Long-Term (LTI) Stock Performance Program 2007

Exhibit 10.1

Long-Term (LTI)

Stock Performance Program

2007

Long-Term Incentive (LTI) Stock Performance Program.

Sterling Bank, as an integral part of its compensation strategies, has developed a stock performance program designed to reward bank officers for individual contributions to company-wide results and to serve as a retention vehicle for executive officers and key employees.

Incentives, when used to influence behavior and performance, can improve the likelihood that the organization’s goals will be achieved.

Equity-based awards may be granted each year and the vesting of such awards is specifically tied to performance metrics approved by the Board of Directors that reflect the linkage between a portion of the officers’ total compensation and the creation of shareholder value.

It is the desire of the program that participating employees accumulate a significant level of equity in the company over the course of their entire career with Sterling Bank with a balance of measurable benefits to our shareholders.

All awards for this program are made under the Shareholder approved 2003 Stock Incentive and Compensation Plan. All awards of stock under this program are considered as recommended grants until approved by the Human Resource Programs Committee.

Definitions:

Sterling Bank officers: Employees who have been designated as an officer of the Bank by the Bank Board and are actively employed by Sterling Bank or any of its subsidiaries.

Program: For purposes of this document, “Program” refers to the Long-Term Incentive (LTI) Stock Performance Program.

Recipient: A bank officer who is actually granted an award under the Program.

Annual awards: Stock awards (phantom units or options) granted during any calendar year to a specific recipient.

Fair Market Value: For purposes of the Program, but not necessarily for tax or other purposes, “Fair Market Value” means the closing price of Sterling Bancshares, Inc. common stock on the National Association of Securities Dealers Automated Quotations (NASDQ) on the business day immediately preceding the grant date.

SBIB: Sterling Bancshares, Inc.

Eligibility

All officers of Sterling Bank are eligible to participate in the Program. Participation in the program does not ensure that the officer will be a recipient of an award. Awards are made on an individual basis considering the employee’s performance, scope of responsibilities, and long-term impact on company-results.

Officers who receive an award during one calendar year are not guaranteed an award in subsequent calendar years.

Program Levels

Each officer position is assigned to one of seven Program Level Groups. Each group is designed to reflect the scope of responsibilities associated with the position. Level 1 represents the most senior executive positions in the company. A complete list of positions within each Program Level Group is attached. See Attachment A.

The Program Level will determine the target stock award (number of shares) level for each group.

The target award level is a guideline only to aid in the administration of the program. The actual awards granted may be higher or lower at the discretion of the President and CEO with the approval of the Human Resources Programs Committee. A table listing the target awards by level is attached. See Attachment B.

The Program Level Group to which a specific officer position is assigned may change each year depending on the organizational structure of the company. All changes are reviewed and approved by the President and CEO and the Chief Human Resources Officer.

The position of President and CEO, as an officer of the company, is an eligible participant in the Program. The Program Level for this position is designated as a separate group, not included in the groups 1 to 7, and has a specific award target. The award type is a combination of performance-based phantom stock units and incentive stock options as described below for program level groups 1, 2, and 3.

Award Type

Program Level Groups 1, 2 and 3 may be granted stock awards that are comprised of two award types. Fifty-percent of the stock award is in the form of “Performance-Based Phantom Stock Units” and the other fifty-percent in the form of Incentive Stock Options.

For the “Performance-Based Phantom Stock Units” portion to be earned, certain performance results in relative comparison to a defined peer group of financial institutions must be achieved by the end of the three-year vesting period stipulated

in the award grant. For awards granted under this program, the three year performance vesting period will be measured in calendar years with the first year of the three year period being the year in which the award is granted.

Two key performance metrics have been approved by the Board of Directors: Return on Assets and Earning Per Share Growth. The performance metrics are evaluated independently at the end of the three-year period and the combined peer performance rankings determine the amount of the award that vests. Performance metric results have been scaled so that recipients can receive 1) a partial award in the event that acceptable, but not the desired results are achieved, 2) a full award if the desired results are achieved, or 3) an enhanced award in the event that better than the desired results are achieved. It is possible that if the results are unacceptable and a minimum threshold of comparative performance is not achieved, no portion of the award will vest at the end of the vesting period. A table listing the performance results for each performance metric is attached. See Attachment C.

In the event of a Change of Control, all awards will vest under the terms of the stock plan. Should a Change of Control occur, any unvested Phantom Stock Units will be accelerated to vest at 100% of the original grant.

An award recipient must remain continuously employed by Sterling Bank through the date in which the Phantom Stock Units vest. This portion of the award cliff vests only at the end of the three-year period and only to the extent that comparative performance metrics at the end of that three-year period have been achieved.

The remaining fifty-percent portion of the award is in the form of an Incentive Stock Option. This is an award that vests in equal increments over a three-year period of time and is in the form of a stock option that has met certain tax requirements which may entitle the recipient to favorable tax treatment. This type of stock award complies with the requirements of Section 422 of the Internal Revenue Code of 1986, as amended or any successor section of the Code. This portion is a time-based vesting award and vests independently from that of the Performance-Based Phantom stock units. However, vesting only occurs if the award recipient remains continuously employed by Sterling Bank through the date in which vesting occurs. In the event of a Change of Control, all option awards will vest under the terms of the stock plan.

A new award may be granted to officers in Program Level Groups 1, 2 and 3 each calendar year. The Performance Based Phantom Stock Unit portion of the new award is subject to performance metrics at the end of the new three-year period. The performance metrics are subject to annual approval by the Human Resources Program Committee.

Program Level Groups 4, 5, 6, and 7 may be granted an award in the form of an Incentive Stock Option. This is an award that vests in equal increments over a three-year period of time and is in the form of a stock option that has met certain tax

requirements which may entitle the recipient to favorable tax treatment. This type of stock award complies with the requirements of Section 422 of the Internal Revenue Code of 1986, as amended or any successor section of the Code. This option award is a time-based vesting award and vesting only occurs if the award recipient remains continuously employed by Sterling Bank through the date in which vesting occurs. In the event of a Change of Control, all option awards will vest under the terms of the stock plan.

A new award may be granted to officers in Program Level Groups 4, 5, 6, and 7 each calendar year. Each new award is treated separately for vesting purposes.

New Hires

Newly hired officers may receive a stock award as part of their employment offer. If a stock award is incorporated into an employment offer, the actual award will be made in the first month of the next quarter following the date of employment. Receiving a new hire award, under the Program, does not impact the officer’s participation in the annual award process. However, a newly hired officer’s first year participation target may be impacted by the months of service to Sterling Bank that have been completed at the time of the award.

The following guidelines are to be used when formulating an employment offer for an officer candidate:

Typically, candidates offered positions at these levels have been participants in their former employers’ stock performance programs. Participation in the program is normal and customary.

The award levels stipulated above are for guidance purposes. Fifty-percent of the award will be Performance-Based Phantom Stock Units tied to the performance metrics determined for that three-year, cliff vesting period, and fifty-percent will be award as time-based, vesting Incentive Stock Options. A request for an award that exceeds the target for either Performance-Based Phantom Stock Units or Incentive Stock Options must be approved by the Chief Human Resources Officer and may also require the approval of the President and CEO.

The new hire incentive stock option awards for Level 4 and 5 positions should not exceed the following targets:

Proposed stock awards for Level 4 and 5 positions must be reviewed by the Director, HR Services, or the Director, HR Operations, before inclusion in the offer letter. A request for an award that exceeds the target must be approved by the Chief Human Resources Officer and may also require the approval of the President and CEO.

Employment offers for candidates being offered Level 6 and 7 positions do not usually include stock awards. Officers hired into Level 6 and 7 positions are eligible to participate in the annual stock award program. Exceptions to this provision must be discussed with the Director of HR Services, or the Director of HR Operations and approved by the Chief Human Resources Officer and the President, and CEO

Effective Date

“Performance Based Phantom Stock Units” are granted as soon as administratively possible following the end of the three-year performance period. The target date for the annual award will be April of each calendar year.

Incentive Stock Option awards under this Program are typically effective the first of the quarter following the award date. The target date for the annual award will be April of each calendar year.

Stock Administration

Sterling Bank uses Charles Schwab to provide stock program administration and brokerage services for cashless transactions to participants in Sterling Bank’s Long Term Stock Performance Program.

All stock award grant distributions and stock option exercise transactions, including sales associated with the transactions, will be processed by Charles Schwab. After

settlement of shares acquired from a grant award distribution or stock option exercise transaction, the shares may be transferred to another broker of the recipient’s choice. Any fees associated with the transfer are the responsibility of the recipient.

For participants who already have a brokerage account with Charles Schwab, there is no further action required. For participants who have a brokerage account with another broker, it will be necessary to open a Charles Schwab account. Recipients can access the Charles Schwab’s website, www. Schwab.com to set up an account and establish a password.

Shares Issued

Shares issued under this Program are shares of Sterling Bancshares, Inc. common stock that is authorized under the Shareholder approved 2003 Stock Incentive and Compensation Plan.

Other Stock Awards

Outside the specifics of this Program, the President and CEO, at his discretion, may recommend an immediate common stock grant, a special grant of Phantom Stock Units, or an Incentive Stock Option award to any employee of Sterling Bank or any of its subsidiaries. Such a discretionary award will have a specified, requested effective date and may be designed to vest immediately, or over a three-year period.

Awards of this type are also issued under the Shareholder approved 2003 Stock Incentive and Compensation Plan and are subject to the final approval by the Human Resources Programs Committee.

Program Review

This program is subject to annual review and approval by the Human Resources Programs Committee. As a result of this review, changes may occur without prior notification to recipients.

Employment-At-Will

Nothing in this document is intended, explicitly or implicitly, to alter the company’s employment-at-will relationship with its employees, including those designated as bank officers. Participation and receipt of an award under this Program do not ensure continued employment.

Effective Date

This Program is effective September 1, 2007.

Attachment A

LTI Level Groupings by Job Title

LTI Level Groupings by Job Title

LTI Level Groupings by Job Title

Attachment B

LTI Program Award Targets by Level

Attachment C

LTI Program Three-Year Performance Metrics For Phantom Stock Units

PSU grants will generally be made in April of each year based upon the individual officer's contribution in the previous calendar year. The award will vest three years from the date of the original grant, and the performance of the bank relative to the peer group in the most recently completed calendar year at the end of the three year period will determine how much if any of the grant vests.

Example: If PSUs had been issued in April of 2004, the three years vesting period would have concluded in April of 2007. Performance relative to peer would have been determined by comparing calendar year 2006 results with the remaining participants in the peer group that was established for 2004. Using Sterling's 2006 results relative to our peer group, we would have achieved the following: ROA of 1.18 placing Sterling in the 37th percentile relative to peer and yielding a 25% vesting. EPS Growth of 24.5% placing Sterling in the 78th percentile and yielding a 100% vesting. The combined vesting for this grant would therefore be 125% of the original award.