<PAGE>

                                                                    EXHIBIT 10.5


February 2, 2000



Sterling Bancshares, Inc.
Attention: George Martinez, Chairman & CEO
15000 Northwest Highway
Houston, Texas 77040-3299

Dear Mr. Martinez:

     This Letter Agreement ("Agreement") sets forth the terms and conditions
governing that certain revolving line of credit by Norwest Bank Minnesota,
National Association ("Norwest") to STERLING BANCSHARES, INC. ("Borrower") in
the original principal amount of TWENTY MILLION AND 00/100 DOLLARS
($20,000,000.00) for the purpose set forth below (the "Line"). The following
terms and conditions shall apply to the Line:

1.  The Line.  From time to time until February 2, 2001 (the "Termination Date")
the Borrower may request advances under the Line in an aggregate principal
amount not exceeding $20,000,000.00, at any one time outstanding.  Each request
for an advance under the Line must be received by Norwest no later than 3:30
p.m. CST on the day of funding. Within the limit of the Line, the Borrower may
borrow, prepay and reborrow under the Line. Borrowings under the Line shall be
evidenced by a promissory note (the "Note"), in form and substance satisfactory
to Norwest, in the face amount of $20,000,000.00. The Note shall be executed and
delivered by the Borrower to Norwest concurrently with this Agreement. The Line
shall be unsecured.

2.  Purpose.  The proceeds of the advances under the Line shall be used to fund
future commercial bank acquisitions and expenses related thereto.

3.  Terms of Renewal:  Notwithstanding the maturity of the Line, the Borrower
may request that the Line be renewed at the Termination Date, and thereafter at
regular annual intervals for a period not exceeding seven years from the date of
execution of this Agreement; provided, however, (i) if the financial condition
of either the Borrower, the Guarantor (as defined hereafter), or the Guarantor's
wholly-owned subsidiary, Sterling Bank, a commercial banking institution located
in Houston, Texas (the "Bank") deteriorates to a point that, in Norwest's
reasonable judgment, impairs the Borrower's ability to repay the amount then
outstanding under the Line, and \or (ii) the terms and conditions of such
renewal are not acceptable to Norwest and its counsel, Norwest reserves its
right not to renew all or any portion of the Line at any time, and Norwest
expressly reserves the right not to renew in its sole discretion.

4.  Interest Rate.  The principal balance outstanding under the Note shall bear
interest at an annual rate of interest equal to ONE HUNDRED NINETY-FIVE (195)
basis points (1.95%) in excess of the Federal Funds Rate in effect from time to
time. Each change in the interest shall become effective on the day the
corresponding change in the Federal Funds Rate becomes effective. As used
herein, the "Federal Funds Rate" shall mean the daily market rate quoted to the
Norwest at approximately 12:00 Noon each business day by dealers in the Federal
Funds market for the offering of dollars to Norwest for deposit, as such rate
may increase or decrease from time to time. Interest on the Note shall be
calculated on the basis of actual number of days elapsed in a 360-day year.
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 2

5.  Interest Payments.  Interest on the unpaid principal balance of the Note
shall be payable quarterly, commencing May 2, 2000, and continuing on the second
(2nd) day of each August, November, February and May thereafter, for so long as
the Line is outstanding.

6.  Principal Payments.  On the Termination Date, all outstanding principal of
the Note shall be due and payable in full, unless the Line is renewed by Norwest
in accordance with the section 3 of this Agreement.

7.  Prepayment.  The Borrower may at any time prepay the Note in whole or from
time to time in part without premium or penalty.  If at any time the principal
outstanding under the Note exceeds $20,000,000.00, the Borrower must immediately
prepay the Note in an amount sufficient to eliminate the excess.

8.  Fees. The Borrower shall pay to Norwest in arrears on a calendar quarter
basis, commencing with the closing of the Line, a fee (the "Unused Line Fee")
calculated at an annual rate equal to one-eighth of one percent (0.125%) of the
average daily unused portion of the Line. The Unused Line Fee shall be
calculated on the basis of actual number of days elapsed in a year of 360 days.
As used herein, the term "unused portion" shall mean the difference of
$20,000,000.00 minus the average daily outstanding principal balance of the Note
as of the date of determination. The Unused Line Fee shall be payable by the
Borrower within 10 calendar days of the Borrower's receipt of the related fee
statement from Norwest.

9.  Guaranty.  The Borrower shall cause to be executed and delivered to Norwest
the unconditional corporate guaranty ("Corporate Guaranty") of Sterling
Bancorporation, Inc., a Delaware corporation operating as a wholly-owned
subsidiary of the Borrower (herein, "Sterling Delaware" and "Guarantor") whereby
the Guarantor guarantees the principal amount of indebtedness, plus interest and
enforcement expenses, under the Line. The Corporate Guaranty shall be unsecured.

10.  Conditions Precedent.  The Borrower shall deliver the following to Norwest,
in form and content acceptable to Norwest, prior to the initial advance under
the Line:

     A.   A copy of the Borrower's and Guarantor's Articles of Incorporation,
          and all amendments thereto, certified as of the most recent date
          practicable by the Secretaries of State of the states of Texas and
          Delaware, respectively;

     B.   A copy of the Borrower's and Guarantor's By-laws and all amendments
          thereto, certified as true and complete by an appropriate officer of
          each such entity;

     C.   Certificates of Good Standing relative to the Borrower and Guarantor,
          and issued as of the most recent date practicable by the Secretaries
          of State of the states of Texas and Delaware, respectively;

     D.   A photocopy of the resolutions of the Borrower's Board of Directors,
          authorizing the execution, delivery and performance of this Agreement,
          the Note and the other documents contemplated herein, certified by the
          corporate secretary of the Borrower;
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 3

     E.   A photocopy of the resolutions of the Board of Directors of Sterling
          Delaware, authorizing the execution, delivery and performance of this
          Agreement and its Guaranty and any other documents contemplated
          herein, certified by the corporate secretary of Sterling Delaware;

     F.   A Norwest Certificate of Authority, duly executed by the corporate
          secretary of the Borrower;

     G.   A Norwest Certificate of Authority, duly executed by the corporate
          secretary of the Guarantor;

     H.   The Note, duly executed by the Borrower; and

     I.   The Corporate Guaranty, duly executed by the Guarantor.

11.  Representations and Warranties.  The Borrower hereby represents and
warrants to Norwest as follows:

     A.   The Borrower and the Bank are corporations duly organized, existing
          and in good standing under the laws of the State of Texas;

     B.   Sterling Delaware is a corporation duly organized, existing and in
          good standing under the laws of the State of Delaware;

     C.   The execution and delivery by the Borrower of this Agreement, the Note
          and the other documents referenced herein will not conflict with the
          terms of the Borrower's Articles of Incorporation or By-laws, or with
          any order, rule or regulation of any court or of any federal or state
          regulatory body or administrative agency or other governmental agency
          having jurisdiction over the Borrower or the Bank;

     D.   The execution and delivery by Sterling Delaware of its Corporate
          Guaranty and the other documents referenced herein will not conflict
          with the terms of Sterling Delaware's Articles of Incorporation or By-
          laws, or with any order, rule or regulation of any court or of any
          federal or state regulatory body or administrative agency or other
          governmental agency having jurisdiction over Sterling Delaware;

     E.   The execution and delivery by the Borrower of this Agreement, the Note
          and the other documents referenced herein have been duly authorized by
          the Borrower's Board of Directors, and will not result in any breach
          of, or constitute a default under, any outstanding indenture,
          mortgage, deed of trust, bank loan or credit agreement or other
          instrument to which the Borrower is a party or by which it or its
          property is bound;

     F.   The execution and delivery by Sterling Delaware of its Corporate
          Guaranty and the other documents referenced herein have been duly
          authorized by Sterling Delaware's Board of Directors, and will not
          result in any breach of, or constitute a default under, any
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 4

          outstanding indenture, mortgage, deed of trust, bank loan or credit
          agreement or other instrument to which Sterling Delaware is a party or
          by which it or its property is bound;

     G.   There is no litigation or governmental proceeding pending or
          threatened in any way against the Borrower, the Bank or Sterling
          Delaware (collectively, the "Bank Group"), to the best of their
          knowledge, which could have a materially adverse effect on such
          entity;

     H.   All authorizations of governmental agencies, bodies or authorities
          which are necessary to permit the transactions contemplated by this
          Agreement have been obtained and are in full force and effect, and no
          further approval, consent, order or authorization of or designation,
          registration, declaration or filing with any governmental authority is
          required in connection with the consummation of the transactions
          contemplated by this Agreement;

     I.   As of the date of this Agreement, there are 1,000 shares of common
          voting stock in Sterling Delaware issued and outstanding, of which the
          Borrower owns 1,000 shares (100%);

     J.   As of the date of this Agreement, there are 12,753,500 shares of
          common voting stock in the Sterling Bank issued and outstanding, of
          which the Sterling Delaware owns 12,753,500 shares (100%);

     K.   All financial statements delivered to Norwest on behalf of the Bank
          Group, including any schedules and notes pertaining thereto, have been
          prepared in accordance with GAAP consistently applied, and fully and
          fairly present the financial condition of the Borrower at the dates
          thereof and the results of operations for the periods covered thereby,
          and there have been no material adverse changes in the consolidated
          financial condition or business of the Borrower, Sterling Delaware or
          the Bank from December 31, 1998 to the date hereof; and

     L.   The Borrower's use of the proceeds of the advances under the Line
          will not result in a violation of Regulation U issued by the Board of
          Governors of the Federal Reserve System.

12.  Covenants.  Without Norwest's prior written consent, for so long as any
indebtedness remains outstanding under the Note, the Borrower:

     A.   Shall use the proceeds of advances under the Line exclusively for the
          purposes set forth in section 2 of this Agreement.

     B.   Will not, and cause Sterling Delaware not to:

               Create, incur, assume, or suffer to exist, or permit any
               subsidiary to create, incur, assume, or suffer to exist, any
               mortgage, deed of trust, pledge, lien, security interest,
               assignment, deposit arrangement, or other preferential
               arrangement, charge, or encumbrance (including without
               limitation, any conditional sale, or
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 5

               other title retention agreement) of any nature, upon or with
               respect to any shares of common voting stock in Sterling Delaware
               and Sterling Bank, now owned or hereafter acquired.

     C.   Shall, and shall cause each member of the Bank Group to:

          (i)   Keep accurate books of record and account, in which true and
                complete entries will be made in accordance with generally
                accepted accounting principles, consistently applied, and upon
                request by Norwest, will give the Norwest account officer or
                representative access during normal business hours to, and
                permit such representative to examine, copy or make extracts
                from, any and all books, records and documents of such entity,
                to inspect any of their respective properties and to discuss
                their respective affairs, finances and accounts with any of
                their respective principal officers, all at such times during
                normal business hours and as often as Norwest may reasonably
                request;

          (ii)  Refrain from purchasing any stock or other securities of, or
                make any loans or advances of credit to, or make any investments
                or acquire any controlling interest whatsoever in, any other
                corporation, bank or non-bank institution;

          (iii) Refrain from declaring or paying any dividends on any class of
                stock or make any payment on account of the purchase, redemption
                or other retirement of any share of stock or make any
                distribution in respect thereof, either directly or indirectly,
                specifically excluding payment of dividends to allow payment of
                the Borrower's indebtedness to Norwest, payment of shareholder
                dividends or repurchases pursuant to a share repurchase program
                that has been approved in writing by Norwest provided that no
                Event of Default has occurred under this Agreement;

          (iv)  Refrain from issuing any debt or equity instruments of any type
                or class other than common stock, preferred stock convertible
                into common stock and debt expressly subordinated (on written
                terms acceptable to Norwest) to indebtedness owed to Norwest;

          (v)   Refrain from incurring or creating any indebtedness or liability
                for borrowed money, except (a) indebtedness owed to Norwest, (b)
                indebtedness disclosed in writing to Norwest prior to the date
                of this Agreement, (c) indebtedness incurred in the ordinary
                course of business where such occurrence, assumption, creation
                of indebtedness or liability is specifically authorized by any
                federal or state regulatory agency having jurisdiction or
                control over the Borrower, Guarantor or the Bank, and (d)
                indebtedness owed by the Borrower or the Guarantor to any of its
                shareholder(s) if such indebtedness is subordinated to the Note
                on written terms acceptable to Norwest;

          (vi)  Refrain from assuming, guaranteeing, endorsing or otherwise
                becoming directly or indirectly liable in connection with the
                obligations of any other person or
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 6

                 entity, except for the endorsement of instruments in the
                 ordinary course of business;

          (vii)  Maintain blanket bond coverage, property and casualty coverage,
                 and errors and omissions coverage from insurance agencies as
                 customary for such businesses and provide prompt notice to
                 Norwest of any action taken by insurance providers that will
                 seriously alter, amend or terminate the above-referenced
                 insurance coverage;

          (viii) Provide Norwest with prompt written notice of any executive
                 management changes;

          (ix)   Provide Norwest with prompt written notice of any negotiations
                 to sell any its capital stock, together with copies of any
                 proposed buy/sell agreements; provided, however, that this
                 subparagraph shall not be deemed approval by Norwest of any
                 such negotiation, and, provided further that this subparagraph
                 shall not apply to information which under applicable law or
                 regulation is prohibited from disclosure to Norwest; and

          (x)    Enter into any transaction of merger or consolidation, or
                 transfer, sell, assign, lease or otherwise dispose of (other
                 than in the ordinary course of business) all or a substantial
                 part of its properties or assets, or any of its notes or
                 accounts receivable, or any stock or any assets or properties
                 necessary or desirable for the proper conduct of its business,
                 or change the nature of its business, or wind up, liquidate or
                 dissolve, or agree to do any of the foregoing

     D.  Shall cause the Bank:

          (i)   To maintain a Return on Equity ("ROE") of not less than fifteen
                percent (15.0%) as of the end of each fiscal quarter calculated
                on a four quarter moving average including the current quarter
                reported plus the three immediately preceding quarters. For
                purposes herein, "Return on Equity" shall be determined by
                dividing net income after taxes by total tangible equity on an
                annualized basis;

          (ii)  To maintain the ratio of its Tier 1 Core Capital to total
                average assets (minus intangible assets and all goodwill) at a
                level equal to the greater of: (i) seven and one-quarter percent
                (7.25%) as of the end of each fiscal quarter, or (ii) the
                minimum ratio required by any regulatory agency having authority
                over the Bank. For purposes herein, "Tier 1 Core Capital" shall
                mean the core capital elements set forth by the Federal Reserve
                Board in 12 CFR Parts 208 and 225, which provides for the
                inclusion of trust preferred stock (to the extent that such
                trust preferred stock together with other cumulative preferred
                stock does not exceed 25% of Tier 1 Core Capital);

          (iii) Not to allow non-performing assets (those classified 90 days
                past due or non-accrued, OREO, restructured debt and any other
                non-performing assets, as
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 7

                reported in the Bank's quarterly Call Reports) to exceed ten
                percent (10%) of Primary Equity Capital, as of the end of each
                fiscal quarter. For purposes herein, "Primary Equity Capital"
                shall mean the sum of perpetual preferred stock, common stock,
                surplus, undivided profits, capital reserves less the net
                unrealized gains (and losses) on available-for-sale securities,
                and the allowance for loan and lease losses, as disclosed in the
                Bank's Call Reports (as defined in section 13 (B), below);

          (iv)  Not to allow the difference of the aggregate book value of the
                Bank's securities portfolios, less the aggregate market value of
                those securities portfolios classified in the held-to-maturity
                category, when expressed as an unrealized securities loss, to
                exceed fifteen percent (15%) of the Bank's Equity Capital
                Accounts.  For purposes herein, "Equity Capital Accounts" shall
                mean the sum of perpetual preferred stock, common stock, surplus
                and undivided profits, capital reserves less the net unrealized
                holding gains and (losses) on available-for-sale securities, as
                disclosed by the Bank in its Call Reports;

          (v)   To maintain an allowance for loan and lease losses at a minimum
                of one hundred percent (100%) of the total amount of non-
                performing loans (those classified 90 days past due or non-
                accrued as) reported in the Bank's Call Reports;

          (vi)  To permit a certified public accountant acceptable to the Bank
                to conduct an audit of the Borrower's annual financial
                statements. The statements must be audited with an unqualified
                opinion and must be accompanied by a certificate of such
                accountant stating, whether, in conducting their audit, they
                have become aware of any event of default under this Agreement,
                or of any event which would, after the lapse of time or the
                giving of notice, or both, constitute an event of default under
                this Agreement, and specifying the nature and duration of the
                default; and

          (vii) To permit a certified public accountant acceptable to the Bank
                to conduct an annual loan review of the Bank.

13.  Reporting Requirements.  For so long as any indebtedness remains
outstanding under the Note, the Borrower shall furnish to Norwest, in form and
content acceptable to Norwest:

     A.   As soon as available, and in any event within 90 days after the end of
          each fiscal year of the Borrower, the annual audited financial
          statement of the Borrower and the annual unaudited financial statement
          of the Bank, all such statements prepared on a basis consistent with
          the accounting practices reflected in the most recent financial
          reports delivered by the Borrower and Bank to Norwest prior to the
          date of this Agreement;

     B.   As soon as available, and in any event within 45 days after the end of
          each fiscal quarter, the complete Consolidated Report of Condition and
          Reported Income (FFIEC 034) (the "Call Report") prepared by the Bank
          at the end of such fiscal quarter in compliance with the requirements
          of any federal or state regulatory agency which has authority to
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 8

          examine the Bank, all prepared in accordance with the requirements
          imposed by the applicable regulatory authorities and applied on a
          basis consistent with the accounting practices reflected in any
          previous Call Report and similar statements;

     C.   As soon as available, and in any event no later than August 31 and
          February 28  of each year, the complete Parent Company Only Financial
          Statements for One Bank Holding Companies (FRY-9SP) required to be
          filed by the Borrower semi-annually with the Federal Reserve Bank (the
          "Fed") in the applicable Federal Reserve District;

     D.   As soon as available, and in any event within 90 days after each
          fiscal year end of the Borrower, the Annual Report of Domestic Holding
          Companies (FRY-6) required by the Fed;

     E.   As soon as available, and in any event within 60 days after the end
          of each fiscal quarter of the Borrower, the complete Consolidated
          Report for Bank Holding Companies (FR Y-9C) required to be filed by
          the Borrower with the Fed;

     F.   As soon as available, and in any event within 60 days after the end
          of each fiscal quarter of the Borrower, the complete Parent Company
          Only Financial Statement for Bank Holding Companies (FR Y-9LP)
          required by the Fed;

     G.   As soon as available, and in any event within 45 days after each
          fiscal quarter end of the Borrower, a Borrower's Compliance
          Certificate (attached hereto as Exhibit A) that has been signed by an
          officer of the Borrower which (i) certifies that the officer has no
          knowledge of any event of default under this Agreement or the
          documents described herein, or of any event which would, after the
          lapse of time or the giving of notice, or both, constitute an Event of
          Default under this Agreement or the documents described herein; and
          (ii) demonstrates that the Bank remains in compliance with all
          financial covenants that must be complied with as of the date thereof;

     H.   As soon as available, and in any event within 90 days after the end
          of each fiscal year of the Guarantor, the annual unaudited financial
          statement of the Guarantor, such statements prepared on a basis
          consistent with the accounting practices reflected in the most recent
          financial reports delivered by the Guarantor to Norwest prior to the
          date of this Agreement;

     I.   As soon as available, and in any event within 60 days after the end
          of each fiscal quarter of the Guarantor, the complete Parent Company
          Only Financial Statement for Bank Holding Companies (FR Y-9LP)
          required by the Fed;

     J.   As soon as available, and in any event within 90 days after each
          fiscal year end of the Guarantor, the Annual Report of Domestic
          Holding Companies (FRY-6) required by the Fed;
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 9

     K.   Immediately upon knowledge thereof, notice in writing to Norwest upon
          the occurrence of any Event of Default (hereinafter defined);

     L.   As soon as available, but without duplication of any other
          requirements set forth in this section 13, such other information
          respecting the financial condition and results of operation of any
          member of the Bank Group (i) as required by law to be furnished to any
          regulatory authority having jurisdiction over any member of the Bank
          Group (including without limitation 10Q and 10K reports), and (ii) as
          Norwest may from time to time reasonably request; provided, however,
          that the provisions of this subsection 13(L) shall not apply to any
          information or reports which are prohibited from disclosure pursuant
          to applicable law or regulation; and

     M.   Such other information respecting the financial condition and results
          of operations of any member of the Bank Group as Norwest may from time
          to time reasonably request, except information which, under applicable
          law or regulation, is prohibited from disclosure.

14.  Default.  The occurrence of any one or more of the following shall
constitute an Event of Default under this Agreement:

     A.   Default in the payment of interest or principal on the Note when due,
          and continuance of such default for 10 calendar days;

     B.   The failure of the Borrower to pay any fee when due in accordance
          with the provisions of this Agreement, and continuance of such failure
          for 10 calendar days;

     C.   The Borrower shall breach any other agreement or covenant contained in
          this Agreement or in any other agreement between the Borrower and
          Norwest, and such breach is not cured within 30 calendar days of
          receipt of written notice from Norwest;

     D.   The Guarantor shall breach any other agreement or covenant contained
          in this Agreement or in any other agreement between the Borrower and
          Norwest, and such breach is not cured within 30 calendar days of
          receipt of written notice from Norwest;

     E.   Any event of default shall occur under the Guaranty and such default
          is not cured within any applicable cure period;

     F.   Any representation or warranty made by the Borrower in this Agreement
          or in any statement or certificate furnished to Norwest by or on
          behalf of the Borrower is untrue or misleading in any material
          respect;

     G.   The issuance or proposed issuance upon any member of the Bank Group of
          any informal or formal administrative action, temporary or permanent,
          issued by any federal or state regulatory agency having jurisdiction
          or control over any member of the Bank Group, against any member of
          the Bank Group, such action taking the form of, but not limited to:
          (i) any informal or formal directive citing conditions or activities
          deemed to be
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 10

          unsafe or unsound or breaches of fiduciary duty or law or regulation;
          (ii) a memorandum of understanding; (iii) a cease and desist order;
          (iv) the termination of insurance coverage of customer deposits by the
          Federal Deposit Insurance Corporation; (v) the suspension or removal
          of a bank officer or director, or the prohibition of participation by
          any others in the business affairs of any member of the Bank Group;
          (vi) capital maintenance agreement; or (vii) other regulatory action,
          agreement or understanding with respect to any member of the Bank
          Group;

     H.   The Guarantor attempts to revoke its guaranty, or proceedings in
          bankruptcy or for the reorganization of the Guarantor, or for the
          readjustment of the Guarantor's debts under the United States
          Bankruptcy Code or under any other law (whether state or federal) for
          the relief of debtors shall be commenced by the Guarantor, or shall be
          commenced against the Guarantor, or the Guarantor makes an assignment
          for the benefit of creditors, or with or without the Guarantor's
          consent, a custodian, trustee or receiver is appointed for the
          Guarantor or any of the Guarantor's property or the Guarantor is
          dissolved, liquidated or winds up its business;

     I.   Proceedings in bankruptcy or for the reorganization of any member of
          the Bank Group, or for the readjustment of any of its debts under the
          United States Bankruptcy Code or under any other law (whether state or
          federal) for the relief of debtors shall be commenced by any member of
          the Bank Group, or shall be commenced against any member of the Bank
          Group, or any member of the Bank Group makes an assignment for the
          benefit of creditors, or with or without consent, a custodian, trustee
          or receiver is appointed for any member of the Bank Group or any of
          such member's property or any member of the Bank Group is dissolved,
          liquidated or winds up its business; and,

     J.   A Material Adverse Change occurs in the financial condition of any
          member of the Bank Group or such member's ability to repay said
          party's obligations to Norwest.  As used herein, "Material Adverse
          Change" means a material adverse change in the (i) the business,
          property, condition (financial or otherwise), results of operations,
          or prospects of such entity; (ii) the ability of such entity to
          perform its obligations in favor of Norwest; or (iii) the
          enforceability of any of Norwest's rights or remedies under this
          Agreement and the documents referenced herein.

None of the foregoing provisions of this section shall be deemed to diminish or
abrogate the rights of Norwest described in section 3 of this Agreement.

Upon the occurrence of one or more of the foregoing Events of Default, Norwest
may, by notice in writing to the Borrower, declare all indebtedness under the
Note to be due and payable, whereupon all such indebtedness shall immediately
become due and payable.  Upon the occurrence of any Event of Default under
paragraph (G), (H) or (I) above, all indebtedness under the Note shall
immediately become due and payable, without notice or demand.  The remedies
described herein are not intended to be exclusive and shall be read cumulatively
with all other rights and remedies available to Norwest under this Agreement, by
other contract, at law or in equity.
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 11

15.  Documentation.  All documentation and financial reporting to be delivered
to Norwest in connection with this Agreement shall be in form and content
acceptable to Norwest.

16.  Collection Expenses.  In the event the Borrower fails to pay Norwest any
amounts due under this Agreement or the Note, the Borrower shall pay all costs
of collection, including reasonable attorneys' fees and legal expenses incurred
by Norwest.

17.  Entire Agreement.  This Agreement and the documents referred to herein
constitute the entire agreement between the parties, and may be amended only by
a writing signed on behalf of each party.

18.  Rights of Setoff.  The Borrower, by signing below, agrees that if all or
any part of the Line (or any extension or renewal thereof) is not paid when due,
Norwest may, without notice to the Borrower or without further action, offset
any and all unrestricted deposits (including unmatured time deposits) of the
Borrower maintained at Norwest against the unpaid principal balance and accrued
and unpaid interest due and owing on the Line (or any extension or renewal
thereof).

19.  Reliance.  This Agreement is addressed to the Borrower only and is not to
be relied upon in any manner by other persons or entities.

20.  Applicable Law.  This Agreement and the documents executed in connection
herewith shall be governed by the substantive laws of the State of Minnesota.

This Agreement is subject to no Material Adverse Change having occurred in the
financial condition of any member of the Bank Group and to no restrictive
changes in governmental, regulatory or monetary policies having occurred.

If the terms and conditions set forth in this Agreement are acceptable to you,
please sign in the space indicated below and return this Agreement, plus
executed originals of the accompanying documents, to the undersigned on or
before February 2, 2000.

THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

                                                    Very truly yours,

                                                    /s/ Michael W. Moses
                                                    Michael W. Moses
                                                    Executive Vice President



           THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
<PAGE>

Sterling Bancshares, Inc.
February 2, 2000
Page 12


ACCEPTANCE:
-----------

The undersigned hereby accepts and agrees to be bound by the terms and
conditions of this Agreement.

STERLING BANCSHARES, INC.

By: /s/ Jo Ann Mikula
   -------------------------------
Its: SVP - Finance
    ------------------------------

Dated:  February 2, 2000



ACKNOWLEDGMENT AND CONSENT:
--------------------------

The undersigned Guarantor hereby consents to the foregoing Agreement, and
acknowledges that its Guaranty shall remain in full force and effect for so long
as the Line is outstanding. Pursuant to said Guaranty, the undersigned
absolutely and unconditionally guarantees, among other things, the payment of
all indebtedness evidenced by the Note, and all extensions, modifications,
renewals and replacements thereof.


STERLING BANCORPORATION, INC.

By: /s/ Jo Ann Mikula
   -------------------------------
Its: VP and Treasurer
    ------------------------------

Dated:  February 2, 2000