Sterling Bancshares, Inc.

25,000 Capital Securities

 

Floating Rate Capital Securities

(Liquidation Amount $1,000.00 per Capital Security)

 

PLACEMENT AGREEMENT

____________________

March 14, 2007

 

FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117

Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019

Ladies and Gentlemen:

Sterling Bancshares, Inc., a Texas corporation (the "Company"), and its
financing subsidiary, Sterling Bancshares Capital Trust IV, a Delaware statutory
trust (the "Trust," and hereinafter together with the Company, the "Offerors"),
hereby confirm their agreement (this "Agreement") with you as placement agents
(the "Placement Agents"), as follows:

Issuance and Sale of Securities.

Introduction.  

The Offerors propose to issue and sell at the Closing (as defined in
Section 2.3.1 hereof) 25,000 of the Trust's Floating Rate Capital Securities,
with a liquidation amount of $1,000.00 per capital security (the "Capital
Securities"), to Keefe, Bruyette & Woods, Inc. (the "Purchaser") pursuant to the
terms of a Subscription Agreement entered into, or to be entered into on or
prior to the Closing Date (as defined in Section 2.3.1 hereof), between the
Offerors and the Purchaser (the "Subscription Agreement"), the form of which is
attached hereto as Exhibit A and incorporated herein by this reference.

Operative Agreements.  

The Capital Securities shall be fully and unconditionally guaranteed on a
subordinated basis by the Company with respect to distributions and amounts
payable upon liquidation, redemption or repayment (the "Guarantee") pursuant and
subject to the Guarantee Agreement (the "Guarantee Agreement"), to be dated as
of the Closing Date and executed and delivered by the Company and Wilmington
Trust Company ("WTC"), as trustee (the "Guarantee Trustee"), for the benefit
from time to time of the holders of the Capital Securities. The entire proceeds
from the sale by the Trust to the holders of the Capital Securities shall be
combined with the entire proceeds from the sale by the Trust to the Company of
its common securities (the "Common Securities"), and shall be used by the Trust
to purchase $25,774,000.00 in principal amount of the Floating Rate Junior
Subordinated Deferrable Interest Debentures (the "Debentures") of the Company.
The Capital Securities and the Common Securities for the Trust shall be issued
pursuant to an Amended and Restated Declaration of Trust among WTC, as Delaware
trustee (the "Delaware Trustee"), WTC, as institutional trustee (the
"Institutional Trustee"), the Administrators named therein, and the Company, to
be dated as of the Closing Date and in substantially the form heretofore
delivered to the Placement Agents (the "Trust Agreement"). The Debentures shall
be issued pursuant to an Indenture (the "Indenture"), to be dated as of the
Closing Date, between the Company and WTC, as indenture trustee (the "Indenture
Trustee"). The documents identified in this Section 1.2 and in Section 1.1 are
referred to herein as the "Operative Documents."

Rights of Purchaser.  

The Capital Securities shall be offered and sold by the Trust directly to the
Purchaser without registration of any of the Capital Securities, the Debentures
or the Guarantee under the Securities Act of 1933, as amended (the "Securities
Act"), or any other applicable securities laws in reliance upon exemptions from
the registration requirements of the Securities Act and other applicable
securities laws. The Offerors agree that this Agreement shall be incorporated by
reference into the Subscription Agreement and the Purchaser shall be entitled to
each of the benefits of the Placement Agents and the Purchaser under this
Agreement and shall be entitled to enforce obligations of the Offerors under
this Agreement as fully as if the Purchaser were a party to this Agreement. The
Offerors and the Placement Agents have entered into this Agreement to set forth
their understanding as to their relationship and their respective rights, duties
and obligations.

Legends.  

Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Securities Act, the Capital
Securities and Debentures certificates shall each contain a legend as required
pursuant to any of the Operative Documents.

Purchase of Capital Securities.

Exclusive Rights; Purchase Price.  

From the date hereof until the Closing Date (which date may be extended by
mutual agreement of the Offerors and the Placement Agents), the Offerors hereby
grant to the Placement Agents the exclusive right to arrange for the sale of the
Capital Securities to the Purchaser at a purchase price of $1,000.00 per Capital
Security.

Subscription Agreement.  

The Offerors hereby agree to evidence their acceptance of the subscription by
countersigning a copy of the Subscription Agreement and returning the same to
the Placement Agents.

Closing and Delivery of Payment.

Closing; Closing Date.  

The sale and purchase of the Capital Securities by the Offerors to the Purchaser
shall take place at a closing (the "Closing") at the offices of Lewis, Rice &
Fingersh, L.C., at 10:00 a.m. (St. Louis time) on March 26, 2007, or such other
business day as may be agreed upon by the Offerors and the Placement Agents (the
"Closing Date"); provided, however, that in no event shall the Closing Date
occur later than March 30, 2007 unless consented to by the Purchaser. Payment by
the Purchaser shall be payable in the manner set forth in the Subscription
Agreement and shall be made prior to or on the Closing Date.

Delivery

.  

The certificate for the Capital Securities shall be in definitive form,
registered in the name of the Purchaser, or the Purchaser's designee, and in the
aggregate amount of the Capital Securities purchased by the Purchaser.

Transfer Agent.  

The Offerors shall deposit the certificate representing the Capital Securities
with the Institutional Trustee or other appropriate party prior to the Closing
Date.

Costs and Expenses.  

Whether or not this Agreement is terminated or the sale of the Capital
Securities is consummated, the Company hereby covenants and agrees that it shall
pay or cause to be paid (directly or by reimbursement) all reasonable costs and
expenses incident to the performance of the obligations of the Offerors under
this Agreement, including all fees, expenses and disbursements of counsel and
accountants for the Offerors; all reasonable expenses incurred by the Offerors
incident to the preparation, execution and delivery of the Trust Agreement, the
Indenture, and the Guarantee; and all other reasonable costs and expenses
incident to the performance of the obligations of the Company hereunder and
under the Trust Agreement.

Failure to Close.  

If any of the conditions to the Closing specified in this Agreement shall not
have been fulfilled to the satisfaction of the Placement Agents or if the
Closing shall not have occurred on or before 10:00 a.m. (St. Louis time) on
March 30, 2007, then each party hereto, notwithstanding anything to the contrary
in this Agreement, shall be relieved of all further obligations under this
Agreement without thereby waiving any rights it may have by reason of such
nonfulfillment or failure; provided, however, that the obligations of the
parties under Sections 2.4, 7.5 and 9 shall not be so relieved and shall
continue in full force and effect.

Closing Conditions

.  

The obligations of the Purchaser and the Placement Agents on the Closing Date
shall be subject to the accuracy, at and as of the Closing Date, of the
representations and warranties of the Offerors contained in this Agreement, to
the accuracy, at and as of the Closing Date, of the statements of the Offerors
made in any certificates pursuant to this Agreement, to the performance by the
Offerors of their respective obligations under this Agreement, to compliance, at
and as of the Closing Date, by the Offerors with their respective agreements
herein contained, and to the following further conditions:

Opinions of Counsel.  

On the Closing Date, the Placement Agents shall have received the following
favorable opinions, each dated as of the Closing Date: (a) from Locke Liddell &
Sapp LLP, counsel for the Offerors and addressed to the Purchaser, the Placement
Agents and WTC in substantially the form set forth on Exhibit B-1 attached
hereto and incorporated herein by this reference, (b) from Richards, Layton &
Finger, P.A., special Delaware counsel to the Offerors and addressed to the
Purchaser, the Placement Agents and the Offerors, in substantially the form set
forth on Exhibit B-2 attached hereto and incorporated herein by this reference
and (c) from Lewis, Rice & Fingersh, L.C., special tax counsel to the Offerors,
and addressed to the Placement Agents and the Offerors, addressing the items set
forth on Exhibit B-3 attached hereto and incorporated herein by this reference,
subject to the receipt by Lewis, Rice & Fingersh, L.C. of a representation
letter from the Company in the form set forth in Exhibit B-3 completed in a
manner reasonably satisfactory to Lewis, Rice & Fingersh, L.C. (collectively,
the "Offerors' Counsel Opinions"). In rendering the Offerors' Counsel Opinions,
counsel to the Offerors may rely as to factual matters upon certificates or
other documents furnished by officers, directors and trustees of the Offerors
(copies of which shall be delivered to the Placement Agents and the Purchaser)
and by government officials, and upon such other documents as counsel to the
Offerors may, in their reasonable opinion, deem appropriate as a basis for the
Offerors' Counsel Opinions. Counsel to the Offerors may specify the
jurisdictions in which they are admitted to practice and that they are not
admitted to practice in any other jurisdiction and are not experts in the law of
any other jurisdiction. If the Offerors' counsel is not admitted to practice in
the State of New York, the opinion of Offerors' counsel may assume, for purposes
of the opinion, that the laws of the State of New York are substantively
identical, in all respects material to the opinion, to the internal laws of the
state in which such counsel is admitted to practice. Such Offerors' Counsel
Opinions shall not state that they are to be governed or qualified by, or that
they are otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).

Officer's Certificate.  

At the Closing Date, the Purchaser and the Placement Agents shall have received
certificates from an authorized officer of the Company, dated as of the Closing
Date, stating that (i) the representations and warranties of the Offerors set
forth in Section 5 hereof are true and correct as of the Closing Date and that
the Offerors have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to the Closing Date,
(ii) since the date of this Agreement the Offerors have not incurred any
liability or obligation, direct or contingent, or entered into any material
transactions, other than in the ordinary course of business, which is material
to the Offerors, and (iii) covering such other matters as the Placement Agents
may reasonably request.

Administrator's Certificate.  

At the Closing Date, the Purchaser and the Placement Agents shall have received
a certificate of one or more Administrators of the Trust, dated as of the
Closing Date, stating that the representations and warranties of the Trust set
forth in Section 5 are true and correct as of the Closing Date and that the
Trust has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date.

Purchase Permitted by Applicable Laws; Legal Investment.  

The purchase of and payment for the Capital Securities as described in this
Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited
by any applicable law or governmental regulation, (b) not subject the Purchaser
or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchaser and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by the
laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agents are subject.

Consents and Permits.  

The Company and the Trust shall have received all consents, permits and other
authorizations, and made all such filings and declarations, as may be required
from any person or entity pursuant to any law, statute, regulation or rule
(federal, state, local and foreign), or pursuant to any agreement, order or
decree to which the Company or the Trust is a party or to which either is
subject, in connection with the transactions contemplated by this Agreement.

Information.  

Prior to or on the Closing Date, the Offerors shall have furnished to the
Placement Agents such further information, certificates, opinions and documents
addressed to the Purchaser and the Placement Agents, which the Placement Agents
may reasonably request, including, without limitation, a complete set of the
Operative Documents or any other documents or certificates required by this
Section 3; and all proceedings taken by the Offerors in connection with the
issuance, offer and sale of the Capital Securities as herein contemplated shall
be reasonably satisfactory in form and substance to the Placement Agents.

If any condition specified in this Section 3 shall not have been fulfilled when
and as required in this Agreement, or if any of the opinions or certificates
mentioned above or elsewhere in this Agreement shall not be reasonably
satisfactory in form and substance to the Placement Agents, this Agreement may
be terminated by the Placement Agents by notice to the Offerors at any time at
or prior to the Closing Date. Notice of such termination shall be given to the
Offerors in writing or by telephone or facsimile confirmed in writing.

Conditions to the Offerors' Obligations.  

The obligations of the Offerors to sell the Capital Securities to the Purchaser
and consummate the transactions contemplated by this Agreement shall be subject
to the accuracy, at and as of the Closing Date, of the representations and
warranties of the Placement Agents contained in this Agreement and to the
following further conditions:

Executed Agreement.  

The Offerors shall have received from the Placement Agents an executed copy of
this Agreement.

Fulfillment of Other Obligations.  

The Placement Agents shall have fulfilled all of their other obligations and
duties required to be fulfilled under this Agreement prior to or at the Closing.

Representations and Warranties of the Offerors.  

Except as set forth on the Disclosure Schedule (as defined in Section 11.1)
attached hereto, if any, the Offerors jointly and severally represent and
warrant to the Placement Agents and the Purchaser as of the date hereof and as
of the Closing Date as follows:

Securities Law Matters

.

  Neither the Company nor the Trust, nor any of their "Affiliates" (as defined
in Rule 501(b) of Regulation D under the Securities Act ("Regulation D")), nor
any person acting on any of their behalf has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration under the Securities Act of
any of the Capital Securities, the Guarantee or the Debentures (collectively,
the "Securities") or any other securities to be issued, or which may be issued,
by the Purchaser.

  Neither the Company nor the Trust, nor any of their Affiliates, nor any person
acting on its or their behalf has (i) other than the Placement Agents, offered
for sale or solicited offers to purchase the Securities, or (ii) engaged in any
form of offering, general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of any of the
Securities.

  The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under
the Securities Act.

  Neither the Company nor the Trust is or, after giving effect to the offering
and sale of the Capital Securities and the consummation of the transactions
described in this Agreement, will be an "investment company" or an entity
"controlled" by an "investment company," in each case within the meaning of
Section 3(a) of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), without regard to Section 3(c) of the Investment Company Act.

  Neither the Company nor the Trust has paid or agreed to pay to any person or
entity (other than the Placement Agents) any compensation for soliciting another
to purchase any of the Securities.

Organization, Standing and Qualification of the Trust

.  

The Trust has been duly created and is validly existing in good standing as a
statutory trust under the Delaware Statutory Trust Act (the "Statutory Trust
Act") with the power and authority to own property and to conduct the business
it transacts and proposes to transact and to enter into and perform its
obligations under the Operative Documents. The Trust is duly qualified to
transact business as a foreign entity and is in good standing in each
jurisdiction in which such qualification is necessary, except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the Trust. The Trust is not a party to or otherwise bound by any agreement other
than the Operative Documents. The Trust is and will, under current law, be
classified for federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.

Trust Agreement

.  

The Trust Agreement has been duly authorized by the Company and, on the Closing
Date, will have been duly executed and delivered by the Company and the
Administrators of the Trust, and, assuming due authorization, execution and
delivery by the Delaware Trustee and the Institutional Trustee, will be a valid
and binding obligation of the Company and such Administrators, enforceable
against them in accordance with its terms, subject to (a) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation and other laws
relating to or affecting creditors' rights generally, and (b) general principles
of equity (regardless of whether considered and applied in a proceeding in
equity or at law) ("Bankruptcy and Equity"). Each of the Administrators of the
Trust is an employee or a director of the Company or of a financial institution
subsidiary of the Company and has been duly authorized by the Company to execute
and deliver the Trust Agreement.

Guarantee Agreement and the Indenture

.  

Each of the Guarantee and the Indenture has been duly authorized by the Company
and, on the Closing Date will have been duly executed and delivered by the
Company, and, assuming due authorization, execution and delivery by the
Guarantee Trustee, in the case of the Guarantee, and by the Indenture Trustee,
in the case of the Indenture, will be a valid and binding obligation of the
Company enforceable against it in accordance with its terms, subject to
Bankruptcy and Equity.

Capital Securities and Common Securities

.  

The Capital Securities and the Common Securities have been duly authorized by
the Trust Agreement and, when issued and delivered against payment therefor on
the Closing Date to the Purchaser, in the case of the Capital Securities, and to
the Company, in the case of the Common Securities, will be validly issued and
represent undivided beneficial interests in the assets of the Trust. None of the
Capital Securities or the Common Securities is subject to preemptive or other
similar rights. On the Closing Date, all of the issued and outstanding Common
Securities will be directly owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance.

Debentures

.  

The Debentures have been duly authorized by the Company and, at the Closing
Date, will have been duly executed and delivered to the Indenture Trustee for
authentication in accordance with the Indenture, and, when authenticated in the
manner provided for in the Indenture and delivered against payment therefor by
the Trust, will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture enforceable against the Company in accordance
with their terms, subject to Bankruptcy and Equity.

Power and Authority

.  

This Agreement has been duly authorized, executed and delivered by the Company
and the Trust and constitutes the valid and binding obligation of the Company
and the Trust, enforceable against the Company and the Trust in accordance with
its terms, subject to Bankruptcy and Equity.

No Defaults

.  

The Trust is not in violation of the Trust Agreement or, to the knowledge of the
Administrators, any provision of the Statutory Trust Act. The execution,
delivery and performance by the Company or the Trust of this Agreement or the
Operative Documents to which it is a party, and the consummation of the
transactions contemplated herein or therein and the use of the proceeds
therefrom, will not conflict with or constitute a breach of, or a default under,
or result in the creation or imposition of any lien, charge or other encumbrance
upon any property or assets of the Trust, the Company or any of the Company's
Subsidiaries (as defined in Section 5.11 hereof) pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Trust, the Company or any of its Subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of any of
them is subject, except for a conflict, breach, default, lien, charge or
encumbrance which could not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect nor will such action result in any violation
of the Trust Agreement or the Statutory Trust Act or require the consent,
approval, authorization or order of any court or governmental agency or body. As
used herein, the term "Material Adverse Effect" means any one or more effects
that individually or in the aggregate are material and adverse to the Offerors'
ability to consummate the transactions contemplated herein or in the Operative
Documents or any one or more effects that individually or in the aggregate are
material and adverse to the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company and its
Subsidiaries taken as whole, whether or not occurring in the ordinary course of
business.

Organization, Standing and Qualification of the Company

.  

The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of Texas, with all requisite corporate power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of the Company
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.

Subsidiaries of the Company

.  

Each of the Company's significant subsidiaries (as defined in Section 1-02(w) of
Regulation S-X to the Securities Act (the "Significant Subsidiaries")) is listed
in Exhibit C attached hereto and incorporated herein by this reference. Each
Significant Subsidiary has been duly organized and is validly existing and in
good standing under the laws of the jurisdiction in which it is chartered or
organized, with all requisite power and authority to own its properties and
conduct the business it transacts and proposes to transact, and is duly
qualified to transact business and is in good standing as a foreign entity in
each jurisdiction where the nature of its activities requires such
qualification, except where the failure of any such Significant Subsidiary to be
so qualified would not, singly or in the aggregate, have a Material Adverse
Effect. All of the issued and outstanding shares of capital stock of the
Significant Subsidiaries (a) have been duly authorized and are validly issued,
(b) are fully paid and nonassessable, and (c) are wholly owned, directly or
indirectly, by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, restriction upon voting or transfer, preemptive
rights, claim, equity or other defect.

Permits

.  

The Company and each of its subsidiaries (as defined in Section 1-02(x) of
Regulation S-X to the Securities Act) (the "Subsidiaries") have all requisite
power and authority, and all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from regulatory or governmental
officials, bodies and tribunals, to own or lease their respective properties and
to conduct their respective businesses as now being conducted, except such
authorizations, approvals, orders, licenses, certificates and permits which, if
not obtained and maintained, would not, singly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such authorizations, approvals, orders, licenses, certificates or permits
which, singly or in the aggregate, if the failure to be so licensed or approved
is the subject of an unfavorable decision, ruling or finding, would, singly or
in the aggregate, have a Material Adverse Effect; and the Company and its
Subsidiaries are in compliance with all applicable laws, rules, regulations and
orders and consents, the violation of which would, singly or in the aggregate,
have a Material Adverse Effect.

Conflicts, Authorizations and Approvals

.  

Neither the Company nor any of its Subsidiaries is in violation of its
respective articles or certificate of incorporation, charter or by-laws or
similar organizational documents or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which either the Company or any of its Subsidiaries is a party, or
by which it or any of them may be bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, the effect of which
violation or default in performance or observance would have, singly or in the
aggregate, a Material Adverse Effect.

Holding Company Registration and Deposit Insurance

.  

The Company is duly registered (i) as a bank holding company or financial
holding company under the Bank Holding Company Act of 1956, as amended, and the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve") or (ii) as a savings and loan holding company under the Home
Owners' Loan Act of 1933, as amended, and the regulations of the Office of
Thrift Supervision (the "OTS"), and the deposit accounts of the Company's
Subsidiary depository institutions are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law and the rules and
regulations of the FDIC, and no proceedings for the termination of such
insurance are pending or threatened.

Financial Statements

.

  The consolidated balance sheets of the Company and all of its Subsidiaries as
of December 31, 2006 and December 31, 2005 and related consolidated income
statements and statements of changes in shareholders' equity for the three years
ended December 31, 2006 together with the notes thereto, copies of each of which
have been provided to the Placement Agents (together, the "Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein) and fairly present in all material respects the financial position and
the results of operations and changes in shareholders' equity of the Company and
all of its Subsidiaries as of the dates and for the periods indicated. The books
and records of the Company and all of its Subsidiaries have been, and are being,
maintained in all material respects in accordance with generally accepted
accounting principles and any other applicable legal and accounting requirements
and reflect only actual transactions.

  The information in the Company's most recently filed (i) FR Y-9C filed with
the Federal Reserve if the Company is a bank holding company, (ii) FR Y-9SP
filed with the Federal Reserve if the Company is a small bank holding company or
(iii) H-(b)11 filed with the OTS if the Company is a savings and loan holding
company (the "Regulatory Report"), previously provided to the Placement Agents
fairly presents in all material respects the financial position of the Company
and, where applicable, all of its Subsidiaries as of the end of the period
represented by such Regulatory Report.

  Since the respective dates of the Financial Statements and the Regulatory
Report, there has been no material adverse change or development with respect to
the financial condition or earnings of the Company and all of its Subsidiaries,
taken as a whole.

  

The accountants of the Company who certified the Financial Statements are
independent public accountants of the Company and its Subsidiaries within the
meaning of the Securities Act and the rules and regulations thereunder.

Exchange Act Reporting

.  

The reports filed with the Securities and Exchange Commission (the "Commission")
by the Company under the Securities Exchange Act of 1934, as amended (the "1934
Act") and the regulations thereunder at the time they were filed with the
Commission complied as to form in all material respects with the requirements of
the 1934 Act and such reports did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading.

Regulatory Enforcement Matters.

  

Neither the Company nor any of its Subsidiaries is subject or is party to, or
has received any notice or advice that any of them may become subject or party
to, any investigation with respect to, any cease-and-desist order, agreement,
consent agreement, memorandum of understanding or other regulatory enforcement
action, proceeding or order with or by, or is a party to any commitment letter
or similar undertaking to, or is subject to any directive by, or has been since
January 1, 2003, a recipient of any supervisory letter from, or since January 1,
2003, has adopted any board resolutions at the request of, any Regulatory Agency
(as defined below) that currently restricts in any material respect the conduct
of their business or that in any material manner relates to their capital
adequacy, their credit policies, their ability or authority to pay dividends or
make distributions to their shareholders or make payments of principal or
interest on their debt obligations, their management or their business (each, a
"Regulatory Agreement"), nor has the Company or any of its Subsidiaries been
advised since January 1, 2003, by any Regulatory Agency that it is considering
issuing or requesting any such Regulatory Agreement. There is no material
unresolved violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the Company
or any of its Subsidiaries. As used herein, the term "Regulatory Agency" means
any federal or state agency charged with the supervision or regulation of
depository institutions, bank, financial or savings and loan holding companies,
or engaged in the insurance of depository institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Company or any of its Subsidiaries. Neither the Company nor any of the
Subsidiaries is currently unable to pay dividends or make distributions to its
shareholders with respect to any class of its equity securities, or prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the reasonable
judgment of the Company's management, neither the Company nor any of the
Subsidiaries will be unable in the foreseeable future to pay dividends or make
distributions with respect to any class of equity securities, or be prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise.

No Material Change

.  

Since December 31, 2006, there has been no material adverse change or
development with respect to the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company or its
Subsidiaries on a consolidated basis, whether or not arising in the ordinary
course of business.

No Undisclosed Liabilities.  

Neither the Company nor any of its Subsidiaries has any material liability,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit, proceeding, hearing, charge, complaint,
claim or demand against the Company or its Subsidiaries giving rise to any such
liability), except (i) for liabilities set forth in the Financial Statements and
(ii) normal fluctuation in the amount of the liabilities referred to in
clause (i) above occurring in the ordinary course of business of the Company and
all of its Subsidiaries since the date of the most recent balance sheet included
in the Financial Statements.

Litigation

.  

No charge, investigation, action, suit or proceeding is pending or, to the
knowledge of the Offerors, threatened against or affecting the Company or its
Subsidiaries or any of their respective properties before or by any courts or
any regulatory, administrative or governmental official, commission, board,
agency or other authority or body, or any arbitrator, wherein an unfavorable
decision, ruling or finding could have, singly or in the aggregate, a Material
Adverse Effect.

Deferral of Interest Payments on Debentures

.  

The Company has no present intention to exercise its option to defer payments of
interest on the Debentures as provided in the Indenture. The Company believes
that the likelihood that it would exercise its right to defer payments of
interest on the Debentures as provided in the Indenture at any time during which
the Debentures are outstanding is remote because of the restrictions that would
be imposed on the Company's ability to declare or pay dividends or distributions
on, or to redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company's capital stock and on the Company's ability to make any
payments of principal, interest or premium on, or repay, repurchase or redeem,
any of its debt securities that rank pari passu in all respects with, or junior
in interest to, the Debentures.

Representations and Warranties of the Placement Agents

.  

Each Placement Agent represents and warrants to the Offerors as to itself (but
not as to the other Placement Agent) as follows:

Organization, Standing and Qualification

.

  FTN Financial Capital Markets is a division of First Tennessee Bank National
Association, a national banking association duly organized, validly existing and
in good standing under the laws of the United States, with full power and
authority to own, lease and operate its properties and conduct its business as
currently being conducted. FTN Financial Capital Markets is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property or conducts its business so as
to require such qualification and in which the failure to so qualify would,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects or results of
operations of FTN Financial Capital Markets.

  Keefe, Bruyette & Woods, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, with full
power and authority to own, lease and operate its properties and conduct its
business as currently being conducted. Keefe, Bruyette & Woods, Inc. is duly
qualified to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property or conducts its
business so as to require such qualification and in which the failure to so
qualify would, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), earnings, business, prospects or
results of operations of Keefe, Bruyette & Woods, Inc.

Power and Authority

.  

The Placement Agent has all requisite power and authority to enter into this
Agreement, and this Agreement has been duly and validly authorized, executed and
delivered by the Placement Agent and constitutes the legal, valid and binding
agreement of the Placement Agent, enforceable against the Placement Agent in
accordance with its terms, subject to Bankruptcy and Equity and except as any
indemnification or contribution provisions thereof may be limited under
applicable securities laws.

General Solicitation

.  

In the case of the offer and sale of the Capital Securities, no form of general
solicitation or general advertising was used by the Placement Agent or its
representatives including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.

Purchaser

.  

The Placement Agent has made such reasonable inquiry as is necessary to
determine that the Purchaser is acquiring the Capital Securities for its own
account, except as contemplated in Section 7.8 hereto, and that the Purchaser
does not intend to distribute the Capital Securities in contravention of the
Securities Act or any other applicable securities laws.

Qualified Purchasers

.  

The Placement Agent has not offered or sold and will not arrange for the offer
or sale of the Capital Securities except (i) to those the Placement Agent
reasonably believes are "accredited investors" (as defined in Rule 501 of
Regulation D), or (ii) in any other manner that does not require registration of
the Capital Securities under the Securities Act. In connection with each such
sale, the Placement Agent has taken or will take reasonable steps to ensure that
the Purchaser is aware that (a) such sale is being made in reliance on an
exemption under the Securities Act and (b) future transfers of the Capital
Securities will not be made except in compliance with applicable securities
laws.

Offering Circulars

.  

Neither the Placement Agent nor its representatives will include any non-public
information about the Company, the Trust or any of their Affiliates in any
registration statement, prospectus, offering circular or private placement
memorandum used in connection with any purchase of Capital Securities without
the prior written consent of the Trust and the Company.

Covenants of the Offerors.  

The Offerors covenant and agree with the Placement Agents and the Purchaser as
follows:

Compliance with Representations and Warranties

.  

During the period from the date of this Agreement to the Closing Date, the
Offerors shall use their best efforts and take all action necessary or
appropriate to cause their representations and warranties contained in Section 5
hereof to be true as of the Closing Date, after giving effect to the
transactions contemplated by this Agreement, as if made on and as of the Closing
Date.

Sale and Registration of Securities

.  

The Offerors and their Affiliates shall not nor shall any of them permit any
person acting on their behalf (other than the Placement Agents), to directly or
indirectly (i) sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) that
would or could be integrated with the sale of the Capital Securities in a manner
that would require the registration under the Securities Act of the Securities
or (ii) make offers or sales of any such Security, or solicit offers to buy any
such Security, under circumstances that would require the registration of any of
such Securities under the Securities Act.

Use of Proceeds

.  

The Trust shall use the proceeds from the sale of the Capital Securities and the
Common Securities to purchase the Debentures from the Company.

Investment Company

.  

The Offerors shall not engage, or permit any Subsidiary to engage, in any
activity which would cause it or any Subsidiary to be an "investment company"
under the provisions of the Investment Company Act.

Reimbursement of Expenses

.  

If the sale of the Capital Securities provided for herein is not consummated
(i) because any condition set forth in Section 3 hereof is not satisfied, or
(ii) because of any refusal, inability or failure on the part of the Company or
the Trust to perform any agreement herein or comply with any provision hereof
other than by reason of a breach by the Placement Agents, the Company shall
reimburse the Placement Agents upon demand for all of their pro rata share of
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
in an amount not to exceed $50,000.00 that shall have been incurred by them in
connection with the proposed purchase and sale of the Capital Securities.
Notwithstanding the foregoing, the Company shall have no obligation to reimburse
the Placement Agents for their out-of-pocket expenses if the sale of the Capital
Securities fails to occur because the Placement Agents fail to fulfill a
condition set forth in Section 4.

Solicitation and Advertising

.  

In connection with any offer or sale of any of the Securities, the Offerors
shall not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents, to engage in any form
of general solicitation or general advertising (as defined in Regulation D).

Compliance with Rule 144A(d)(4) under the Securities Act

.  

So long as any of the Securities are outstanding and are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Offerors
will, during any period in which they are not subject to and in compliance with
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the Offerors are not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act,
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser in connection with any proposed
transfer, any information required to be provided by Rule 144A(d)(4) under the
Securities Act, if applicable. This covenant is intended to be for the benefit
of the holders, and the prospective purchasers designated by such holders, from
time to time of such restricted securities. The information provided by the
Offerors pursuant to this Section 7.7 will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

Quarterly Reports.  

Within 50 days of the end of each calendar year quarter and within 100 days of
the end of each calendar year during which the Debentures are issued and
outstanding and Purchaser holds any of the Capital Securities, the Offerors
shall submit to Purchaser a completed quarterly report in the form attached
hereto as Exhibit D as well as a copy of the applicable Regulatory Report for
the Company.

Book-Entry Registration

.  

Each Offeror will cooperate with the Placement Agents and use all commercially
reasonable efforts to make the Capital Securities, and in the event the
Debentures are distributed to holders of the Capital Securities, to make the
Debentures, eligible for clearance and settlement as book-entry securities
through the facilities of DTC, and will execute, deliver and comply with all
representations made to, and agreements with, DTC and Nasdaq's PORTAL system.

Covenants of the Placement Agents.  

The Placement Agents covenant and agree with the Offerors that, during the
period from the date of this Agreement to the Closing Date, the Placement Agents
shall use their best efforts and take all action necessary or appropriate to
cause their representations and warranties contained in Section 6 to be true as
of the Closing Date, after giving effect to the transactions contemplated by
this Agreement, as if made on and as of the Closing Date. The Placement Agents
further covenant and agree not to engage in hedging transactions with respect to
the Capital Securities unless such transactions are conducted in compliance with
the Securities Act.

Indemnification.

Indemnification Obligation.  

The Offerors shall jointly and severally indemnify and hold harmless the
Placement Agents and the Purchaser and each of their respective agents,
employees, officers and directors and each person that controls either of the
Placement Agents or the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and agents, employees,
officers and directors or any such controlling person of either of the Placement
Agents or the Purchaser (each such person or entity, an "Indemnified Party")
from and against any and all losses, claims, damages, judgments, liabilities or
expenses, joint or several, to which such Indemnified Party may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Offerors), insofar as such losses, claims, damages, judgments, liabilities or
expenses (or actions in respect thereof) arise out of, or are based upon, or
relate to, in whole or in part, (a) any untrue statement or alleged untrue
statement of a material fact contained in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors, or (b) any omission or
alleged omission to state in any information (whether written or oral) or
documents executed in favor of, furnished or made available to the Placement
Agents or the Purchaser by the Offerors a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Indemnified Party for any legal and other expenses as such
expenses are reasonably incurred by such Indemnified Party in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, judgments, liability, expense or action described in this Section 9.1.
In addition to their other obligations under this Section 9, the Offerors hereby
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of, or based upon, or
related to the matters described above in this Section 9.1, they shall reimburse
each Indemnified Party on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return such amounts to the Offerors together with interest,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by First
Tennessee Bank National Association (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Indemnified Party within 30 days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.

Conduct of Indemnification Proceedings.  

Promptly after receipt by an Indemnified Party under this Section 9 of notice of
the commencement of any action, such Indemnified Party shall, if a claim in
respect thereof is to be made against the Offerors under this Section 9, notify
the Offerors in writing of the commencement thereof; but, subject to
Section 9.4, the omission to so notify the Offerors shall not relieve them from
any liability pursuant to Section 9.1 which the Offerors may have to any
Indemnified Party unless and to the extent that the Offerors did not otherwise
learn of such action and such failure by the Indemnified Party results in the
forfeiture by the Offerors of substantial rights and defenses. In case any such
action is brought against any Indemnified Party and such Indemnified Party seeks
or intends to seek indemnity from the Offerors, the Offerors shall be entitled
to participate in, and, to the extent that they may wish, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party;
provided, however, if the defendants in any such action include both the
Indemnified Party and the Offerors and the Indemnified Party shall have
reasonably concluded that there may be a conflict between the positions of the
Offerors and the Indemnified Party in conducting the defense of any such action
or that there may be legal defenses available to it and/or other Indemnified
Parties which are different from or additional to those available to the
Offerors, the Indemnified Party shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such Indemnified Party. Upon receipt of notice from the
Offerors to such Indemnified Party of their election to so assume the defense of
such action and approval by the Indemnified Party of counsel, the Offerors shall
not be liable to such Indemnified Party under this Section 9 for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof unless (i) the Indemnified Party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso in the preceding sentence (it being understood, however, that
the Offerors shall not be liable for the expenses of more than one separate
counsel representing the Indemnified Parties who are parties to such action), or
(ii) the Offerors shall not have employed counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel of such Indemnified Party shall be at the expense of the
Offerors.

Contribution.  

If the indemnification provided for in this Section 9 is required by its terms,
but is for any reason held to be unavailable to or otherwise insufficient to
hold harmless an Indemnified Party under Section 9.1 in respect of any losses,
claims, damages, liabilities or expenses referred to herein or therein, then the
Offerors shall contribute to the amount paid or payable by such Indemnified
Party as a result of any losses, claims, damages, judgments, liabilities or
expenses referred to herein (i) in such proportion as is appropriate to reflect
the relative benefits received by the Offerors, on the one hand, and the
Indemnified Party, on the other hand, from the offering of such Capital
Securities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Offerors, on the one hand, and the Placement Agents, on the other
hand, in connection with the statements or omissions or inaccuracies in the
representations and warranties herein or other breaches which resulted in such
losses, claims, damages, judgments, liabilities or expenses, as well as any
other relevant equitable considerations. The respective relative benefits
received by the Offerors, on the one hand, and the Placement Agents, on the
other hand, shall be deemed to be in the same proportion, in the case of the
Offerors, as the total price paid to the Offerors for the Capital Securities
sold by the Offerors to the Purchaser (net of the compensation paid to the
Placement Agents hereunder, but before deducting expenses), and in the case of
the Placement Agents, as the compensation received by them, bears to the total
of such amounts paid to the Offerors and received by the Placement Agents as
compensation. The relative fault of the Offerors and the Placement Agents shall
be determined by reference to, among other things, whether the untrue statement
or alleged untrue statement of a material fact or the omission or alleged
omission of a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Offerors
or the Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The provisions set forth in Section 9.2 with respect to notice of commencement
of any action shall apply if a claim for contribution is made under this
Section 9.3; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 9.2 for
purposes of indemnification. The Offerors and the Placement Agents agree that it
would not be just and equitable if contribution pursuant to this Section 9.3
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in this
Section 9.3. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages, judgments, liabilities or expenses referred to in
this Section 9.3 shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim. In
no event shall the liability of the Placement Agents hereunder be greater in
amount than the dollar amount of the compensation (net of payment of all
expenses) received by the Placement Agents upon the sale of the Capital
Securities giving rise to such obligation. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation.

Additional Remedies.  

The indemnity and contribution agreements contained in this Section 9 are in
addition to any liability that the Offerors may otherwise have to any
Indemnified Party.

Additional Indemnification

.  

The Company shall indemnify and hold harmless the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Sections 9.1 through 9.4 hereof.

Rights and Responsibilities of Placement Agents.

Reliance.  

In performing their duties under this Agreement, the Placement Agents shall be
entitled to rely upon any notice, signature or writing which they shall in good
faith believe to be genuine and to be signed or presented by a proper party or
parties. The Placement Agents may rely upon any opinions or certificates or
other documents delivered by the Offerors or their counsel or designees to
either the Placement Agents or the Purchaser.

Rights of Placement Agents.  

In connection with the performance of their duties under this Agreement, the
Placement Agents shall not be liable for any error of judgment or any action
taken or omitted to be taken unless the Placement Agents were grossly negligent
or engaged in willful misconduct in connection with such performance or
non-performance. No provision of this Agreement shall require the Placement
Agents to expend or risk their own funds or otherwise incur any financial
liability on behalf of the Purchaser in connection with the performance of any
of their duties hereunder. The Placement Agents shall be under no obligation to
exercise any of the rights or powers vested in them by this Agreement.

Miscellaneous.

Disclosure Schedule.  

The term "Disclosure Schedule," as used herein, means the schedule, if any,
attached to this Agreement that sets forth items the disclosure of which is
necessary or appropriate as an exception to one or more representations or
warranties contained in Section 5 hereof; provided, that any item set forth in
the Disclosure Schedule as an exception to a representation or warranty shall be
deemed an admission by the Offerors that such item represents an exception,
fact, event or circumstance that is reasonably likely to result in a Material
Adverse Effect. The Disclosure Schedule shall be arranged in paragraphs
corresponding to the section numbers contained in Section 5. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the immediately preceding
sentence, the mere listing (or inclusion of a copy) of a document or other item
in the Disclosure Schedule shall not be deemed adequate to disclose an exception
to a representation or warranty made herein unless the representation or
warranty has to do with the existence of the document or other item itself.
Information provided by the Company in response to any due diligence
questionnaire shall not be deemed part of the Disclosure Schedule and shall not
be deemed to be an exception to one or more representations or warranties
contained in Section 5 hereof unless such information is specifically included
on the Disclosure Schedule in accordance with the provisions of this
Section 11.1.

Legal Expenses

.  

At Closing, the Placement Agents shall provide a credit for the Offerors'
transaction-related legal expenses in the amount of $10,000.00.

Non-Disclosure

.  

Except as required by applicable law, including without limitation securities
laws and regulations promulgated thereunder, (i) the Offerors shall not, and
will cause their advisors and representatives not to, issue any press release or
other public statement regarding the transactions contemplated by this Agreement
or the Operative Documents prior to or on the Closing Date and (ii) following
the Closing Date, the Offerors shall not include in any press release, other
public statement or other communication regarding the transactions contemplated
by this Agreement or the Operative Documents, any reference to the Placement
Agents, WTC, the Purchaser, the term "PreTS" or any derivations thereof, or the
terms and conditions of this Agreement or the Operative Documents.
Notwithstanding anything to the contrary, the Offerors may (1) consult any tax
advisor regarding U.S. federal income tax treatment or tax structure of the
transaction contemplated under this Agreement and the Operative Documents and
(2) disclose to any and all persons, without limitation of any kind, the U.S.
Federal income tax structure (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transaction contemplated under this
Agreement and the Operative Documents and all materials of any kind (including
opinions or other tax analyses) that are provided to the Offerors relating to
such tax treatment and tax structure. For this purpose, "tax structure" is
limited to any facts relevant to the U.S. federal income tax treatment of the
transaction and does not include information relating to the identity of the
parties.

Notices

.  

Prior to the Closing, and thereafter with respect to matters pertaining to this
Agreement only, all notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier or overnight air courier guaranteeing next day delivery:

if to the Placement Agents, to:

FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117

Telecopier: 901-435-4706

Telephone: 800-456-5460

Attention: James D. Wingett

and

Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019

Telecopier: 212-403-2000

Telephone: 212-403-1004

Attention: Mitchell Kleinman, General Counsel

with a copy to:

Lewis, Rice & Fingersh, L.C.

500 North Broadway, Suite 2000

St. Louis, Missouri 63102

Telecopier: 314-241-6056

Telephone: 314-444-7600

Attention: Thomas C. Erb, Esq.

and

Sidley Austin LLP

787 7th Avenue

New York, New York 10019

Telecopier: 212-839-5599

Telephone: 212-839-5300

Attention: Renwick Martin, Esq.

if to the Offerors, to:

Sterling Bancshares, Inc.

2550 North Loop West, Suite 600

Houston, Texas 77092

Telecopier: 713-507-2955

Telephone: 713-507-2968

Attention: Patrick Oakes

and

Sterling Bancshares Capital Trust IV

2550 North Loop West, Suite 600

Houston, Texas 77092

Telecopier: 713-466-3117

Telephone: 713-466-8300

Attention: James W. Goolsby, Jr.

with a copy to:

Locke Liddell & Sapp LLP

3400 JPMorgan Chase Tower

600 Travis Street

Houston, Texas 77002

Telecopier: 713-229-2636

Telephone: 713-226-1187

Attention: Gregory C. Hill, Esq.

All such notices and communications shall be deemed to have been duly given
(i) at the time delivered by hand, if personally delivered, (ii) five business
days after being deposited in the mail, postage prepaid, if mailed, (iii) when
answered back, if telexed, (iv) the next business day after being telecopied, or
(v) the next business day after timely delivery to a courier, if sent by
overnight air courier guaranteeing next day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Offerors, and their respective counsel, may change their respective
notice addresses from time to time by written notice to all of the foregoing
persons.

Parties in Interest, Successors and Assigns.  

Except as expressly set forth herein, this Agreement is made solely for the
benefit of the Placement Agents, the Purchaser and the Offerors and any person
controlling the Placement Agents, the Purchaser or the Offerors and their
respective successors and assigns; and no other person shall acquire or have any
right under or by virtue of this Agreement. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.

Counterparts.  

This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

Headings.  

The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

Governing Law.  

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF LAWS) OF THE STATE OF
NEW YORK.

Entire Agreement.  

This Agreement, together with the Operative Documents and the other documents
delivered in connection with the transactions contemplated by this Agreement, is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, together with
the Operative Documents and the other documents delivered in connection with the
transaction contemplated by this Agreement, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

Severability.  

In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Offerors', the Placement Agents' and the Purchaser's
rights and privileges shall be enforceable to the fullest extent permitted by
law.

Survival.  

The Placement Agents and the Offerors, respectively, agree that the
representations, warranties and agreements made by each of them in this
Agreement and in any certificate or other instrument delivered pursuant hereto
shall remain in full force and effect and shall survive the delivery of, and
payment for, the Capital Securities.

Signatures appear on the following page

If this Agreement is satisfactory to you, please so indicate by signing the
acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.

Very truly yours,

Sterling Bancshares, Inc.

 

By:/s/ J. Downey Bridgwater

Name: J. Downey Bridgwater

Title: Chairman, President & Chief Executive Officer

 

Sterling Bancshares Capital Trust IV

 

By: /s/ Zach Wasson

Name: Zach Wasson

Title: Administrator

 

 

CONFIRMED AND ACCEPTED,

as of the date first set forth above

FTN FINANCIAL CAPITAL MARKETS,

a division of First Tennessee Bank National Association,

as a Placement Agent

 

By: /s/ James D. Wingett

Name: James D. Wingett

Title: Senior Vice President

 

KEEFE, BRUYETTE & WOODS, INC.,

a New York corporation, as a Placement Agent

 

By: /s/ Peter J. Wirth

Name: Peter J. Wirth

Title: Managing Director

EXHIBIT A

FORM OF SUBSCRIPTION AGREEMENT

Sterling Bancshares Capital Trust IV

Sterling Bancshares, Inc.

SUBSCRIPTION AGREEMENT

March 26, 2007

THIS SUBSCRIPTION

AGREEMENT (this "Agreement") made among Sterling Bancshares Capital Trust IV
(the "Trust"), a statutory trust created under the Delaware Statutory Trust Act
(Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. SectionSection 3801, et
seq.), Sterling Bancshares, Inc., a Texas corporation, with its principal
offices located at 2550 North Loop West, Suite 600, Houston, Texas 77092 (the
"Company" and, collectively with the Trust, the "Offerors"), and Keefe,
Bruyette & Woods, Inc. (the "Purchaser").

RECITALS:

The Trust desires to issue 25,000 of its Floating Rate Capital Securities (the
"Capital Securities"), liquidation amount $1,000.00 per Capital Security,
representing an undivided beneficial interest in the assets of the Trust (the
"Offering"), to be issued pursuant to an Amended and Restated Declaration of
Trust (the "Declaration") by and among the Company, Wilmington Trust Company
("WTC"), the administrators named therein, and the holders (as defined therein),
which Capital Securities are to be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and otherwise pursuant
to the terms of a Guarantee Agreement between the Company and WTC, as trustee
(the "Guarantee"); and

The proceeds from the sale of the Capital Securities will be combined with the
proceeds from the sale by the Trust to the Company of its common securities, and
will be used by the Trust to purchase an equivalent amount of Floating Rate
Junior Subordinated Deferrable Interest Debentures of the Company (the
"Debentures") to be issued by the Company pursuant to an indenture to be
executed by the Company and WTC, as trustee (the "Indenture"); and

In consideration of the premises and the mutual representations and covenants
hereinafter set forth, the parties hereto agree as follows:

PURCHASE AND SALE OF CAPITAL SECURITIES

Upon the execution of this Agreement, the Purchaser hereby agrees to purchase
from the Trust 25,000 Capital Securities at a price equal to $1,000.00 per
Capital Security (the "Purchase Price") and the Trust agrees to sell such
Capital Securities to the Purchaser for said Purchase Price. The rights and
preferences of the Capital Securities are set forth in the Declaration. The
Purchase Price is payable in immediately available funds on March 26, 2007, or
such other business day as may be designated by the Purchaser, but in no event
later than March 30, 2007 (the "Closing Date"). The Offerors shall provide the
Purchaser wire transfer instructions no later than 1 day following the date
hereof.

The Placement Agreement, dated March 14, 2007 (the "Placement Agreement"), among
the Offerors and the placement agents identified therein (the "Placement
Agents") includes certain representations and warranties, covenants and
conditions to closing and certain other matters governing the Offering. The
Placement Agreement is hereby incorporated by reference into this Agreement and
the Purchaser shall be entitled to each of the benefits of the Placement Agents
and the Purchaser under the Placement Agreement and shall be entitled to enforce
the obligations of the Offerors under such Placement Agreement as fully as if
the Purchaser were a party to such Placement Agreement.

Anything herein or in the Placement Agreement notwithstanding, the Offerors
acknowledge and agree that, so long as Purchaser holds some or all of the
Capital Securities, the Purchaser may in its discretion from time to time
transfer or sell, or sell or grant participation interests in, some or all of
such Capital Securities to one or more parties, provided that any such
transaction complies, as applicable, with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any other
applicable securities laws, is pursuant to an exemption therefrom, or is
otherwise not subject thereto.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser understands and acknowledges that none of the Capital Securities,
the Debentures or the Guarantee have been registered under the Securities Act or
any other applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.

The Purchaser represents and warrants that, except as contemplated under
Section 1.3 hereof, it is purchasing the Capital Securities for its own account,
for investment, and not with a view to, or for offer or sale in connection with,
any distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control and subject to its ability to resell
such Capital Securities pursuant to an effective registration statement under
the Securities Act or under Rule 144A or any other exemption from registration
available under the Securities Act or any other applicable securities law.

The Purchaser represents and warrants that neither the Offerors nor the
Placement Agents are acting as a fiduciary or financial or investment adviser
for the Purchaser.

The Purchaser represents and warrants that it is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Offerors or of the Placement
Agents.

The Purchaser represents and warrants that (a) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisers
in connection herewith to the extent it has deemed necessary, (b) it has had a
reasonable opportunity to ask questions of and receive answers from officers and
representatives of the Offerors concerning their respective financial condition
and results of operations and the purchase of the Capital Securities, and any
such questions have been answered to its satisfaction, (c) it has had the
opportunity to review all publicly available records and filings concerning the
Offerors and it has carefully reviewed such records and filings that it
considers relevant to making an investment decision, and (d) it has made its own
investment decisions based upon its own judgment, due diligence and advice from
such advisers as it has deemed necessary and not upon any view expressed by the
Offerors or the Placement Agents.

The Purchaser represents and warrants that it is a "qualified institutional
buyer" as defined under Rule 144A under the Securities Act. If the Purchaser is
a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A under the
Securities Act, it owns and invests on a discretionary basis not less than U.S.
$25,000,000.00 in securities of issuers that are not affiliated with it. The
Purchaser is not a participant-directed employee plan, such as a 401(k) plan, or
any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of
Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A
that holds the assets of such a plan, unless investment decisions with respect
to the plan are made solely by the fiduciary, trustee or sponsor of such plan.

The Purchaser represents and warrants that on each day from the date on which it
acquires the Capital Securities through and including the date on which it
disposes of its interests in the Capital Securities, either (i) it is not (a) an
"employee benefit plan" (as defined in Section 3(3) of the United States
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) which is
subject to the provisions of Part 4 of Subtitle B of Title I of ERISA, or any
entity whose underlying assets include the assets of any such plan (an "ERISA
Plan"), (b) any other "plan" (as defined in Section 4975(e)(1) of the United
States Internal Revenue Code of 1986, as amended (the "Code")) which is subject
to the provisions of Section 4975 of the Code or any entity whose underlying
assets include the assets of any such plan (a "Plan"), (c) an entity whose
underlying assets include the assets of any such ERISA Plan or other Plan by
reason of Department of Labor regulation section 2510.3-101 or otherwise, or
(d) a governmental or church plan that is subject to any federal, state or local
law which is substantially similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code (a "Similar Law"); or (ii) the purchase, holding and
disposition of the Capital Securities by it will satisfy the requirements for
exemptive relief under Prohibited Transaction Class Exemption ("PTCE") 84-14,
PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar exemption, or, in the
case of a plan subject to a Similar Law, will not result in a non-exempt
violation of such Similar Law.

The Purchaser represents and warrants that it is acquiring the Capital
Securities as principal for its own account for investment and, except as
contemplated under Section 1.3 hereof, not for sale in connection with any
distribution thereof. It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were not
specifically solicited from any person owning a beneficial interest in it for
the purpose of enabling it to purchase any Capital Securities. The Purchaser is
not a (i) partnership, (ii) common trust fund or (iii) special trust, pension,
profit sharing or other retirement trust fund or plan in which the partners,
beneficiaries or participants, as applicable, may designate the particular
investments to be made or the allocation of any investment among such partners,
beneficiaries or participants, and except as contemplated under Section 1.3
hereof, it agrees that it shall not hold the Capital Securities for the benefit
of any other person and shall be the sole beneficial owner thereof for all
purposes and that it shall not sell participation interests in the Capital
Securities or enter into any other arrangement pursuant to which any other
person shall be entitled to a beneficial interest in the distribution of the
Capital Securities. The Capital Securities purchased directly or indirectly by
the Purchaser constitute an investment of no more than 40% of its assets. The
Purchaser understands and agrees that any purported transfer of the Capital
Securities to a purchaser which would cause the representations and warranties
of Section 2.6, Section 2.7 and this Section 2.8 to be inaccurate shall be null
and void ab initio and the Offerors retain the right to resell any Capital
Securities sold to non-permitted transferees.

The Purchaser represents and warrants that it has full power and authority to
execute and deliver this Agreement, to make the representations and warranties
specified herein, and to consummate the transactions contemplated herein and it
has full right and power to subscribe for Capital Securities and perform its
obligations pursuant to this Agreement.

The Purchaser represents and warrants that no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
governmental body, agency or court having jurisdiction over the Purchaser, other
than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Agreement or to
consummate the transactions contemplated herein.

The Purchaser represents and warrants that this Agreement has been duly
authorized, executed and delivered by the Purchaser.

The Purchaser understands and acknowledges that the Company and the Trust will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Company.

The Purchaser understands that no public market exists for any of the Capital
Securities, and that it is unlikely that a public market will ever exist for the
Capital Securities.

MISCELLANEOUS

Any notice or other communication given hereunder shall be deemed sufficient if
in writing and sent by registered or certified mail, return receipt requested,
international courier or delivered by hand against written receipt therefor, or
by facsimile transmission and confirmed by telephone, to the following
addresses, or such other address as may be furnished to the other parties as
herein provided:

To the Offerors: Sterling Bancshares, Inc.

2550 North Loop West, Suite 600

Houston, Texas 77092

Attention: Patrick Oakes

Fax: 713-507-2955

To the Purchaser: Keefe, Bruyette & Woods, Inc.

787 7th Avenue, 4th Floor

New York, New York 10019

Attention: Mitchell Kleinman, General Counsel

Fax: 212-403-2000

Unless otherwise expressly provided herein, notices shall be deemed to have been
given on the date of mailing, except notice of change of address, which shall be
deemed to have been given when received.

This Agreement shall not be changed, modified or amended except by a writing
signed by the parties to be charged, and this Agreement may not be discharged
except by performance in accordance with its terms or by a writing signed by the
party to be charged.

Upon the execution and delivery of this Agreement by the Purchaser, this
Agreement shall become a binding obligation of the Purchaser with respect to the
purchase of Capital Securities as herein provided.

NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE
PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS
HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

The parties agree to execute and deliver all such further documents, agreements
and instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.

This Agreement may be executed in one or more counterparts each of which shall
be deemed an original, but all of which shall together constitute one and the
same instrument.

In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Offerors' and the Purchaser's rights and privileges
shall be enforceable to the fullest extent permitted by law.

Signatures appear on the following page

IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day and
year first written above.

KEEFE, BRUYETTE & WOODS, INC.

 

By:

Print Name:

Title:

Sterling Bancshares, Inc.

 

By:

Name:

Title:

Sterling Bancshares Capital Trust IV

 

By:

Name:

Title: Administrator

 

EXHIBIT B-1

FORM OF COMPANY COUNSEL OPINION

March 26, 2007

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-1600

FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117

Keefe, Bruyette & Woods, Inc.

787 7th Avenue, 4th Floor

New York, New York 10019

Ladies and Gentlemen:

We have acted as counsel to Sterling Bancshares, Inc. (the "Company"), a Texas
corporation in connection with a certain Placement Agreement, dated March 14,
2007, (the "Placement Agreement"), between the Company and Sterling Bancshares
Capital Trust IV (the "Trust"), on one hand, and FTN Financial Capital Markets
and Keefe, Bruyette & Woods, Inc. (the "Placement Agents"), on the other hand.
Pursuant to the Placement Agreement, and subject to the terms and conditions
stated therein, the Trust will issue and sell to Keefe, Bruyette & Woods, Inc.
(the "Purchaser"), $25,000,000.00 aggregate principal amount of Floating Rate
Capital Securities (liquidation amount $1,000.00 per capital security) (the
"Capital Securities").

Capitalized terms used herein and not otherwise defined shall have the same
meanings ascribed to them in the Placement Agreement.

The law covered by the opinions expressed herein is limited to the law of the
United States of America and of the State of Texas.

We have made such investigations of law as, in our judgment, were necessary to
render the following opinions. We have also reviewed (a) the Company's Articles
of Incorporation, as amended, and its By-Laws, as amended; and (b) such
corporate documents, records, information and certificates of the Company and
the Subsidiaries, certificates of public officials or government authorities and
other documents as we have deemed necessary or appropriate as a basis for the
opinions hereinafter expressed. As to certain facts material to our opinions, we
have relied, with your permission, upon statements, certificates or
representations, including those delivered or made in connection with the
above-referenced transaction, of officers and other representatives of the
Company and the Subsidiaries and the Trust.

As used herein, the phrases "to the best of our knowledge" or "known to us" or
other similar phrases mean the actual knowledge of the attorneys who have had
active involvement in the transactions described above or who have prepared or
signed this opinion letter, or who otherwise have devoted substantial attention
to legal matters for the Company.

Based upon and subject to the foregoing and the further qualifications set forth
below, we are of the opinion as of the date hereof that:

1. The Company is validly existing and in good standing under the laws of the
State of Texas and is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended. Each of the Significant Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of the Company and the Significant Subsidiaries has full
corporate power and authority to own or lease its properties and to conduct its
business as such business is currently conducted in all material respects. To
the best of our knowledge, all outstanding shares of capital stock of the
Significant Subsidiaries have been duly authorized and validly issued, and are
fully paid and nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 1831o or 12 U.S.C. Section 55, and are owned
of record and beneficially, directly or indirectly, by the Company.

2. The issuance, sale and delivery of the Debentures in accordance with the
terms and conditions of the Placement Agreement and the Operative Documents have
been duly authorized by all necessary actions of the Company. The issuance, sale
and delivery of the Debentures by the Company and the issuance, sale and
delivery of the Capital Securities and the Common Securities by the Trust do not
give rise to any preemptive or other rights to subscribe for or to purchase any
shares of capital stock or equity securities of the Company or the Significant
Subsidiaries pursuant to the corporate Articles of Incorporation or Charter,
By-Laws or other governing documents of the Company or the Significant
Subsidiaries, or, to the best of our knowledge, any agreement or other
instrument to which either the Company or the Subsidiaries is a party or by
which the Company or the Significant Subsidiaries may be bound.

3. The Company has all requisite corporate power to enter into and perform its
obligations under the Placement Agreement and the Subscription Agreement, and
the Placement Agreement and the Subscription Agreement have been duly and
validly authorized, executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, except as the enforcement thereof may be limited by general
principles of equity and by bankruptcy or other laws affecting creditors' rights
generally, and except as the indemnification and contribution provisions thereof
may be limited under applicable laws and certain remedies may not be available
in the case of a non-material breach.

4. Each of the Indenture, the Trust Agreement and the Guarantee Agreement has
been duly authorized, executed and delivered by the Company, and is a valid and
legally binding obligation of the Company enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies of
creditors generally and of general principles of equity.

5. The Debentures have been duly authorized, executed and delivered by the
Company, are entitled to the benefits of the Indenture and are legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.

6. To the best of our knowledge, neither the Company, the Trust, nor any of the
Subsidiaries is in breach or violation of, or default under, with or without
notice or lapse of time or both, its Articles of Incorporation or Charter,
By-Laws or other governing documents (including without limitation, the Trust
Agreement). The execution, delivery and performance of the Placement Agreement
and the Operative Documents and the consummation of the transactions
contemplated by the Placement Agreement and the Operative Documents do not and
will not (i) result in the creation or imposition of any material lien, claim,
charge, encumbrance or restriction upon any property or assets of the Company or
the Subsidiaries, or (ii) conflict with, constitute a material breach or
violation of, or constitute a material default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of (A) the
Articles of Incorporation or Charter, By-Laws or other governing documents of
the Company or the Subsidiaries, or (B) to the best of our knowledge, any
material contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license or any other agreement or instrument to which
the Company or the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or (C) any order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to us having jurisdiction over the Company or the Subsidiaries or any of
their respective properties which, in the case of each of (i) or (ii) above, is
material to the Company and the Subsidiaries on a consolidated basis.

7. Except for filings, registrations or qualifications that may be required by
applicable securities laws, no authorization, approval, consent or order of, or
filing, registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required under the
laws of the State of Texas in connection with the transactions contemplated by
the Placement Agreement and the Operative Documents in connection with the offer
and sale of the Capital Securities as contemplated by the Placement Agreement
and the Operative Documents.

8. To the best of our knowledge (i) no action, suit or proceeding at law or in
equity is pending or threatened to which the Company, the Trust or the
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Company, the Trust or the
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the transactions contemplated by the Placement Agreement and the Operative
Documents or the issuance and sale of the Capital Securities as contemplated
therein or the condition (financial or otherwise), earnings, affairs, business,
or results of operations of the Company, the Trust and the Subsidiaries on a
consolidated basis.

9. Assuming the truth and accuracy of the representations and warranties of the
Placement Agents in the Placement Agreement and the Purchaser in the
Subscription Agreement, it is not necessary in connection with the offering,
sale and delivery of the Capital Securities, the Debentures and the Guarantee
Agreement (or the Guarantee) to register the same under the Securities Act of
1933, as amended, under the circumstances contemplated in the Placement
Agreement and the Subscription Agreement.

10. Neither the Company nor the Trust is or after giving effect to the offering
and sale of the Capital Securities and the consummation of the transactions
described in the Placement Agreement will be, an "investment company" or an
entity "controlled" by an "investment company," in each case within the meaning
of the Investment Company Act of 1940, as amended, without regard to Section
3(c) of such Act.

The opinion expressed in the first two sentences of numbered paragraph 1 of this
opinion is based solely upon certain certificates and confirmations issued by
the applicable governmental officer or authority with respect to each of the
Company and the Significant Subsidiaries.

With respect to the foregoing opinions, since no member of this firm is actively
engaged in the practice of law in the States of Delaware or New York, we do not
express any opinions as to the laws of such states and have (i) relied, with
your approval, upon the opinion of Richards, Layton & Finger, P.A. with respect
to matters of Delaware law and (ii) assumed, with your approval and without
rendering any opinion to such effect, that the laws of the State of New York, in
all respects material to this opinion, are substantively identical to the laws
of the State of Texas, without regard to conflict of law provisions.

The opinions expressed herein are rendered to you solely pursuant to
Section 3.1(a) of the Placement Agreement. As such, they may be relied upon by
you only and may not be used or relied upon by any other person for any purpose
whatsoever without our prior written consent.

Very truly yours,

EXHIBIT B-2

FORM OF DELAWARE COUNSEL OPINION

To Each of the Persons

Listed on Schedule A Hereto

Re: Sterling Bancshares Capital Trust IV

Ladies and Gentlemen:

We have acted as special Delaware counsel for Sterling Bancshares Capital
Trust IV, a Delaware statutory trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.

For purposes of giving the opinions hereinafter set forth, our examination of
documents has been limited to the examination of originals or copies of the
following:

(a) The Certificate of Trust of the Trust (the "Certificate of Trust"), as filed
in the office of the Secretary of State of the State of Delaware (the "Secretary
of State") on March 9, 2007;

(b) The Declaration of Trust, dated as of March 9, 2007, among Sterling
Bancshares, Inc., a Texas corporation (the "Company"), Wilmington Trust Company,
a Delaware banking corporation ("WTC"), as trustee and the administrators named
therein (the "Administrators");

(c) The Amended and Restated Declaration of Trust of the Trust, dated as of
March 26, 2007 (including the form of Capital Securities Certificate attached
thereto as Exhibit A-1 and the terms of the Capital Securities attached as Annex
I) (the "Declaration of Trust"), among the Company, as sponsor, WTC, as Delaware
trustee (the "Delaware Trustee") and institutional trustee (the "Institutional
Trustee"), the Administrators and the holders, from time to time, of undivided
beneficial interests in the assets of the Trust;

(d) The Placement Agreement, dated March 14, 2007 (the "Placement Agreement"),
among the Company, the Trust, and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, Inc., as placement agents;

(e) The Subscription Agreement, dated March 26, 2007 (the "Subscription
Agreement"), among the Trust, the Company and Keefe, Bruyette & Woods, Inc. (the
documents identified in items (c) through (e) being collectively referred to as
the "Operative Documents");

(f) The Capital Securities being issued on the date hereof (the "Capital
Securities");

(g) The Common Securities being issued on the date hereof (the "Common
Securities") (the documents identified in items (f) and (g) being collectively
referred to as the "Trust Securities"); and

(h) A Certificate of Good Standing for the Trust, dated March 23, 2007, obtained
from the Secretary of State.

Capitalized terms used herein and not otherwise defined are used as defined in
the Declaration of Trust, except that reference herein to any document shall
mean such document as in effect on the date hereof. This opinion is being
delivered pursuant to Section 3.1 of the Placement Agreement.

For purposes of this opinion, we have not reviewed any documents other than the
documents listed in paragraphs (a) through (h) above. In particular, we have not
reviewed any document (other than the documents listed in paragraphs (a) through
(h) above) that is referred to in or incorporated by reference into the
documents reviewed by us. We have assumed that there exists no provision in any
document that we have not reviewed that is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation of our own but
rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.

With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.

For purposes of this opinion, we have assumed (i) that the Declaration of Trust
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation, and
termination of the Trust, and that the Declaration of Trust and the Certificate
of Trust are in full force and effect and have not been amended further, (ii)
that there are no proceedings pending or contemplated, for the merger,
consolidation, liquidation, dissolution or termination of the Trust, (iii)
except to the extent provided in paragraph 1 below, the due creation, due
formation or due organization, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, formation or organization, (iv) that each
party to the documents examined by us is qualified to do business in each
jurisdiction where such qualification is required generally or necessary in
order for such party to enforce its rights under the documents examined by us,
(v) the legal capacity of each natural person who is a party to the documents
examined by us, (vi) except to the extent set forth in paragraph 2 below, that
each of the parties to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations under, such documents,
(vii) except to the extent provided in paragraph 3 below, that each of the
parties to the documents examined by us has duly authorized, executed and
delivered such documents, (viii) the receipt by each Person to whom a Capital
Security is to be issued by the Trust (the "Capital Security Holders") of a
Capital Security Certificate for the Capital Security and the payment for the
Capital Securities acquired by it, in accordance with the Declaration of Trust
and the Subscription Agreement, (ix) that the Capital Securities are issued and
sold to the Holders of the Capital Securities in accordance with the Declaration
of Trust and the Subscription Agreement, (x) the receipt by the Person (the
"Common Securityholder") to whom the common securities of the Trust representing
common undivided beneficial interests in the assets of the Trust (the "Common
Securities" and, together with the Capital Securities, the "Trust Securities")
are to be issued by the Trust of a Common Security Certificate for the Common
Securities and the payment for the Common Securities acquired by it, in
accordance with the Declaration of Trust, (xi) that the Common Securities are
issued and sold to the Common Securityholder in accordance with the Declaration
of Trust, (xii) that each of the parties to the documents reviewed by us has
agreed to and received the stated consideration for the incurrence of its
obligations under such documents, (xiii) that each of the documents reviewed by
us (other than the Declaration of Trust) is a legal, valid, binding and
enforceable obligation of the parties thereto in accordance with the terms
thereof and (xiv) that the Trust derives no income from or connected with
sources within the State of Delaware and has no assets, activities (other than
having a trustee and the filing of documents with the Secretary of State) or
employees in the State of Delaware. We have not participated in the preparation
of any offering materials with respect to the Trust Securities and assume no
responsibility for its contents.

This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder that are
currently in effect.

We express no opinion as to (i) the effect of suretyship defenses, or defenses
in the nature thereof, with respect to the obligations of any applicable
guarantor, joint obligor, surety, accommodation party, or other secondary
obligor or any provisions of the Declaration of Trust with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein as
to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents.

We express no opinion as to the enforceability of any particular provision of
the Declaration of Trust or the other Operative Documents relating to remedies
after default.

We express no opinion as to the enforceability of any particular provision of
any of the Operative Documents relating to (i) waivers of rights to object to
jurisdiction or venue, or consents to jurisdiction or venue, (ii) waivers of
rights to (or methods of) service of process, or rights to trial by jury, or
other rights or benefits bestowed by operation of law, (iii) waivers of any
applicable defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
variations of provisions which are not capable of waiver or variation under the
Uniform Commercial Code ("UCC") of the State, (v) the grant of powers of
attorney to any person or entity, or (vi) exculpation or exoneration clauses,
indemnity clauses, and clauses relating to releases or waivers of unmatured
claims or rights.

We have made no examination of, and no opinion is given herein as to the
Trustee's or the Trust's title to or other ownership rights in, or the existence
of any liens, charges or encumbrances on, or adverse claims against, any asset
or property held by the Institutional Trustee or the Trust. We express no
opinion as to the creation, validity, attachment, perfection or priority of any
mortgage, security interest or lien in any asset or property held by the
Institutional Trustee or the Trust.

We express no opinion as to the effect of events occurring, circumstances
arising, or changes of law becoming effective or occurring, after the date
hereof on the matters addressed in this opinion letter, and we assume no
responsibility to inform you of additional or changed facts, or changes in law,
of which we may become aware.

We express no opinion as to any requirement that any party to the Operative
Documents (or any other persons or entities purportedly entitled to the benefits
thereof) qualify or register to do business in any jurisdiction in order to be
able to enforce its rights thereunder or obtain the benefits thereof.

Based upon the foregoing, and upon our examination of such questions of law and
statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:

1. The Trust has been duly created and is validly existing in good standing as a
statutory trust under the Delaware Statutory Trust Act (12 Del. C. Section 3801,
et seq.) (the "Act"). All filings required under the laws of the State of
Delaware with respect to the creation and valid existence of the Trust as a
statutory trust have been made.

2. Under the Declaration of Trust and the Act, the Trust has the trust power and
authority to (A) execute and deliver the Operative Documents, (B) perform its
obligations under such Operative Documents and (C) issue the Trust Securities.

3. The execution and delivery by the Trust of the Operative Documents, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust.

4. The Declaration of Trust constitutes a legal, valid and binding obligation of
the Company, the Trustees and the Administrators, and is enforceable against the
Company, the Trustees and the Administrators, in accordance with its terms.

5. Each of the Operative Documents constitutes a legal, valid and binding
obligation of the Trust, enforceable against the Trust, in accordance with its
terms.

6. The Capital Securities have been duly authorized for issuance by the
Declaration of Trust, and, when duly executed and delivered to and paid for by
the purchasers thereof in accordance with the Declaration of Trust, the
Subscription Agreement and the Placement Agreement, the Capital Securities will
be validly issued, fully paid and, subject to the qualifications set forth in
paragraph 8 below, nonassessable undivided beneficial interests in the assets of
the Trust and will entitle the Capital Securities Holders to the benefits of the
Declaration of Trust. The issuance of the Capital Securities is not subject to
preemptive or other similar rights under the Act or the Declaration of Trust.

7. The Common Securities have been duly authorized for issuance by the
Declaration of Trust and, when duly executed and delivered to the Company as
Common Security Holder in accordance with the Declaration of Trust, will be
validly issued, fully paid and, subject to paragraph 8 below and Section 9.1(b)
of the Declaration of Trust (which provides that the Holder of the Common
Securities are liable for debts and obligations of Trust), nonassessable
undivided beneficial interests in the assets of the Trust and will entitle the
Common Security Holder to the benefits of the Declaration of Trust. The issuance
of the Common Securities is not subject to preemptive or other similar rights
under the Act or the Declaration of Trust.

8. Under the Declaration of Trust and the Act, the Holders of the Capital
Securities, as beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders of the Capital Securities and the Holder
of the Common Securities may be obligated, pursuant to the Declaration of Trust,
(A) to provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Capital Security
Certificates and the issuance of replacement Capital Security Certificates, and
(B) to provide security or indemnity in connection with requests of or
directions to the Institutional Trustee to exercise its rights and powers under
the Declaration of Trust.

9. Neither the execution, delivery and performance by the Trust of the Operative
Documents, nor the consummation by the Trust of any of the transactions
contemplated thereby, requires the consent or approval of, the authorization of,
the withholding of objection on the part of, the giving of notice to, the
filing, registration or qualification with, or the taking of any other action in
respect of, any governmental authority or agency of the State of Delaware, other
than the filing of the Certificate of Trust with the Secretary of State (which
Certificate of Trust has been duly filed).

10. Neither the execution, delivery and performance by the Trust of the Trust
Documents, nor the consummation by the Trust of the transactions contemplated
thereby, (i) is in violation of the Declaration of Trust or of any law, rule or
regulation of the State of Delaware applicable to the Trust or (ii) to the best
of our knowledge, without independent investigation, violates, contravenes or
constitutes a default under, or results in a breach of or in the creation of any
lien (other than as permitted by the Operative Documents) upon any property of
the Trust under any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, license or other
agreement or instrument to which the Trust is a party or by which it is bound.

11. Assuming that the Trust will not be taxable as a corporation for federal
income tax purposes, but rather will be classified for such purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, the Trust will not be subject to any tax, fee or
governmental charge under the laws of the State of Delaware.

The opinions expressed in paragraph 4, 5, 6, 7 and 8 above are subject, as to
enforcement, to the effect upon the Declaration of Trust of (i) bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation, fraudulent
conveyance and transfer, and other similar laws relating to or affecting the
rights and remedies of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating to
indemnification or contribution.

Circular 230 Notice.

Any advice contained in this communication with respect to any federal tax
matter was not intended or written to be used, and it cannot be used by any
taxpayer, for the purpose of avoiding penalties that the Internal Revenue
Service may impose on the taxpayer. If any such advice is made to any person
other than to our client for whom the advice was prepared, the advice expressed
above is being delivered to support the promotion or marketing (by a person
other than Richards, Layton & Finger) of the transaction or matter discussed or
referenced, and such taxpayer should seek advice based on the taxpayer's
particular circumstances from an independent tax advisor.

In basing the opinions set forth herein on "our knowledge," the words "our
knowledge" signify that no information has come to the attention of the
attorneys in the firm who are directly involved in the representation of the
Trust in this transaction that would give us actual knowledge that any such
opinions are not accurate. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters.

We consent to your relying as to matters of Delaware law upon this opinion in
connection with the Placement Agreement. We also consent to Lewis, Rice &
Fingersh, L.C.'s and Locke Liddell & Sapp LLP's relying as to matters of
Delaware law upon this opinion in connection with opinions to be rendered by
them on the date hereof pursuant to the Placement Agreement. Except as stated
above, without our prior written consent, this opinion may not be furnished or
quoted to, or relied upon by, any other Person for any purpose.

Very truly yours,

SCHEDULE A

Wilmington Trust Company

FTN Financial Capital Markets

Keefe, Bruyette & Woods, Inc.

Sterling Bancshares, Inc.

 

 

EXHIBIT B-3

TAX COUNSEL OPINION ITEMS

1. The Debentures will be classified as indebtedness of the Company for U.S.
federal income tax purposes.

2. The Trust will be characterized as a grantor trust and not as an association
taxable as a corporation for U.S. federal income tax purposes.

Lewis, Rice & Fingersh, L.C.

500 N. Broadway, Suite 2000

St. Louis, Missouri 63102

 

Re: Representations Concerning the Issuance of Junior Subordinated Deferrable
Interest Debentures (the "Debentures") to Sterling Bancshares Capital Trust IV
(the "Trust") and Sale of Trust Securities (the "Trust Securities") of the Trust

Ladies and Gentlemen:

In accordance with your request, Sterling Bancshares, Inc. (the "Company")
hereby makes the following representations in connection with the preparation of
your opinion letter as to the United States federal income tax consequences of
the issuance by the Company of the Debentures to the Trust and the sale of the
Trust Securities.

Company hereby represents that:

 

The sole assets of the Trust will be the Debentures, any interest paid on the
Debentures to the extent not distributed, proceeds of the Debentures, or any of
the foregoing.

The Company intends to use the net proceeds from the sale of the Debentures for
general corporate purposes.

The Trust was not formed to conduct any trade or business and is not authorized
to conduct any trade or business. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of Trust Securities to acquire the Debentures, and (iii) engaging only in
activities necessary or incidental thereto.

The Company has not entered into an agency agreement with the Trust or
authorized the trustee to act as its agent in dealing with third parties. To
Company's knowledge, after due inquiry, the Trust has not acted as the agent of
the Company or of anyone else in dealing with third parties.

The Trust was formed to facilitate direct investment in the assets of the Trust,
and the existence of multiple classes of ownership is incidental to that
purpose. There is no intent to provide holders of such interests in the Trust
with diverse interests in the assets of the Trust.

The Company intends to create a debtor-creditor relationship between the
Company, as debtor, and the Trust, as a creditor, upon the issuance and sale of
the Debentures to the Trust by the Company. The Company will (i) record and at
all times continue to reflect the Debentures as indebtedness on its separate
books and records for financial accounting purposes, and (ii) treat the
Debentures as indebtedness for all United States tax purposes.

During each year, the Trust's income will consist solely of payments made by the
Company with respect to the Debentures. Such payments will not be derived from
the active conduct of a financial business by the Trust. Both the Company's
obligation to make such payments and the measurement of the amounts payable by
the Company are defined by the terms of the Debentures. Neither the Company's
obligation to make such payments nor the measurement of the amounts payable by
the Company is dependent on income or profits of Company or any affiliate of the
Company.

The Company expects that it will be able to make, and will make, timely payment
of amounts identified by the Debentures as principal and interest in accordance
with the terms of the Debentures with available capital or accumulated earnings.

The Company presently has no intention to defer interest payments on the
Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company or payments of dividends from direct or indirect subsidiaries of the
Company to their parent corporations, which also shall be direct or indirect
subsidiaries of the Company) or make any payment of principal of or interest or
premium, if any, on or repay, repurchase, or redeem any debt securities of the
Company or any affiliate of the Company that rank pari passu in all respects
with or junior in interest to the Debentures, in each case subject to limited
exceptions stated in Section 2.11 of the Indenture to be entered into in
connection with the issuance of the Debentures.

The Company has no present intention (a) to take the position that a deferral of
interest payments on the Debentures is not a remote contingency, or (b) to make
an explicit disclosure on the Company's tax return, under Reg. Section
1.1275-2(h)(5) that its determination as holder with respect to remote
contingency status is different from its determination as issuer.

Immediately after the issuance of the Debentures, the debt-to-equity ratio of
the Company (as determined for financial accounting purposes, but excluding
deposit liabilities from the Company's debt) will be within standard depository
institution industry norms and, in any event, will be no higher than four to one
(4 : 1).

To the best of our knowledge, the Company is currently in compliance with all
federal, state, and local capital requirements, except to the extent that
failure to comply with any such requirements would not have a material adverse
effect on the Company and its affiliates.

The Company will not issue any class of common stock or preferred stock senior
to the Debentures during their term.

The Internal Revenue Service has not challenged the interest deduction on any
class of the Company's subordinated debt in the last ten (10) years on the basis
that such debt constitutes equity for federal income tax purposes.

The above representations are accurate as of the date below and will continue to
be accurate through the issuance of the Trust Securities, unless you are
otherwise notified by us in writing. The undersigned understands that you will
rely on the foregoing in connection with rendering certain legal opinions, and
possesses the authority to make the representations set forth in this letter on
behalf of the Company.

Very truly yours,

Sterling Bancshares, Inc.

 

Date: March 16, 2007 By: ___________________________________

Title: ___________________________________

EXHIBIT C

SIGNIFICANT SUBSIDIARIES

Sterling Bancorporation, LLC

Sterling Bank

Sterling Bancshares Capital Trust II

Sterling Bancshares Capital Trust III

BOTH Capital Trust I

EXHIBIT D

FORM OF QUARTERLY REPORT

Keefe, Bruyette & Woods, Inc.

787 7th Avenue, 4th Floor

New York, New York 10019

Attention: Mitchell Kleinman, General Counsel

BANK HOLDING COMPANY

As of [March 31, June 30, September 30 or December 31], 20__

Tier 1 to Risk Weighted Assets _________%

Ratio of Double Leverage _________%

Non-Performing Assets to Loans and OREO _________%

Ratio of Reserves to Non-Performing Loans _________%

Ratio of Net Charge-Offs to Loans _________%

Return on Average Assets (annualized)** _________%

Net Interest Margin (annualized)** _________%

Efficiency Ratio _________%

Ratio of Loans to Assets _________%

Ratio of Loans to Deposits _________%

Total Assets $__________

Year to Date Income $__________

___________________

*A table describing the quarterly report calculation procedures is provided on
page D-2

** To annualize Return on Average Assets and Net Interest Margin do the
following:

1st Quarter-multiply income statement item by 4, then divide by balance sheet
item(s)

2nd Quarter-multiply income statement item by 2,then divide by balance sheet
item(s)

3rd Quarter-divide income statement item by 3, then multiply by 4, then divide
by balance sheet item(s)

4th Quarter-should already be an annual number

NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS

Financial Definitions

 

Report Item

Corresponding FRY-9C or LP Line Items with Line Item corresponding Schedules

Description of Calculation

"Tier 1 Capital" to Risk Weighted Assets

BHCK7206

Schedule HC-R

Tier 1 Risk Ratio: Core Capital (Tier 1)/ Risk-Adjusted Assets

Ratio of Double Leverage

(BHCP0365)/(BHCP3210)

Schedule PC in the LP

Total equity investments in subsidiaries divided by the total equity capital.
This field is calculated at the parent company level. "Subsidiaries" include
bank, bank holding company, and nonbank subsidiaries.

Non-Performing Assets to Loans and OREO

(BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/(BHCK2122+BHCK2744) Schedules
HC-C, HC-M & HC-N

Total Nonperforming Assets (NPLs+Foreclosed Real Estate+Other Nonaccrual &
Repossessed Assets)/ Total Loans + Foreclosed Real Estate

Ratio of Reserves to Non-Performing Loans

(BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)

Schedules HC & HC-N

Total Loan Loss and Allocated Transfer Risk Reserves/ Total Nonperforming Loans
(Nonaccrual + Restructured)

Ratio of Net Charge-Offs to Loans

(BHCK4635-BHCK4605)/(BHCK3516)

Schedules HI-B & HC-K

Net charge offs for the period as a percentage of average loans.

Return on Assets

(BHCK4340/BHCK3368)

Schedules HI & HC-K

Net Income as a percentage of Assets.

Net Interest Margin

(BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHCKB985)

Schedules HI Memorandum and HC-K

(Net Interest Income Fully Taxable Equivalent, if available / Average Earning
Assets)

Efficiency Ratio

(BHCK4093)/(BHCK4519+BHCK4079)

Schedule HI

(Noninterest Expense)/ (Net Interest Income Fully Taxable Equivalent, if
available, plus Noninterest Income)

Ratio of Loans to Assets

(BHCKB528+BHCK5369)/BHCK2170)

Schedule HC

Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/ Total Assets

Ratio of Loans to Deposits

(BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)

Schedule HC

Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/ Total Deposits
(Includes Domestic and Foreign Deposits)

Total Assets

(BHCK2170)

Schedule HC

The sum of total assets. Includes cash and balances due from depository
institutions; securities; federal funds sold and securities purchased under
agreements to resell; loans and lease financing receivables; trading assets;
premises and fixed assets; other real estate owned; investments in
unconsolidated subsidiaries and associated companies; customer's liability on
acceptances outstanding; intangible assets; and other assets.

Net Income

(BHCK4300)

Schedule HI

The sum of income (loss) before extraordinary items and other adjustments and
extraordinary items; and other adjustments, net of income taxes.