On December 12, 2008, as part of the Troubled Asset Relief Program Capital Purchase Program, Sterling Bancshares, Inc. (the "Company") entered into a Letter Agreement and Securities Purchase Agreement with the United States Department of the Treasury (the "Treasury"), pursuant to which the Company
(i) sold 125,198 shares of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series J (the "Preferred Stock") for a purchase price of $125,198,000 in cash, and (ii) issued a warrant (the "Warrant") to purchase 2,615,557 shares of the Company's common stock, par value $1.00 per share (the "Common Stock"), for a price of $7.18 per share.

On May 5, 2009, the Company returned to the Treasury a total of $126,589,089, which includes the original investment amount of $125,198,000 plus accrued and unpaid dividends of $1,391,089, in exchange for the cancelled share certificate for the Preferred Stock. In connection with this transaction, the Company and the Treasury entered into a Letter Agreement dated May 5, 2009 (the "Redemption Letter Agreement"), a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein. Pursuant to the terms of the Redemption Letter Agreement, the Company has fifteen calendar days to notify the Treasury whether it will repurchase the Warrant from the Treasury or deliver a substitute warrant which will be identical to the Warrant except that Section 13(H) of the Warrant would be deleted. The price for the repurchase of the Warrant will be subject to negotiation and there can be no assurance that the Warrant will be repurchased.

On May 5, 2009, the Company issued a press release announcing the consummation of the transaction described above under "Item 1.01 Entry into a Material Definitive Agreement" and the commencement of a public offering of $50 million of its Common Stock for sale to the public. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

(d) Exhibits. The following exhibit is furnished as part of this Current Report on Form 8-K:

Exhibit No.     Description of Exhibit
10.1            Redemption Letter Agreement, dated May 5, 2009, by and between
                Sterling Bancshares, Inc. and the United States Department of the
                Treasury.

99.1            Press Release dated May 5, 2009.