five inside directors and three outside
directors. Two of the inside directors (George Martinez and J. Downey
Bridgwater) and all three outside directors (James Clepper, Bruce Harper, and
Howard Tellepsen) also serve on the Company's Board. The other inside directors
are officers of the Company and/or Sterling Bank. 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.
CLASS II NOMINEES. The Board has nominated six individuals for
election as Class II directors: James M. Clepper, David L. Hatcher, James J.
Kearney, David B. Moulton, G. Edward Powell, and Raimundo Riojas. Messrs.
Clepper, Kearney and Riojas have served as a Class II director since the 1997
annual meeting of shareholders. Mr. Hatcher previously served on the board of
directors of First Houston Bancshares, Inc., which was acquired by the Company
in September 1997, and was elected to serve as a Class II director at the 1999
annual meeting of shareholders. Mr. Powell has been nominated to serve as a
director of the Company for the first time.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE AS CLASS II 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 II DIRECTORS.
Shareholders may not cumulate their votes in the election of
directors. Each of the Class II 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 may 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 II directors and the
other current directors of the Company.
2
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
NAME DESCRIPTION AGE SINCE DIRECTOR CLASS
- ---- ----------- --- ----- --------------
<S> <C> <C> <C> <C>
J. Downey Bridgwater President and director of the 42 1998 Class III
(1)(2)(3)(4) Company and Sterling Bank
L. S. "Pat" Brown (5) Director 67 1994 (9) Class I
John H. Buck (6) Director 57 1996 Class III
Charles I. Castro (3) Director 67 1999 Class I
James M. Clepper (1) Director 54 1997 Class II Nominee
Walter P. Gibbs, Jr. (2) Director 67 1994 Class I
Willis J. Hargrave, Jr. (3) Director 64 1994 (9) Class III
Bruce J. Harper (1) Director 65 1996 Class III
David L. Hatcher (7) Director 57 1999 Class II Nominee
Glenn H. Johnson (6) Director 59 1990 Class III
James J. Kearney (7) Director 56 1995 Class II Nominee
Paul Michael Mann, M.D. (5) Director 58 1998 (9) Class I
George Martinez (1)(7) Chairman, Chief Financial Officer 58 1980 Class III
and director of the Company and
Sterling Bank
David B. Moulton (5) Director 60 1999 Class II Nominee
G. Edward Powell Director Nominee 63 - Class II Nominee
Christian A. Rasch (5) Director 37 1996 Class I
Thomas A. Reiser (3) Director 48 1994 (9) Class I
Steven F. Retzloff (2) Director 43 1988 Class III
Raimundo Riojas (8) Director 60 1994 Class II Nominee
Howard T. Tellepsen (1) Director 55 1994 (9) Class I
- -----------------------
</TABLE>
(1) Member of the Executive Committee.
(2) Member of the Asset Quality Committee.
(3) Member of the Service Quality Committee.
(4) Member of the Director Compensation Committee.
(5) Member of the Trust Administrative Committee.
(6) Member of the Audit Committee.
(7) Member of the Asset/Liability Management Committee.
(8) Member of the Human Resources Programs Committee.
(9) Represents service as a director of Sterling Bank.
3
<PAGE> 7
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 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) 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) 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.
James M. Clepper (Class II Nominee) 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.
Walter P. Gibbs, Jr. (Class I) 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.
Willis J. Hargrave, Jr. (Class III) has been the owner of Harco
Insurance Services, a general insurance agency based in Houston, Texas, for
more than the last five years.
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.
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. Mr. Hatcher also serves as a director of KMG Chemicals, Inc., a public
company that is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended.
Glenn H. Johnson (Class III) has been a partner in the Houston law
firm of Johnson & Wurzer, P.C. since 1973.
James J. Kearney (Class II Nominee) 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) 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.
4
<PAGE> 8
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. Prior to 1994, Mr.
Martinez was President of the Company.
David B. Moulton (Class II Nominee) is retired. In connection with the
Company's acquisition of B.O.A. Bancshares, Inc. in June 1999, Mr. Moulton was
elected to the Board to serve as a Class II director until the 2000 annual
meeting of shareholders. He was Chairman and CEO of Houston Commerce Bank (and
its parent company, B.O.A. Bancshares, Inc.) from March 1996 until its
operations were merged into the Company in October 1999. From March 1986 to
June 1996, Mr. Moulton served as Chairman and CEO of National Commerce Bank,
Houston, Texas.
G. Edward Powell (Class II Nominee) is a certified public accountant
and consultant who advises emerging and middle market businesses. From 1982
until his retirement in 1994, Mr. Powell served as the managing partner of the
Houston office of Price Waterhouse & Co., a major public accounting and
consulting firm.
Christian A. Rasch (Class I) 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) has been the Chairman and CEO of Technical
Risks, Inc., a specialized insurance agency based in Houston, Texas, for more
than the past five years. Mr. Reiser also serves as a director of Texoil, Inc.,
which is a public company that is subject to the reporting requirements of the
Securities Exchange 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 Nominee) 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) has been Chairman and CEO of Tellepsen
Corporation, a commercial construction firm based in Houston, Texas, for more
than the past five years.
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. In addition, the Board of Directors may from time to time
appoint additional advisory directors to the Board.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
COMPENSATION OF DIRECTORS. For the 1999-2000 Board year, which ends on
April 24, 2000, non-employee directors and advisory directors of the Company
received an annual retainer fee of $25,000 paid as 2,030 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"). All
of the directors serve on board committees with no additional per-meeting fees
for attending any committee meetings and no additional fee being paid for
serving on more than one committee. The Company reimburses the directors for
their travel expenses for attending meetings.
For the 2000-2001 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. The
amount
5
<PAGE> 9
of the annual retainer fee to be used in calculating the number of shares
issuable to directors as compensation for their 2000-2001 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 and committee service will be
determined based upon the closing price of the Common Stock on April 24, 2000,
the date when the 2000-2001 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 or any board committees on which
they serve.
BOARD OF DIRECTORS. During 1999, the Board of Directors met four
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
1999.
EXECUTIVE COMMITTEE. The directors who served on the Executive
Committee during the 1999-2000 Board year were J. Downey Bridgwater, James M.
Clepper, Bruce J. Harper, George Martinez, and Howard Tellepsen. In addition,
Glenn W. Rust, Michael E. Skowronek, and P. Michael Wells, Jr., who are
officers of Sterling Bank, also served 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, review and approve
significant capital expenditures, and evaluate management. The Executive
Committee met eight times during 1999. The members of the Executive Committee
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 federally insured depository institution. In accordance with Texas
banking regulations, the board of directors of Sterling Bank met twelve times
in 1999.
AUDIT COMMITTEE. The directors who served on the Audit Committee
during the 1999-2000 board year were John H. Buck, Glenn H. Johnson, and
Russell I. Orr, a Class II director whose term expires at the 2000 annual
meeting of shareholders. 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 1999.
HUMAN RESOURCES PROGRAMS COMMITTEE. Raimundo Riojas served on the
Human Resources Programs Committee during the 1999-2000 Board year. In
addition, Thomas McDade, an advisory director, and Cuba Wadlington, a Class II
director whose term expires at the 2000 annual meeting of shareholders, also
served on the Human Resources Programs Committee during the year. The primary
function of the Human Resources Programs Committee is to develop, review, and
make recommendations with respect to the Company's executive compensation
policies and to make awards under the Company's 1994 Stock Incentive Plan. The
Human Resources Programs Committee met eight times during 1999.
ASSET/LIABILITY MANAGEMENT COMMITTEE. The Asset/Liability Management
Committee for the 1999-2000 Board year included David L. Hatcher, James J.
Kearney, and George Martinez. In addition, Jo Ann Mikula, Steve Raffaele and
Freddy Hurst, officers of Sterling Bank, and Bert Harrop, a Class II director
whose term expires at the 2000 annual meeting of shareholders, also served on
the Asset/Liability Management Committee during the year. 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 1999.
DIRECTOR COMPENSATION COMMITTEE. The directors who served on the
Director Compensation Committee during the 1999-2000 Board year were J. Downey
Bridgwater and George Martinez. The primary function of the
6
<PAGE> 10
Director Compensation Committee is the administration of the Company's Director
Stock Plan. The Director Compensation Committee met twice during 1999.
SERVICE QUALITY COMMITTEE. The directors who served on the Service
Quality Committee during the 1999-2000 Board year were J. Downey Bridgwater,
Charles Castro, Willis Hargrave and Thomas A. Reiser. Bambi McCullough, Norm
Miller and Travis Jaggers, officers of Sterling Bank, also served on the
Service Quality Committee during the year. The primary function of the Service
Quality Committee is to monitor of the Company's overall service quality. The
Service Quality Committee met eight times in 1999.
ASSET QUALITY COMMITTEE. The directors who served on the Asset Quality
Committee during the 1999-2000 Board year were J. Downey Bridgwater, Walter P.
Gibbs, Jr. and Steve Retzloff. David B. Moulton became a member of the Asset
Quality Committee upon his election to the Board in July 1999. Daryl Bohls,
David McGuire and Don Najvar, officers of the Company and/or Sterling Bank, and
F. Richard Drake, a Class II director whose term expires at the 2000 annual
meeting of shareholders, also served on the Asset Quality Committee during the
year. The primary function of the Asset Quality Committee is to provide
oversight and guidance with respect to Sterling Bank's loan portfolio, lending
practices, loan review program, and compliance with loan policies and
procedures. The Asset Quality Committee met eight times in 1999.
TRUST ADMINISTRATIVE COMMITTEE. The directors who served on the Trust
Administrative Committee during the 1999-2000 Board year were L.S. "Pat" Brown,
Paul Michael Mann, M.D. and Christian A. Rasch. Jimmy Cox, Joseph Klingen,
Robert Neyland, and Michael Roy, officers of Sterling Bank, also served on the
Trust Administrative Committee during the year. The primary function of the
Trust Administrative Committee is to oversee the trust and asset management
operations of Sterling Bank, review and ratify new accounts, and approve the
products and services offered through Sterling Bank's trust and asset
management department. The Trust Administrative Committee met four times in
1999.
EXECUTIVE COMPENSATION
HUMAN RESOURCES PROGRAMS COMMITTEE REPORT
The following is a report from the Human Resources Programs Committee
of the Board of Directors describing the policies pursuant to which
compensation was paid to executive officers of the Company during 1999.
The Human Resources Programs 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. During the 1999-2000 Board
year, Raimundo Riojas, Cuba Wadlington and Tom McDade served on the Human
Resources Programs Committee. The Human Resources Programs Committee prepares a
report which sets forth the components of the Company's executive officer
compensation program and describes the basis on which the 1999 compensation
determinations were made by the Human Resources Programs 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 bank.
The Human Resources Programs 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 Human Resources Programs 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
7
<PAGE> 11
executive officers of banking organizations of similar size. In addition, the
Human Resources Programs Committee takes into account individual experience and
performance and specific issues particular to the Company.
The Company, following the recommendation of the Human Resources
Programs 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 Human Resources Programs
Committee, provides that officers will receive incentive compensation equal to
a designated percentage of the Company's earnings in excess of those 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. Eighty
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 twenty percent is allocated among both officer and
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.
Finally, each of the named executive officers may be selected to
participate in the Sterling Bancshares, Inc. 1994 Stock Incentive Plan, as
amended (the "Incentive Stock Plan"). Since they had previously been awarded
options under the Incentive Stock Plan, none of the named officers were granted
any stock options or other awards under the Incentive Stock Plan during 1999,
except for (i) 11,218 incentive stock options awarded to Mr. Bohls (whose
previously granted options expired in 1999) and (ii) the breakthrough stock
award to Mr. Bridgwater as discussed more fully below. In addition to the
authority to grant incentive stock options, the Incentive Stock Plan authorizes
the Human Resources Programs Committee to make other stock-based incentive
awards to executive and other eligible officers. Effective July 15, 1998, a
breakthrough performance stock award was made to Mr. Bridgwater that entitles
him to receive a variable number of shares of the Company's Common Stock in the
event that the total return on the Company's Common Stock during the three year
period ending on July 15, 2001 (the "Performance Period") exceeds the NASDAQ
Bank Index by at least 25%. The actual number of shares that Mr. Bridgwater may
receive under this breakthrough stock grant, if any, is highly variable, cannot
be specifically determined or predicted at this time, and depends upon
Sterling's common stock outperforming the market. The Human Resources Programs
Committee also contemplates making breakthrough performance based stock awards
to the other named executive officers in the future.
Compensation for each of the named executive officers, as well as
other senior executives, consists of a base salary and incentive compensation.
The Human Resources Programs 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 1999 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 1999 totaled $107,763.
In reviewing the 1999 compensation of Mr. Martinez, the Company's
Chairman, the Human Resources Programs Committee reviewed his compensation
history, executive compensation survey data, and comparative
8
<PAGE> 12
performance information. Based upon such information, the Human Resources
Programs Committee determined that a base salary adjustment was warranted and
set Mr. Martinez' salary for 1999 at $235,000, a 6.8% increase over 1998. Mr.
Martinez participates in the Incentive Program along with all other officers.
From the Incentive Program in 1999, Mr. Martinez earned a bonus of $51,047
resulting in 18.5% of his 1999 cash 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 1999 was $38,824. The Human Resources Programs Committee believes
that Mr. Martinez' total compensation is reasonable and competitive based upon
compensation survey data and comparative performance information.
Date: March 15, 2000 Human Resources Programs Committee:
Raimundo Riojas, Chairman
Thomas McDade
Cuba Wadlington
HUMAN RESOURCES PROGRAMS COMMITTEE INTERLOCKS
During 1999, no executive officer of the Company served as (i) a
member of the Human Resources Programs Committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served on the Human Resources Programs Committee of the Company, (ii)
a director of another entity, one of whose executive officers served on the
Human Resources Programs Committee of the Company, or (iii) a member of the
Human Resources Programs 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> 13
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 indices of the Russell 2000 Index and the
SNL Securities $1 Billion-to-$5 Billion Asset Bank Index for the period between
December 31, 1994 and December 31, 1999. 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 (1)
RUSSELL 2000, SNL SECURITIES $1 BILLION-$5 BILLION ASSET
BANK INDEX (2) AND STERLING BANCSHARES, INC.
[GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
--------------------------------------------------------------------
INDEX 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sterling Bancshares, Inc. 100.00 153.58 253.36 413.17 460.01 351.06
Russell 2000 100.00 128.45 149.64 183.10 178.44 216.37
SNL $1B-$5B Bank Index 100.00 134.48 174.33 290.73 290.06 266.58
</TABLE>
(1) Assumes that the value of the investment in Sterling Bancshares, Inc.,
and each index, was $100 on December 31, 1994 and that all dividends
were reinvested.
10
<PAGE> 14
(2) The SNL Securities $1 Billion-to-$5 Billion Asset Bank Index is
comprised of all publicly traded banking institutions (118 total
institutions) with more than $1 billion and less than $5 billion in
total assets as of September 30, 1999.
SUMMARY COMPENSATION TABLE
The following table sets forth for 1999, 1998 and 1997 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
Sterling Bank who were serving as executive officers at the end of 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
NAME AND ------------------------- ----------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS(2) COMPENSATION(3)
------------------ ---- -------- ------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
George Martinez 1999 $235,000 $51,047 0 $35,829
Chairman and Chief 1998 220,000 64,801 0 34,302
Financial Officer 1997 195,000 87,782 0 33,762
J. Downey Bridgwater(4) 1999 $165,000 $47,741 0 $26,741
President 1998 150,000 42,052 48,564 23,215
1997 106,000 38,908 4,041 17,986
Daryl D. Bohls 1999 $127,200 $25,642 11,218 $15,850
Executive Vice President 1998 120,000 35,132 0 17,673
and Chief Credit Officer 1997 114,400 49,987 0 21,003
Glenn W. Rust 1999 $127,200 $27,222 0 $16,754
Executive Vice President/ 1998 120,000 34,414 0 17,977
Operations and Technology 1997 106,000 45,865 2,933 18,421
Michael A. Roy 1999 $110,000 $23,286 0 $12,589
Senior Vice President 1998 100,000 28,185 0 17,052
and General Counsel 1997 95,000 30,528 5,787 12,075
</TABLE>
- ---------------
(1) Other annual compensation provided to the named executive officers
during 1999, 1998, or 1997 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 for the named executive officers during 1999,
1998 and 1997, together with the Company's contribution for the same
years 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, (iii) earnings
on the undistributed balances of the Deferred Compensation Plan
accounts of the named executive officers, or (iv) term life insurance
premiums paid by the Company for the benefit of the named executive
officers. The amount of such term life insurance premiums for 1999
were as follows, with comparable amounts having been paid in prior
reported periods: Martinez ($564), Bridgwater ($396), Bohls ($305),
Rust ($205), and Roy ($264).
(4) Mr. Bridgwater was appointed President of the Company and Sterling
Bank on December 29, 1997. From January 1, 1996 to December 28, 1997,
Mr. Bridgwater served as the Bank CEO of Sterling Bank's Memorial
Office.
11
<PAGE> 15
STOCK OPTION PLANS
The Company maintains the 1994 Stock Incentive Plan (the "Stock
Incentive Plan") for all of its officers and employees which is administered by
the Human Resources Programs Committee. The Board of Directors recommended and
the shareholders of the Company approved the amendment and restatement of the
Stock Incentive Plan (the "Amended Plan") at the 1998 Annual Meeting of
Shareholders. An aggregate of 2,000,000 shares are presently issuable under the
Amended Plan prior to its termination in April 2004.
OPTION GRANTS TABLE
The following table sets forth information concerning the grant of
stock options during 1999 to the Company's Chief Executive Officer and the
executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF PERCENTAGE VALUE AT ASSUMED ANNUAL
SECURITIES OF TOTAL RATE OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM($)(3)
GRANTED EMPLOYEES PRICE EXPIRATION ----------------------
NAME (SHARES)(1) IN 1999(2) ($/SHARE) DATE 5% 10%
- ---- ---------- ---------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
George Martinez - - - - - -
J. Downey Bridgwater - - - - - -
Daryl D. Bohls 11,218 5.4% $12.72 02/21/2009 $89,730 $100,797
Glenn W. Rust - - - - - -
Michael A. Roy - - - - - -
</TABLE>
- ----------
(1) The options granted in 1999 vest over four years at the rate of 25%
per year on each anniversary of the date of grant.
(2) The Company granted options representing approximately 206,584 shares
to officers in 1999.
(3) These amounts represent certain assumed rates of appreciation based on
actual option term and annual compounding from the date of grant.
Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the future performance of the Common Stock
and overall stock market conditions. There can be no assurance that
the stock appreciation amounts reflected in this table will be
achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning the exercise of
stock options during 1999 by the Company's Chief Executive Officer and the
executive officers named in the Summary Compensation Table, and the fiscal
year-end value of unexercised options.
12
<PAGE> 16
OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE ----------------------------- ---------------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ------------ ----------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
George Martinez - - 90,261 0 $698,015 -
J. Downey Bridgwater - - 19,481 38,444 15,253 $ 4,871
Daryl D. Bohls 8,781 $114,002 1,687 11,781 8,845 2,952
Glenn W. Rust - - 27,611 1,755 193,592 4,993
Michael A. Roy - - 18,283 8,024 80,833 31,595
</TABLE>
- -----------------
(1) 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
$11.19 on December 31, 1999) 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.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------------ ------------ --------
<S> <C> <C>
Neuberger & Berman, LLC 1,370,869 5.25%
605 Third Avenue
New York, NY 10158-3698
Steven F. Retzloff 1,172,630 (1) 4.5%
Daryl D. Bohls 62,980 (2) *
J. Downey Bridgwater 43,957 (3) *
L. S. "Pat" Brown 11,030 *
John H. Buck 8,479 (4) *
Charles I. Castro 256,487 *
James M. Clepper 12,118 *
Walter P. Gibbs, Jr. 218,204 (5) *
Willis Hargrave 116,700 *
Bruce J. Harper 7,530 *
David L. Hatcher 6,170 *
Glenn H. Johnson 201,571 (6) *
James J. Kearney 10,228 *
Paul Michael Mann, M.D. 476,534 (7) 1.82%
</TABLE>
13
<PAGE> 17
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------------ ------------ --------
<S> <C> <C>
George Martinez 737,699 (8) 2.83%
David B. Moulton 125,142 *
G. Edward Powell 0 *
Christian A. Rasch 812,430 (9) 3.11%
Thomas A. Reiser 14,805 (10) *
Raimundo Riojas 280,360 (11) 1.07%
Michael A. Roy 22,908 (12) *
Glenn W. Rust 29,303 (13) *
Howard T. Tellepsen. Jr. 5,899 *
All directors and executive 4,761,906 (14) 18.26% (15)
officers as a group
(23 persons)
</TABLE>
- ----------------
* Indicates less than one percent.
(1) Includes (i) 1,092,588 shares owned of record by Retzloff Industries,
Inc., of which Steven F. Retzloff is the controlling shareholder,
President and CEO; (ii) 73,421 of the A.F. Retzloff Living Trust, of
which Steven F. Retzloff is a trustee; and (iii) 2,528 held for the
benefit of his children.
(2) Includes 225 shares which are held of record by Mr. Bohls' spouse,
2,628 shares held in an individual retirement account by Mr. Bohls'
spouse, 5,564 shares held by Mr. Bohls as custodian for the benefit of
his children, 5,054 shares that can be acquired pursuant to exercise
of fully vested outstanding stock options (3,367 of which vested after
December 31, 1999), 744 shares which have been contributed by the
Company to Mr. Bohl's 401(k) plan matching account, and 242 shares
which have been contributed by the Company to the 401(k) plan matching
account of Mr. Bohls' spouse.
(3) Includes 38,961 shares that could be acquired pursuant to exercise of
fully vested outstanding stock options (19,480 of which vested after
December 31, 1999) and 857 shares which have been contributed by the
Company to Mr. Bridgwater's 401(k) plan matching account.
(4) Represents shares owned of record by First Ferguson Financial
Partners, a partnership that is controlled by Mr. Buck.
(5) Includes 92,058 shares which are held of record by Mr. Gibbs spouse.
(6) Includes 28,535 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 11,011 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 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 1,029 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.
14
<PAGE> 18
(11) Includes 278,758 shares owned by Glencox Investments, Inc., which is
principally owned and controlled by Mr. Riojas.
(12) Includes 19,730 shares that can be acquired pursuant to the exercise
of fully vested outstanding stock options (1,447 of which vested after
December 31, 1999) and 340 shares which have been contributed by the
Company to Mr. Roy's 401(k) plan matching account.
(13) Represents 28,622 shares that can be acquired pursuant to the exercise
of fully vested outstanding stock options (1,011 of which vested after
December 31, 1999) and 681 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 bank 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 of
business with such banks, including outstanding loans. Furthermore, certain of
the directors and executive officers are officers, directors and/or
shareholders of businesses that perform services from time to time for the
Company. All loans made or services obtained were on substantially the same
terms as those prevailing at the time for comparable transactions with other
unaffiliated persons, and did not involve more than a normal risk of
collectability for any credit transactions or otherwise 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 1999. 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, three executive officers and three directors,
Messrs. Bohls, Bridgwater, Clepper, Martinez, Retzloff and Rasch, did not
timely file reports on Form 4 to reflect changes in their beneficial ownership
during 1999. 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.
15
<PAGE> 19
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 2001 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 27, 2000; such
proposal must also have complied with the Company's Bylaws 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 Rule 14a-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.
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> 20
STERLING BANCSHARES
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF SIX CLASS II DIRECTORS FOR A THREE For Withhold For All
YEAR TERM ENDING AT THE 2003 ANNUAL MEETING OF All All (except withhold for nominee written below.)
SHAREHOLDERS. [ ] [ ] [ ]
--------------------------------------
Nominees: 2. In their discretion, the proxies are
authorized to vote upon other business
01 James M. Clepper 02 David L. Hatcher as may properly come before the meeting
03 James J. Kearney 04 David B. Moulton or adjournment thereof. Either of the
05 G. Edward Powell 06 Raimundo Riojas proxies or their respective substitutes,
who shall be present and acting, shall
have and may exercise all the powers
hereby granted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL 1 AND UNLESS A CONTRARY CHOICE IS
SPECIFIED, PROXY WILL BE VOTED FOR THE
PROPOSAL.
Change of Address [ ]
THIS SPACE RESERVED FOR ADDRESSING Dated: ,2000
(key lines do not print) ------------
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.)
- ------------------------------------------------------------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
-------------------------------------------------------------------------
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT
IN THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE> 21
- --------------------------------------------------------------------------------
PROXY PROXY
STERLING BANCSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL SHAREHOLDER'S MEETING APRIL 24, 2000
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 24, 2000 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 SEE REVERSE SIDE
of this card.) ------------------
- --------------------------------------------------------------------------------
