Sterling Bancshares 8-K Sterling Bancshares Reports First Quarter 2011 Results

NEWS RELEASE

For More Information Contact:	For Release  - April 19, 2011
Chris Reid, Vice President and Director of Investor Relations, (713) 507-2873 Media: Graham Painter, Executive Vice President and Director of Corporate Communication, (713) 507-2770

STERLING BANCSHARES REPORTS FIRST QUARTER 2011 RESULTS

HOUSTON, TX, April 19, 2011 – Sterling Bancshares, Inc. (Nasdaq: SBIB) today reported a net loss of $370 thousand, or $0.00 per diluted share, for the first quarter ended March 31, 2011, compared to net income of $1.9 million, or $0.02 per diluted share, for the fourth quarter of 2010 and a net loss of $6.2 million, or $0.07 per diluted share for the first quarter of 2010.

As previously announced, on January 16, 2011, Sterling Bancshares, Inc, and Comerica Incorporated, a company headquartered in Dallas, Texas, agreed to a strategic business combination in which Sterling will merge with Comerica.  The transaction is expected to be completed in the second quarter of 2011, subject to customary closing conditions, including regulatory approvals and approval by Sterling’s shareholders.

For the first quarter of 2011, loans decreased $153 million or 5.6% to $2.6 billion at March 31, 2011.  This decrease was due primarily to reductions in commercial real estate loans of $90.2 million, resulting from the Company’s continued efforts to reduce exposure to these loan types.  Commercial and industrial loans decreased $41.8 million during the first quarter of 2011 due to continued low loan demand and line usage.

At March 31, 2011, total deposits were $4.1 billion, a decrease of $140 million or 3.3% compared to December 31, 2010.  The decrease in deposits was primarily related to the impact of year-end seasonal activity including lower public fund balances.

Nonperforming assets were $186 million at March 31, 2011, an increase of $15.4 million compared to December 31, 2010.  The increase in nonperforming assets was due to an increase in foreclosed assets of $12.8 million on a linked-quarter basis as additional problem loans continued to transition into this category.  Nonperforming loans increased slightly on a linked-quarter basis to $136 million at March 31, 2011.

At March 31, 2011, the total allowance for loan losses was $75.5 million or 2.90% of period-end total loans, down from $77.1 million or 2.80% of period-end total loans at December 31, 2010.  Net charge-offs for the first quarter of 2011 were $12.4 million or 1.87% of average total loans, compared to $9.7 million or 1.36% of average total loans for the fourth quarter of 2010.  Net charge-offs during the first quarter of 2011 were primarily due to approximately $8.4 million in charge-offs related to commercial real estate loans.  

Sterling Bancshares, Inc., News Release

April 19, 2011

Page 2

Tax-equivalent net interest income for the first quarter of 2011 was $39.9 million, down slightly on a linked-quarter basis. Tax-equivalent net interest margin was 3.52% for the first quarter of 2011, up 13 basis points from 3.39% for the fourth quarter of 2010.  The increase in net interest margin during the first quarter of 2011 was due to a decline in average interest-bearing cash of $70 million which was used to fund higher yielding average securities growth of $100 million and a decrease in rates paid on interest-bearing deposits.

Noninterest income for the first quarter of 2011 was $10.1 million, an increase of $1.3 million compared to the fourth quarter of 2010.  Net losses on securities of $429 thousand recorded in the first quarter of 2011 was due to the sale of a security that was downgraded to below investment grade during the quarter.  Other noninterest income increased $1.9 million for the first quarter of 2011 compared to the fourth quarter of 2010 due to payout claims on certain bank-owned life insurance policies.

Total noninterest expense for the first quarter of 2011 was $41.1 million, a decrease of $407 thousand compared to the fourth quarter of 2010.  Professional fees increased $262 thousand for the first quarter of 2011 compared to the fourth quarter of 2010 due primarily to additional legal fees paid in connection with the pending merger with Comerica.  Other noninterest expense increased $576 thousand due to additional carrying costs and write-downs on foreclosed assets.

As of March 31, 2011, Sterling had total assets of $5.0 billion, total loans of $2.6 billion and total deposits of $4.1 billion.  Shareholders’ equity of $623 million at March 31, 2011, was 12.34% of total assets.  Book value per common share at period-end was $6.10.  Tangible capital ratio was 9.06% and all regulatory capital ratios were in excess of those considered to be well-capitalized at March 31, 2011.

Forward-Looking Statements

Any statements in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “trend,” “objective” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica, Sterling, the proposed transaction or the combined company following the transaction often identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of management based on information known to management as of the date of this filing and do not purport to speak as of any other date. Forward-looking statements may include descriptions of the expected benefits and costs of the transaction; forecasts of revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries; management plans relating to the transaction; the expected timing of the completion of the transaction; the ability to complete the transaction; the ability to obtain any required regulatory, shareholder or other approvals; any statements of the plans and objectives of management for future or past operations, products or services, including the execution of integration plans; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Such statements reflect the view of management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, actual results could differ materially from those anticipated by the forward-looking statements or historical results. Factors that could cause or contribute to such differences include, but are not limited to, the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the transaction may not be timely completed, if at all; that prior to the completion of the transaction or thereafter, Comerica’s and Sterling’s respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies; that required regulatory, shareholder or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; reputational risks and the reaction of the companies’ customers to the transaction; diversion of management time on merger-related issues; and those factors referenced in Comerica’s and Sterling’s filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date they are made. Comerica and Sterling do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this release or in any documents, Comerica and Sterling claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Sterling Bancshares, Inc., News Release

April 19, 2011

Page 3

Additional Information

Management of Sterling will not host a conference call.  In connection with the proposed merger transaction, Comerica has filed with the SEC a Registration Statement on Form S-4 that includes a Proxy Statement of Sterling and a Prospectus of Comerica, and Sterling mailed the definitive Proxy Statement/Prospectus to its shareholders on or about April 6, 2011. Each of Comerica and Sterling may file other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

A free copy of the definitive Proxy Statement/Prospectus, as well as other filings containing information about Comerica and Sterling, may be obtained at the SEC’s Internet site (http://www.sec.gov). You may be able to obtain these documents, free of charge, from Comerica at www.comerica.com under the tab “Investor Relations” and then under the heading “SEC Filings” or from Sterling by accessing Sterling’s website at www.banksterling.com under the tab “Investor Relations” and then under the heading “SEC Filings.”

Comerica and Sterling and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Sterling in connection with the proposed merger. Information about the directors and executive officers of Comerica is set forth in the proxy statement for Comerica’s 2011 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 18, 2011. Information about the directors and executive officers of Sterling is set forth in Sterling’s Form 10-K/A filed with the SEC on April 8, 2011. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the above-referenced definitive Proxy Statement/Prospectus and other relevant materials filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.

About Sterling Bancshares

Sterling Bancshares, Inc. is a Houston-based bank holding company with total assets of $5.0 billion, which operates 57 banking centers in the greater metropolitan areas of Houston, San Antonio, Dallas and Fort Worth, Texas. The Company’s common stock is traded through the NASDAQ Global Select Market under the symbol “SBIB”.  For more information on Sterling Bancshares, please visit the Company’s web site at http://www.banksterling.com.

–Tables to follow–

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands, except for per share data)

Page 4

	Quarter Ended
	Mar. 31,			Dec. 31,			Mar. 31,
	2011			2010			2010
Profitability
Net income (loss)	$	(370	)	$	1,901		$	(6,248	)
Earnings (loss) per common share (1)
Basic	$	(0.00	)	$	0.02		$	(0.07	)
Diluted	$	(0.00	)	$	0.02		$	(0.07	)
Return on average common equity (2)		(0.24	)%		1.20	%		(4.41	)%
Return on average assets (2)		(0.03	)%		0.15	%		(0.51	)%
Net interest margin (3)		3.52	%		3.39	%		4.02	%
Efficiency Ratio (4):
Consolidated		81.37	%		84.49	%		76.30	%
Sterling Bank		76.41	%		80.60	%		73.60	%
Liquidity and Capital Ratios
Average loans to average deposits		65.32	%		67.16	%		78.64	%
Period-end stockholders' equity to total assets		12.34	%		11.98	%		12.28	%
Average stockholders' equity to average assets		12.35	%		12.28	%		11.63	%
Period-end tangible capital to total tangible assets		9.06	%		8.77	%		8.96	%
Tier 1 capital to risk-weighted assets		15.41	%		15.43	%		14.08	%
Total capital to risk-weighted assets		18.13	%		18.10	%		16.92	%
Tier 1 leverage ratio (Tier 1 capital to average assets)		10.08	%		10.32	%		10.64	%
Other Data
Shares used in computing earnings (loss) per common share
Basic shares		102,034			101,967			88,483
Diluted shares		102,034			102,331			88,483
End of period common shares outstanding		102,141			101,984			101,877
Book value per common share at period-end	$	6.10		$	6.10		$	6.08
Cash dividends paid per common share	$	0.015		$	0.015		$	0.015
Common stock dividend payout ratio		N/M			80.53	%		N/M
Full-time equivalent employees		938			946			1,004
Number of banking centers		57			57			58

STERLING BANCSHARES, INC.                                                                      

CONSOLIDATED BALANCE SHEETS (Unaudited)                                                                                                                         

(dollars in thousands)                                                                                                                           

Page 5                                                                                                                           

	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
	2011			2010			2010			2010			2010
ASSETS
Cash and cash equivalents	$	462,700		$	502,894		$	366,590		$	359,388		$	361,199
Available-for-sale securities, at fair value		1,343,536			1,287,555			1,169,519			1,069,964			920,082
Held-to-maturity securities, at amortized cost		246,768			265,080			280,215			280,658			267,503
Loans held for sale		1,877			2,691			7,123			6,509			18,055
Loans held for investment		2,599,778			2,752,349			2,862,952			2,992,370			3,096,261
Total loans		2,601,655			2,755,040			2,870,075			2,998,879			3,114,316
Allowance for loan losses		(75,535	)		(77,141	)		(80,754	)		(80,983	)		(76,646	)
Loans, net		2,526,120			2,677,899			2,789,321			2,917,896			3,037,670
Premises and equipment, net		49,618			49,421			48,507			47,812			47,396
Real estate acquired by foreclosure		49,826			37,064			14,571			18,151			17,282
Goodwill		173,210			173,210			173,210			173,210			173,210
Core deposits and other intangibles, net		8,951			9,477			10,004			10,540			11,077
Accrued interest receivable		13,588			14,673			14,356			14,951			15,462
Other assets		175,230			174,680			173,328			183,429			192,498
TOTAL ASSETS	$	5,049,547		$	5,191,953		$	5,039,621		$	5,075,999		$	5,043,379
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand	$	1,287,921		$	1,322,492		$	1,248,321		$	1,266,781		$	1,167,602
Interest-bearing demand		2,084,062			2,138,822			2,014,207			1,962,854			2,031,399
Certificates and other time deposits		745,301			796,116			840,683			921,495			925,427
Total deposits		4,117,284			4,257,430			4,103,211			4,151,130			4,124,428
Other borrowed funds		109,701			112,202			106,546			100,770			99,012
Subordinated debt		77,673			78,059			78,624			78,247			77,737
Junior subordinated debt		82,734			82,734			82,734			82,734			82,734
Accrued interest payable and other liabilities		39,074			39,604			41,704			38,722			39,944
Total liabilities		4,426,466			4,570,029			4,412,819			4,451,603			4,423,855
COMMITMENTS AND CONTINGENCIES		-			-			-			-			-
SHAREHOLDERS' EQUITY
Common stock		104,008			103,852			103,820			103,795			103,745
Capital surplus		241,280			239,940			238,536			238,186			237,439
Retained earnings		288,901			290,800			290,429			287,503			288,436
Treasury stock		(21,399	)		(21,399	)		(21,399	)		(21,399	)		(21,399	)
Accumulated other comprehensive income, net of tax		10,291			8,731			15,416			16,311			11,303
Total shareholders' equity		623,081			621,924			626,802			624,396			619,524
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	5,049,547		$	5,191,953		$	5,039,621		$	5,075,999		$	5,043,379

STERLING BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(dollars in thousands, except for per share data)

Page 6

	Quarter Ended
	Mar. 31,			Dec. 31,			Sep. 30,		Jun. 30,		Mar. 31,
	2011			2010			2010		2010		2010
Interest income:
Loans, including fees	$	34,906		$	37,003		$	40,153	$	42,087	$	43,649
Securities:
Taxable		10,359			9,342			9,841		9,602		9,117
Non-taxable		1,044			1,028			1,013		915		925
Deposits in financial institutions		209			258			157		231		115
Other interest-earning assets		2			2			1		3		1
Total interest income		46,520			47,633			51,165		52,838		53,807
Interest expense:
Demand and savings deposits		2,660			3,158			3,583		4,319		4,212
Certificates and other time deposits		1,937			2,328			2,823		3,159		3,352
Other borrowed funds		764			781			784		768		448
Subordinated debt		696			714			747		705		687
Junior subordinated debt		1,034			1,043			1,071		1,040		1,028
Total interest expense		7,091			8,024			9,008		9,991		9,727
Net interest income		39,429			39,609			42,157		42,847		44,080
Provision for credit losses		10,800			5,250			7,716		9,336		22,936
Net interest income after provision for credit losses		28,629			34,359			34,441		33,511		21,144
Noninterest income:
Customer service fees		3,284			3,569			3,728		3,591		3,488
Net gain (loss) on securities		(429	)		(136	)		43		17		20
Wealth management fees		1,914			1,997			1,733		2,102		2,098
Other		5,365			3,447			3,986		2,815		931
Total noninterest income		10,134			8,877			9,490		8,525		6,537
Noninterest expense:
Salaries and employee benefits		19,565			19,933			20,722		20,453		20,503
Occupancy		6,031			6,083			5,566		5,709		5,790
Technology		2,081			2,176			2,267		2,332		2,417
Professional fees		2,482			2,220			1,452		1,372		2,005
Postage, delivery and supplies		559			606			661		719		708
Marketing		63			216			198		271		269
Core deposits and other intangibles amortization		526			527			537		537		549
FDIC insurance assessments		2,138			2,667			2,478		2,438		2,547
Other		7,652			7,076			3,899		6,975		4,165
Total noninterest expense		41,097			41,504			37,780		40,806		38,953
Income (loss) before income taxes		(2,334	)		1,732			6,151		1,230		(11,272	)
Income tax provision (benefit)		(1,964	)		(169	)		1,696		634		(5,024	)
Net income (loss)	$	(370	)	$	1,901		$	4,455	$	596	$	(6,248	)
Earnings (loss) per common share (1):
Basic	$	(0.00	)	$	0.02		$	0.04	$	0.01	$	(0.07	)
Diluted	$	(0.00	)	$	0.02		$	0.04	$	0.01	$	(0.07	)

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)

Page 7

	Quarter Ended
	Mar. 31,							Dec. 31,
	2011							2010
	Average Balance		Interest		Yield/Rate			Average Balance		Interest		Yield/Rate
Interest-Earning Assets:
Loans held for sale	$	3,008	$	12		1.55	%	$	6,728	$	36		2.15	%
Loans held for investment:
Taxable		2,692,192		34,893		5.26	%		2,807,348		36,967		5.22	%
Non-taxable (3)		63		1		6.81	%		75		1		6.61	%
Securities:
Taxable		1,447,767		10,359		2.90	%		1,348,061		9,342		2.75	%
Non-taxable (3)		112,947		1,558		5.59	%		112,733		1,527		5.37	%
Deposits in financial institutions		347,116		209		0.24	%		416,917		258		0.25	%
Other interest-earning assets		4,016		2		0.20	%		4,859		2		0.14	%
Total interest-earning assets		4,607,109		47,034		4.14	%		4,696,721		48,133		4.07	%
Noninterest-earning assets		454,688							435,743
Total Assets	$	5,061,797						$	5,132,464
Interest-Bearing Liabilities:
Deposits:
Demand and savings	$	2,087,550	$	2,660		0.52	%	$	2,069,470	$	3,158		0.61	%
Certificates and other time		772,172		1,937		1.02	%		827,574		2,328		1.12	%
Other borrowed funds		109,885		764		2.82	%		108,810		781		2.85	%
Subordinated debt		77,959		696		3.62	%		78,517		714		3.61	%
Junior subordinated debt		82,734		1,034		5.07	%		82,734		1,043		5.00	%
Total interest-bearing liabilities		3,130,300		7,091		0.92	%		3,167,105		8,024		1.01	%
Noninterest-bearing sources:
Noninterest-bearing liabilities		1,306,235							1,335,051
Shareholders' equity		625,262							630,308
Total Liabilities and Shareholders' Equity	$	5,061,797						$	5,132,464
Tax Equivalent Net Interest Income and Margin (3)				39,943		3.52	%				40,109		3.39	%
Non-GAAP to GAAP Reconciliation:
Tax Equivalent Adjustment:
Loans				-							1
Securities				514							499
Total tax equivalent adjustment				514							500
Net Interest Income			$	39,429						$	39,609

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)

Page 8

	Year-to-date
	2011							2010
	Average Balance		Interest		Yield/Rate			Average Balance		Interest		Yield/Rate
Interest-Earning Assets:
Loans held for sale	$	3,008	$	12		1.55	%	$	13,572	$	47		1.40	%
Loans held for investment:
Taxable		2,692,192		34,893		5.26	%		3,176,511		43,560		5.56	%
Non-taxable (3)		63		1		6.81	%		4,834		62		5.19	%
Securities:
Taxable		1,447,767		10,359		2.90	%		1,000,917		9,117		3.69	%
Non-taxable (3)		112,947		1,558		5.59	%		101,443		1,362		5.44	%
Deposits in financial institutions		347,116		209		0.24	%		194,104		115		0.24	%
Other interest-earning assets		4,016		2		0.20	%		2,418		1		0.17	%
Total interest-earning assets		4,607,109		47,034		4.14	%		4,493,799		54,264		4.90	%
Noninterest-earning assets		454,688							443,748
Total Assets	$	5,061,797						$	4,937,547
Interest-Bearing Liabilities:
Deposits:
Demand and savings	$	2,087,550	$	2,660		0.52	%	$	1,993,546	$	4,212		0.86	%
Certificates and other time		772,172		1,937		1.02	%		924,473		3,352		1.47	%
Other borrowed funds		109,885		764		2.82	%		99,884		448		1.82	%
Subordinated debt		77,959		696		3.62	%		77,724		687		3.59	%
Junior subordinated debt		82,734		1,034		5.07	%		82,734		1,028		5.04	%
Total interest-bearing liabilities		3,130,300		7,091		0.92	%		3,178,361		9,727		1.24	%
Noninterest-bearing sources:
Noninterest-bearing liabilities		1,306,235							1,184,970
Shareholders' equity		625,262							574,216
Total Liabilities and Shareholders' Equity	$	5,061,797						$	4,937,547
Tax Equivalent Net Interest Income and Margin (3)				39,943		3.52	%				44,537		4.02	%
Non-GAAP to GAAP Reconciliation:
Tax Equivalent Adjustment:
Loans				-							20
Securities				514							437
Total tax equivalent adjustment				514							457
Net Interest Income			$	39,429						$	44,080

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)

Page 9

	Quarter Ended
	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
	2011		2010		2010		2010		2010
Condensed Average Balance Sheet
Loans held for sale	$	3,008	$	6,728	$	5,390	$	11,454	$	13,572
Loans held for investment		2,692,255		2,807,423		2,930,419		3,041,030		3,181,345
Total loans		2,695,263		2,814,151		2,935,809		3,052,484		3,194,917
Available-for-sale securities, at fair value		1,304,941		1,188,610		1,113,780		953,742		860,466
Held-to-maturity securities, at amortized cost		255,773		272,184		284,458		271,967		241,894
Deposits in financial institutions		347,116		416,917		260,167		362,429		194,104
Other interest-earning assets		4,016		4,859		566		840		2,418
Total interest-earning assets		4,607,109		4,696,721		4,594,780		4,641,462		4,493,799
Goodwill		173,210		173,210		173,210		173,210		173,210
Core deposits and other intangibles, net		9,208		9,732		10,262		10,800		11,340
All other noninterest-earning assets		272,270		252,801		255,050		260,923		259,198
Total assets	$	5,061,797	$	5,132,464	$	5,033,302	$	5,086,395	$	4,937,547
Noninterest-bearing demand	$	1,266,324	$	1,293,021	$	1,224,402	$	1,197,400	$	1,144,754
Interest-bearing deposits:
Interest-bearing demand		2,087,550		2,069,470		2,003,914		2,027,133		1,993,546
Jumbo certificates of deposit		468,726		509,458		539,094		582,727		549,723
Regular certificates of deposit		211,043		220,615		227,490		233,592		241,649
Brokered certificates of deposit		92,403		97,501		103,457		118,622		133,101
Total deposits		4,126,046		4,190,065		4,098,357		4,159,474		4,062,773
Other borrowed funds		109,885		108,810		103,902		100,976		99,884
Subordinated debt		77,959		78,517		78,472		77,831		77,724
Junior subordinated debt		82,734		82,734		82,734		82,734		82,734
Accrued interest payable and other liabilities		39,911		42,030		39,079		40,952		40,216
Total liabilities		4,436,535		4,502,156		4,402,544		4,461,967		4,363,331
Total shareholders' equity		625,262		630,308		630,758		624,428		574,216
Total liabilities and shareholders' equity	$	5,061,797	$	5,132,464	$	5,033,302	$	5,086,395	$	4,937,547
	Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,
	2011		2010		2010		2010		2010
Period-end Loans:
Loans held for sale	$	1,877	$	2,691	$	7,123	$	6,509	$	18,055
Loans held for investment:
Commercial and industrial		581,703		623,487		597,205		658,141		697,998
Real Estate:
Commercial		1,421,683		1,511,846		1,590,081		1,632,213		1,672,562
Construction and development		213,102		220,076		268,691		310,689		330,855
Residential mortgage		344,774		354,310		362,404		343,894		346,400
Consumer/other		38,516		42,630		44,571		47,433		48,446
Loans held for investment		2,599,778		2,752,349		2,862,952		2,992,370		3,096,261
Total period-end loans	$	2,601,655	$	2,755,040	$	2,870,075	$	2,998,879	$	3,114,316
Period-End Deposits:
Noninterest-bearing demand	$	1,287,921	$	1,322,492	$	1,248,321	$	1,266,781	$	1,167,602
Interest-bearing demand		2,084,062		2,138,822		2,014,207		1,962,854		2,031,399
Certificates and other time deposits:
Jumbo		445,833		487,037		512,178		587,377		560,093
Regular		205,840		215,867		224,290		231,404		234,010
Brokered		93,628		93,212		104,215		102,714		131,324
Total period-end deposits	$	4,117,284	$	4,257,430	$	4,103,211	$	4,151,130	$	4,124,428

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)

Page 10

	Quarter Ended
	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
	2011			2010			2010			2010			2010
Allowance For Credit Losses
Allowance for loan losses at beginning of period	$	77,141		$	80,754		$	80,983		$	76,646		$	74,732
Charge-offs:
Commercial, financial and industrial		239			1,845			1,034			1,687			1,968
Real estate, mortgage and construction		12,220			8,535			7,314			5,786			20,214
Consumer		713			323			285			205			262
Total charge-offs		13,172			10,703			8,633			7,678			22,444
Recoveries:
Commercial, financial and industrial		405			342			481			433			483
Real estate, mortgage and construction		255			631			633			845			821
Consumer		106			67			72			51			118
Total Recoveries		766			1,040			1,186			1,329			1,422
Net charge-offs		12,406			9,663			7,447			6,349			21,022
Provision for loan losses		10,800			6,050			7,218			10,686			22,936
Allowance for loan losses at end of period	$	75,535		$	77,141		$	80,754		$	80,983		$	76,646
Allowance for unfunded loan commitments at beginning of period		1,200			2,000			1,502			2,852			2,852
Provision for losses on unfunded loan commitments		-			(800	)		498			(1,350	)		-
Allowance for unfunded loan commitments at end of period		1,200			1,200			2,000			1,502			2,852
Total allowance for credit losses	$	76,735		$	78,341		$	82,754		$	82,485		$	79,498
Nonperforming Assets
Nonperforming loans:
Loans held for sale	$	-		$	-		$	1,665		$	3,491		$	10,883
Loans held for investment		135,791			133,264			162,096			162,669			125,025
Real estate acquired by foreclosure		49,826			37,064			14,571			18,151			17,282
Other repossessed assets		127			3			50			20			60
Total nonperforming assets	$	185,744		$	170,331		$	178,382		$	184,331		$	153,250
Restructured loans - accruing	$	15,001		$	27,699		$	17,495		$	15,001		$	10,675
Potential problem loans	$	171,276		$	166,442		$	169,646		$	142,123		$	172,020
Accruing loans 30 to 89 days past due	$	31,720		$	23,680		$	16,234		$	19,307		$	46,410
Accruing loans past due 90 days or more	$	2,334		$	507		$	953		$	441		$	306
Ratios
Period-end allowance for credit losses to period-end loans		2.95	%		2.84	%		2.88	%		2.75	%		2.55	%
Period-end allowance for loan losses to period-end loans		2.90	%		2.80	%		2.81	%		2.70	%		2.46	%
Period-end allowance for loan losses to nonperforming loans		55.63	%		57.89	%		49.31	%		48.74	%		56.40	%
Nonperforming loans to period-end loans		5.22	%		4.84	%		5.71	%		5.54	%		4.36	%
Nonperforming assets to period-end assets		3.68	%		3.28	%		3.54	%		3.63	%		3.04	%
Net charge-offs to average loans (2)		1.87	%		1.36	%		1.01	%		0.83	%		2.67	%

STERLING BANCSHARES, INC.

FOOTNOTES TO EARNINGS RELEASE

Page 11

(1)  Earnings per share in each quarter is computed individually using the weighted-average number of shares outstanding during that quarter.

(2)  Interim periods annualized.

(3)  Taxable-equivalent basis assuming a 35% tax rate.  The Company presents net interest income on a tax-equivalent basis.  Accordingly, net interest income from tax-exempt securities and loans is presented in the net interest income results on a basis comparable to taxable securities and loans.  This non-GAAP financial measure allows management to assess the comparability of net interest income arising from both taxable and tax-exempt sources.

(4)  The efficiency ratio is calculated by dividing noninterest expense by tax equivalent basis net interest income plus noninterest income less net gain (loss) on investment securities.

N/M  Not meaningful.