One of the nation's most profitable banks has named an insider as its new president.

Houston-based Sterling Bancshares chose J. Downey Bridgwater, chief executive officer of one of Sterling's branches and a career Houston banker, to take over as president of the $1.1 billion-asset company. Mr. Bridgwater succeeds Mark Giles, who announced last month that he would leave Sterling to start a new bank in Charlottesville, Va.

Analysts said the job was considered a plum post in the community banking industry and that there had been speculation over who would take over for Mr. Giles.

George Martinez, chairman and founder of Sterling, said the company chose Mr. Bridgwater based on his track record as CEO of one of its largest branches. Mr. Martinez said Sterling wanted an insider for the president's job so that "our organization can be confident that we will not miss a single beat."

Analysts agreed, saying they expect the leadership transition will go smoothly.

"I would be surprised if they missed a lick," said Robert C. Ollech, a bank analyst at Principal Financial Securities in Milwaukee.

Mr. Ollech and other analysts predicted Mr. Martinez and Mr. Bridgwater will run Sterling together, as Mr. Martinez did with Mr. Giles.

Joseph A. Stieven, an analyst at Stifel Nicolaus & Co. in St. Louis, said Mr. Martinez had a number of worthy managers - many of whom are transplants from other Houston banks-to choose from for the president's job.

"Sterling is able to attract very strong people because they're known as a very stable bank in a market that hasn't been very stable," he said.

Mr. Bridgwater, who joined Sterling about two years ago from Houston's Allied Bank, has a tough act to follow.

Under Mr. Giles' leadership, Sterling has grown internally at a quick pace while maintaining return-on-asset figures ranging from 1.57% to 1.24% since mid-1996. Return on equity has also been strong, hitting 20% twice in the past five quarters, according to company figures.

Mr. Ollech said that Sterling's stock price has appreciated by about 60% in each of the last two years.

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