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                                                                    EXHIBIT 99.1


                                  NEWS RELEASE


For More Information, Call 713/507-7292  For Immediate Release - August 27, 2001
Eugene Putnam, Jr.


              STERLING BANCSHARES CLOSES LONE STAR BANK ACQUISITION


HOUSTON, TEXAS - Sterling Bancshares, Inc. (NASDAQ: SBIB) announced today that
it has completed the acquisition of Houston-based Lone Star Bancorporation, Inc.
and its subsidiary bank, Lone Star Bank. Lone Star, with approximately $160
million in total assets, has four locations and extends the reach of Sterling's
franchise in the greater Houston marketplace. Full integration with Sterling
operations is planned to occur in the first quarter of 2002.

[LOGO]

Sterling Bancshares, Inc. is a Houston-based bank holding company that operates
33 community-banking offices in the greater metro areas of Dallas, Houston, San
Antonio, and South Texas. The Company also provides mortgage-banking services
through its 80 percent-owned subsidiary, Sterling Capital Mortgage Company.
Sterling's common stock is traded through the NASDAQ National Market System
under the symbol SBIB. For more information on Sterling Bancshares, please visit
the Company's web site at http://www.banksterling.com.

Contact: Eugene Putnam, Jr. of Sterling Bancshares, Inc., 1-713-507-7292.


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