THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Sterling Bancshares, Inc. (SBIB)

3/7/2006 Proxy Information

Certain of the Company’s officers and directors are, or have been in the past, customers of the 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 the Bank and its predecessor banks, including outstanding loans. All loans made 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 of the Company and the Bank are reviewed and approved by the Loan Committee of the Bank and are disclosed and reviewed monthly in the meetings of the Board of the Bank.

Effective May 31, 2004, George Martinez, a former Class III Director, resigned as an employee of the Company and entered into a Consulting Agreement with the Company effective June 1, 2004. The term of the Consulting Agreement extends through December 31, 2006, during which time Mr. Martinez shall provide up to 40 hours of consulting services per month pertaining to business strategies and leadership development. Mr. Martinez shall receive an annual consulting fee of $250,000 and, at the discretion of the Company’s chief executive officer and upon approval of an appropriate committee of the Company’s Board, an annual bonus not to exceed $75,000. In addition, the Company shall reimburse Mr. Martinez up to $3,300 per month for rental expenses and shall make available the services of his administrative assistant who shall remain an employee of the Bank, subject to the reimbursement of 50% of her salary and benefits. Mr. Martinez shall also be provided benefits under the Company’s medical insurance coverage and if such benefits are not available, the Company will reimburse Mr. Martinez for comparable coverage.

Mr. Martinez retired from the Board of Directors of the Company effective as of December 31, 2005, and in connection with his retirement, the Company and Mr. Martinez entered into an Amendment to (i) his employment agreement, and (ii) the Consulting Agreement. Pursuant to the terms of the Amendment, Mr. Martinez will no longer be prohibited from providing consulting services to financial institutions operating in Texas. The Amendment also provides that the non-competition and non-solicitation covenants in his employment agreement will automatically terminate following a change of control of the Company. With the exception of the foregoing, the Amendment does not otherwise affect the continuing obligations of Mr. Martinez under the terms of the Consulting Agreement, or his post-termination obligations under the terms of his employment agreement.

R. Bruce LaBoon, a Class III director, is a partner of Locke Liddell & Sapp LLP, a law firm that has provided services to the Company and its subsidiaries for many years. The Company’s fee arrangement with Locke Liddell & Sapp LLP is negotiated on the same basis as arrangements with other outside legal counsel and is subject to these same terms and conditions. The fees we pay to Locke Liddell & Sapp LLP are comparable to those we pay to other law firms for similar services. The Company’s Board has reviewed this arrangement and determined that it is not material to Mr. LaBoon.

11/2/2005 8K Information

Mr. Wells is Chairman and Chief Executive Officer of recently acquired Oaks Bank & Trust Company.

3/9/2005 Proxy Information

During 2004, the Bank contracted with Inverfondos, Inc. to provide business development and courier services to Guatemala on behalf of the Bank. Inverfondos, Inc. is owned 75% by Nueva Holdco, S.A. of which Mr. Riojas owned approximately 38%. The Bank paid Inverfondos, Inc. approximately $185,048 during 2004 for such services. Although the Bank has continued to utilize the services of Inverfondos, Inc. during 2005, and expects to do so in the future, in February 2005, Mr. Riojas divested his indirect interest in Inverfondos, Inc.

Certain of the Company’s officers and directors are, or have been in the past, customers of the 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 the Bank and its predecessor banks, including outstanding loans. All loans made 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 of the Company and the Bank are reviewed and approved by the Loan Committee of the Bank and are disclosed and reviewed monthly in the meetings of the Board of the Bank.

Effective May 31, 2004, George Martinez, a Class III Director, resigned as an employee of the Company and entered into a Consulting Agreement with the Company effective June 1, 2004. The term of the Consulting Agreement extends through December 31, 2006, during which time Mr. Martinez shall provide up to 40 hours of consulting services per month pertaining to business strategies and leadership development. Mr. Martinez shall receive an annual consulting fee of $250,000 and, at the discretion of the Company’s chief executive officer and upon approval of an appropriate committee of the Company’s Board, an annual bonus not to exceed $75,000. In addition, the Company shall reimburse Mr. Martinez up to $3,300 per month for rental expenses and shall make available the services of his administrative assistant who shall remain an employee of the Bank, subject to the reimbursement of 50% of her salary and benefits. Mr. Martinez shall also be provided benefits under the Company’s medical insurance coverage and if such benefits are not available, the Company will reimburse Mr. Martinez for comparable coverage. Mr. Martinez remains subject to certain covenants concerning noncompetition and confidentiality in accordance with the provisions of his previously disclosed employment agreement.

During 2004, the Bank paid to Papillon Joint Venture (“Papillon”) the sum of $372,900 pursuant to an existing Service Agreement between the Bank and Papillon. Papillon was a joint venture which was owned 49% by the Bank and 51% by Chrysalis Partners LLC (“Chrysalis”), an entity owned by Mr. Martinez and Bambi L. McCullough, a former executive officer of the Company and Bank. Pursuant to the Service Agreement, Papillon either directly provided training and human resource consulting services or provided such services through its Business Consultant Agreement with Mark Kamin and Associates, Inc. (“Kamin”). Papillon paid to Kamin the amount of $336,400 during 2004 under the terms of the Business Consultant Agreement. Other than expenses payable to third parties such as Kamin and royalty payments to the third party licensor of the proprietary training techniques utilized by Chrysalis, Chrysalis paid to the Bank, as an administrative fee, an amount equal to Chrysalis’ share of any and all profits generated by Papillon and reimbursed the Bank for the time spent by Mr. Martinez and Ms. McCullough on Chrysalis activities not related to the Bank. Neither Mr. Martinez nor Ms. McCullough received any payments from Papillon during 2004 or at any other time since its formation and the implementation of the training programs under the Service Agreement.

As previously reported by the Company, effective December 31, 2004 (i) Papillon and Kamin mutually agreed to terminate the existing Business Consultant Agreement between Papillon and Kamin, (ii) the Bank and Chrysalis mutually agreed to terminate Papillon and its Service Agreement with the Bank, and (iii) the Bank and Ms. McCullough mutually agreed to terminate her consulting agreement with the Bank. The Company agreed to pay $1,175,000 in aggregate termination payments to Kamin and Ms. McCullough in consideration for the early termination of their respective agreements.

R. Bruce LaBoon, a Class III director, is a partner of Locke Liddell & Sapp LLP, a law firm that has provided services to the Company and its subsidiaries for many years. The Company’s fee arrangement with Locke Liddell & Sapp LLP is negotiated on the same basis as arrangements with other outside legal counsel and is subject to these same terms and conditions. The fees we pay to Locke Liddell & Sapp LLP are comparable to those we pay to other law firms for similar services. The Company’s Board has reviewed this arrangement and determined that it is not material to Mr. LaBoon.

10/26/2004 8K Information

Mr. Martinez was appointed Chairman Emeritus of Sterling Bancshares, Incorporated in October 2004 after serving as Chairman since 1994, Chairman of Sterling Bank since December 1989 and an executive officer since 1974.

3/15/2004 Proxy Information

George Martinez has been Chairman of Sterling Bancshares, Incorporated since 1994, Chairman of Sterling Bank since December 1989 and an executive officer since 1974. He served as Chief Financial Officer of both from January 1997 until March 2001 and Chief Executive Officer of Sterling Bancshares, Incorporated from 1980 to 2001. Prior to 1994, Mr. Martinez was President of Sterling Bancshares.

R. Bruce LaBoon, a nominee for a Class III director, is a partner of Locke Liddell & Sapp LLP, a law firm that has provided services to the Company and its subsidiaries for many years. Our fee arrangement with Locke Liddell & Sapp LLP is negotiated on the same basis as our arrangements with other outside legal counsel and is subject to these same terms and conditions. The fees we pay to Locke Liddell & Sapp LLP are comparable to those we pay to other law firms for similar services. The Company’s Board has reviewed this arrangement and determined that it is not material to Mr. LaBoon.

George Martinez, the Company’s Chairman of the Board and Class III Nominee, has informed the Company of his intent to retire from his employment by the Company following the Meeting. Assuming his reelection at the Meeting, Mr. Martinez will continue to serve as director and Chairman of the Board. It is currently proposed that following his retirement as an employee of the Company, Mr. Martinez will enter into an agreement or relationship with the Company pursuant to which he will provide consulting services to the Company and the Bank. The final terms of the proposed relationship have not been fully agreed upon at the time of this Proxy Statement and may not be completed at the time of the Meeting. The terms will be subject to review and approval by the Audit Committee before any definitive agreement is entered into by the Company. It is currently contemplated that the amount of payments to Mr. Martinez for his consulting services will be approximately $250,000 on an annual basis. The consulting services will involve identification of acquisition candidates, providing recommendations related to business development, and leadership development.

Bambi McCullough, the Company’s Executive Vice President and Chief Service Officer, has informed the Company of her intent to terminate her employment with the Company following the Meeting. After that time, it is anticipated that Ms. McCullough will enter into an agreement or relationship with the Company pursuant to which she will provide consulting services to the Company and the Bank and will be paid approximately $200,000 on an annual basis. The final terms of the proposed relationship have not been fully agreed upon at the time of this Proxy Statement and may not be completed at the time of the Meeting. The terms will be subject to review and approval by the Audit Committee before any definitive agreement is entered into by the Company. The consulting services will involve organizational development, consulting intervention, executive coaching and facilitation of programs designed to impact performance and service for the Company and the Bank as directed by the Chief Executive Officer of the Company.

3/21/2003 Proxy Information

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 the Bank, are reviewed and approved by the Loan Committee of the Bank and are disclosed and reviewed monthly in the meetings of the Board of the Bank.