##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 1-31272
 (LOGO)
    
    Compass Bancshares, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    63-0593897(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 15 South 20th Street
Birmingham, Alabama 35233
 
  (205) 297-3000
 
  þ o
  þ o o
 o þ
  Class
    
    Outstanding at July 31, 2006Common Stock, $2 Par Value
    
    129,391,435
   1




---



##### 



PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005
    
    
    3Consolidated Statements of Income for the Three and Six Months Ended June 30, 2006 and 2005
    
    
    4Consolidated Statements of Changes In Shareholders Equity for the Six Months Ended
June 30, 2006 and 2005
    
    
    5Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2
    
    Managements Discussion and Analysis of Results of Operations and Financial Condition
    
    
    26Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4
    
    Controls and Procedures
    
    
    35PART II.
    
    OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    
    36Item 1A
    
    Risk Factors
    
    
    36Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    36Item 5
    
    Other Information
    
    
    37Item 6
    
    Exhibits
    
    
    37EX-3.(H) BYLAWS OF COMPASS BANCSHARES, INC.EX-10.(R) DEFERRED COMPENSATION PLANEX-10.(S) SPECIAL SUPPLEMENTAL RETIREMENT PLANEX-10.(AI) SUMMARY OF COMPENSATION FOR EXECUTIVE OFFICERSEX-31.(A) SECTION 302 CERTIFICATION OF CEOEX-31.(B) SECTION 302 CERTIFICATION OF CFOEX-32.(A) SECTION 906 CERTIFICATION OF CEOEX-32.(B) SECTION 906 CERTIFICATION OF CFO
  - 2 -




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1  Financial Statements
 COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
  June 30, 2006
    
    
    December 31, 2005(Unaudited)AssetsCash and due from banks
    
    $
    757,579
    
    
    $
    805,556Federal funds sold and securities purchased
under agreements to resell
    
    
    97,740
    
    
    
    46,393Trading account assets
    
    
    103,835
    
    
    
    76,559Investment securities available for sale
    
    
    4,282,890
    
    
    
    4,704,375Investment securities held to maturity (fair value of
$2,054,478 and $2,212,273 for 2006 and 2005, respectively)
    
    
    2,131,900
    
    
    
    2,245,942Loans
    
    
    24,232,115
    
    
    
    21,372,215Allowance for loan losses
    
    
    (289,143
    )
    
    
    (267,173
    )Net loans
    
    
    23,942,972
    
    
    
    21,105,042Premises and equipment, net
    
    
    592,016
    
    
    
    547,195Bank owned life insurance
    
    
    465,030
    
    
    
    441,226Goodwill
    
    
    674,801
    
    
    
    316,197Other assets
    
    
    564,729
    
    
    
    509,747Total assets
    
    $
    33,613,492
    
    
    $
    30,798,232Liabilities and Shareholders EquityDeposits:Noninterest bearing
    
    $
    6,663,451
    
    
    $
    6,097,881Interest bearing
    
    
    16,173,808
    
    
    
    14,286,234Total deposits
    
    
    22,837,259
    
    
    
    20,384,115Federal funds purchased and securities sold under
agreements to repurchase
    
    
    2,674,350
    
    
    
    3,102,572Other short-term borrowings
    
    
    1,430,804
    
    
    
    652,750FHLB and other borrowings
    
    
    3,657,912
    
    
    
    4,111,462Accrued expenses and other liabilities
    
    
    407,655
    
    
    
    311,304Total liabilities
    
    
    31,007,980
    
    
    
    28,562,203Shareholders equity:Preferred stock (25,000,000 shares authorized; issued  none)
    
    
    
    
    
    
    Common stock of $2 par value:Authorized  300,000,000 sharesIssued  134,849,730 shares in 2006 and
133,950,243 shares in 2005
    
    
    269,699
    
    
    
    267,900Treasury stock, at cost (5,529,858 shares in 2006 and
10,411,684 shares in 2005)
    
    
    (202,422
    )
    
    
    (377,327
    )Surplus
    
    
    389,110
    
    
    
    300,375Retained earnings
    
    
    2,244,841
    
    
    
    2,121,310Accumulated other comprehensive loss
    
    
    (93,829
    )
    
    
    (63,156
    )Loans to finance stock purchases
    
    
    (1,887
    )
    
    
    (1,262
    )Unearned restricted stock
    
    
    
    
    
    
    (11,811
    )Total shareholders equity
    
    
    2,605,512
    
    
    
    2,236,029Total liabilities and shareholders equity
    
    $
    33,613,492
    
    
    $
    30,798,232
  - 3 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Income
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest income:Interest and fees on loans
    
    $
    433,252
    
    
    $
    293,740
    
    
    $
    805,632
    
    
    $
    563,023Interest on investment securities available for sale
    
    
    51,199
    
    
    
    45,701
    
    
    
    102,364
    
    
    
    91,862Interest on investment securities held to maturity
    
    
    25,973
    
    
    
    30,132
    
    
    
    51,854
    
    
    
    62,255Interest on federal funds sold and securities
purchased under agreements to resell
    
    
    744
    
    
    
    416
    
    
    
    1,273
    
    
    
    629Interest on trading account assets
    
    
    295
    
    
    
    183
    
    
    
    538
    
    
    
    355Total interest income
    
    
    511,463
    
    
    
    370,172
    
    
    
    961,661
    
    
    
    718,124Interest expense:Interest on deposits
    
    
    126,418
    
    
    
    59,097
    
    
    
    225,719
    
    
    
    108,559Interest on federal funds purchased and securities
sold under agreements to repurchase
    
    
    35,588
    
    
    
    29,500
    
    
    
    72,865
    
    
    
    55,692Interest on other short-term borrowings
    
    
    10,757
    
    
    
    972
    
    
    
    15,258
    
    
    
    1,504Interest on FHLB and other borrowings
    
    
    51,018
    
    
    
    44,133
    
    
    
    99,876
    
    
    
    84,326Total interest expense
    
    
    223,781
    
    
    
    133,702
    
    
    
    413,718
    
    
    
    250,081Net interest income
    
    
    287,682
    
    
    
    236,470
    
    
    
    547,943
    
    
    
    468,043Provision for loan losses
    
    
    27,322
    
    
    
    27,800
    
    
    
    44,434
    
    
    
    48,073Net interest income after provision for loan
losses
    
    
    260,360
    
    
    
    208,670
    
    
    
    503,509
    
    
    
    419,970Noninterest income:Service charges on deposit accounts
    
    
    82,317
    
    
    
    78,927
    
    
    
    154,485
    
    
    
    141,576Card and merchant processing fees
    
    
    28,673
    
    
    
    24,274
    
    
    
    54,380
    
    
    
    45,604Insurance commissions
    
    
    15,477
    
    
    
    15,570
    
    
    
    33,081
    
    
    
    31,294Retail investment sales
    
    
    10,904
    
    
    
    8,448
    
    
    
    20,324
    
    
    
    17,229Asset management fees
    
    
    8,408
    
    
    
    6,646
    
    
    
    16,156
    
    
    
    13,707Corporate and correspondent investment sales
    
    
    5,607
    
    
    
    5,234
    
    
    
    10,836
    
    
    
    9,354Bank owned life insurance
    
    
    5,191
    
    
    
    4,216
    
    
    
    10,094
    
    
    
    8,456Gain on prepayment of FHLB advances
    
    
    
    
    
    
    
    
    
    
    14,893
    
    
    
    Investment securities (losses) gains, net
    
    
    (51
    )
    
    
    79
    
    
    
    (14,889
    )
    
    
    79Gain on sale of business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,791Trading gains and settlements on economic hedge
swaps
    
    
    
    
    
    
    9,414
    
    
    
    
    
    
    
    4,818Other
    
    
    24,840
    
    
    
    22,623
    
    
    
    47,350
    
    
    
    48,488Total noninterest income
    
    
    181,366
    
    
    
    175,431
    
    
    
    346,710
    
    
    
    325,396Noninterest expense:Salaries, benefits and commissions
    
    
    144,309
    
    
    
    118,762
    
    
    
    280,319
    
    
    
    240,106Equipment
    
    
    22,586
    
    
    
    20,170
    
    
    
    44,133
    
    
    
    40,229Net occupancy
    
    
    18,616
    
    
    
    16,833
    
    
    
    35,833
    
    
    
    33,485Professional services
    
    
    15,896
    
    
    
    15,154
    
    
    
    30,800
    
    
    
    29,234Marketing
    
    
    14,235
    
    
    
    11,476
    
    
    
    26,499
    
    
    
    23,361Communications
    
    
    6,151
    
    
    
    5,447
    
    
    
    11,773
    
    
    
    10,923Amortization of intangibles
    
    
    3,548
    
    
    
    1,588
    
    
    
    5,038
    
    
    
    3,115Merger and integration
    
    
    5,223
    
    
    
    235
    
    
    
    7,849
    
    
    
    469Other
    
    
    35,286
    
    
    
    32,930
    
    
    
    67,976
    
    
    
    63,545Total noninterest expense
    
    
    265,850
    
    
    
    222,595
    
    
    
    510,220
    
    
    
    444,467Net income before income tax expense
    
    
    175,876
    
    
    
    161,506
    
    
    
    339,999
    
    
    
    300,899Income tax expense
    
    
    60,505
    
    
    
    55,518
    
    
    
    116,719
    
    
    
    101,927Net income
    
    $
    115,371
    
    
    $
    105,988
    
    
    $
    223,280
    
    
    $
    198,972Basic earnings per share
    
    $
    0.90
    
    
    $
    0.86
    
    
    $
    1.77
    
    
    $
    1.61Basic weighted average shares outstanding
    
    
    128,690
    
    
    
    123,617
    
    
    
    126,201
    
    
    
    123,452Diluted earnings per share
    
    $
    0.88
    
    
    $
    0.83
    
    
    $
    1.73
    
    
    $
    1.57Diluted weighted average shares outstanding
    
    
    131,395
    
    
    
    126,212
    
    
    
    128,923
    
    
    
    126,407Dividends declared per share
    
    $
    0.39
    
    
    $
    0.35
    
    
    $
    0.78
    
    
    $
    0.70
  - 4 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Changes In Shareholders Equity
    AccumulatedOther
    
    
    
    
    
    
    TotalCommon
    
    
    Treasury
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    
    
    
    
    Shareholders
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Loss
    
    
    Other
    
    
    Equity
    
    
    IncomeBalance, January 1, 2005
    
    $
    265,806
    
    
    $
    (333,351
    )
    
    $
    264,400
    
    
    $
    1,894,546
    
    
    $
    (23,376
    )
    
    $
    (11,680
    )
    
    $
    2,056,345Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198,972
    
    
    
    
    
    
    
    
    
    
    
    198,972
    
    
    $
    198,972Net change in unrealized losses on securities
available for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,031
    )
    
    
    
    
    
    
    (10,031
    )
    
    
    (10,031
    )Net change in accumulated 
losses on cash-flow hedging instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,298
    
    
    
    
    
    
    
    1,298
    
    
    
    1,298Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    190,239Common dividends declared ($0.70 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86,754
    )
    
    
    
    
    
    
    
    
    
    
    (86,754
    )Exercise of stock options and other issuances
    
    
    911
    
    
    
    
    
    
    
    9,417
    
    
    
    (1,047
    )
    
    
    
    
    
    
    
    
    
    
    9,281Issuances of restricted stock, net of cancellations
    
    
    237
    
    
    
    
    
    
    
    4,310
    
    
    
    
    
    
    
    
    
    
    
    (4,547
    )
    
    
    Repayments on loans to finance stock purchases,
net of advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    47Issuance of treasury stock for acquisitions, stock
options and employee benefit plans
    
    
    
    
    
    
    14,502
    
    
    
    3,627
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,129Amortization of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,712
    
    
    
    1,712Purchase of treasury stock
    
    
    
    
    
    
    (1,786
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,786
    )Balance, June 30, 2005
    
    $
    266,954
    
    
    $
    (320,635
    )
    
    $
    281,754
    
    
    $
    2,005,717
    
    
    $
    (32,109
    )
    
    $
    (14,468
    )
    
    $
    2,187,213Balance, January 1, 2006
    
    $
    267,900
    
    
    $
    (377,327
    )
    
    $
    300,375
    
    
    $
    2,121,310
    
    
    $
    (63,156
    )
    
    $
    (13,073
    )
    
    $
    2,236,029Adoption of SFAS No. 123R
    
    
    
    
    
    
    
    
    
    
    (11,811
    )
    
    
    
    
    
    
    
    
    
    
    11,811
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223,280
    
    
    
    
    
    
    
    
    
    
    
    223,280
    
    
    $
    223,280Net change in unrealized losses on securities
available for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,177
    )
    
    
    
    
    
    
    (28,177
    )
    
    
    (28,177
    )Net change in accumulated losses on cash-
flow hedging instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,444
    )
    
    
    
    
    
    
    (2,444
    )
    
    
    (2,444
    )Net change in additional minimum pension
liability, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    (52
    )
    
    
    (52
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    192,607Common dividends declared ($0.78 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,660
    )
    
    
    
    
    
    
    
    
    
    
    (98,660
    )Exercise of stock options and other issuances
    
    
    1,448
    
    
    
    
    
    
    
    18,065
    
    
    
    (1,089
    )
    
    
    
    
    
    
    
    
    
    
    18,424Issuances of restricted stock, net of cancellations
    
    
    351
    
    
    
    
    
    
    
    (351
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Advances on loans to finance stock purchases,
net of repayments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (625
    )
    
    
    (625
    )Issuance of treasury stock for acquisitions and
stock options
    
    
    
    
    
    
    184,461
    
    
    
    77,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261,767Amortization of restricted stock and stock
option grants
    
    
    
    
    
    
    
    
    
    
    5,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,526Purchase of treasury stock
    
    
    
    
    
    
    (9,556
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,556
    )Balance, June 30, 2006
    
    $
    269,699
    
    
    $
    (202,422
    )
    
    $
    389,110
    
    
    $
    2,244,841
    
    
    $
    (93,829
    )
    
    $
    (1,887
    )
    
    $
    2,605,512
  - 5 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
   Six Months EndedJune 30,2006
    
    
    2005Operating Activities:Net income
    
    $
    223,280
    
    
    $
    198,972Adjustments to reconcile net income to cash provided by
operations:Depreciation and amortization
    
    
    49,693
    
    
    
    52,650Amortization of stock-based compensation
    
    
    5,526
    
    
    
    1,712Accretion of discount and loan fees
    
    
    (6,280
    )
    
    
    (4,334
    )Provision for loan losses
    
    
    44,434
    
    
    
    48,073Net change in trading account assets
    
    
    (26,885
    )
    
    
    (5,665
    )Investment securities losses (gains), net
    
    
    14,889
    
    
    
    (79
    )Gain on prepayment of FHLB advances
    
    
    (14,893
    )
    
    
    Gain on sale of business
    
    
    
    
    
    
    (4,791
    )Increase in other assets
    
    
    (27,706
    )
    
    
    (46,441
    )Increase in accrued expenses and other liabilities
    
    
    30,048
    
    
    
    44,272Net cash provided by operating activities
    
    
    292,106
    
    
    
    284,369Investing Activities:Proceeds from prepayments, maturities and calls of
investment securities held to maturity
    
    
    188,828
    
    
    
    266,458Purchases of investment securities held to maturity
    
    
    (10,193
    )
    
    
    (5,000
    )Proceeds from sales of investment securities available for sale
    
    
    782,334
    
    
    
    48,627Proceeds from prepayments, maturities and calls of
investment securities available for sale
    
    
    460,684
    
    
    
    325,842Purchases of investment securities available for sale
    
    
    (800,787
    )
    
    
    (595,459
    )Net (increase) decrease in federal funds sold and securities
purchased under agreements to resell
    
    
    (26,459
    )
    
    
    5,875Net increase in loan portfolio
    
    
    (1,503,992
    )
    
    
    (1,242,444
    )Net cash paid in acquisitions
    
    
    (190,071
    )
    
    
    (202
    )Net cash received in sale of business
    
    
    
    
    
    
    4,726Purchases of premises and equipment, net
    
    
    (39,486
    )
    
    
    (41,482
    )Proceeds from sales of other real estate owned
    
    
    6,210
    
    
    
    9,805Net cash used by investing activities
    
    
    (1,132,932
    )
    
    
    (1,223,254
    )
  - 6 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows  Continued
 Six Months EndedJune 30,2006
    
    
    2005Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    711,685
    
    
    
    42,921Net increase in time deposits
    
    
    268,805
    
    
    
    1,131,183Net decrease in federal funds purchased and securities sold
under agreements to repurchase
    
    
    (449,100
    )
    
    
    (11,293
    )Net increase (decrease) in other short-term borrowings
    
    
    775,366
    
    
    
    (15,753
    )Proceeds from FHLB advances and other borrowings
    
    
    1,071,441
    
    
    
    396,902Repayment of FHLB advances and other borrowings
    
    
    (1,504,082
    )
    
    
    (400,274
    )Common dividends paid
    
    
    (98,958
    )
    
    
    (122,266
    )Purchase of treasury stock
    
    
    (1,720
    )
    
    
    (1,786
    )Issuance of treasury stock for benefit plans and stock options
    
    
    1,613
    
    
    
    4,420Repayment of loans to finance stock purchases
    
    
    370
    
    
    
    350Proceeds from exercise of stock options
    
    
    17,429
    
    
    
    8,978Net cash provided by financing activities
    
    
    792,849
    
    
    
    1,033,382Net (decrease) increase in cash and due from banks
    
    
    (47,977
    )
    
    
    94,497Cash and due from banks at beginning of period
    
    
    805,556
    
    
    
    585,679Cash and due from banks at end of period
    
    $
    757,579
    
    
    $
    680,176Schedule of noncash investing and financing activities:Transfers of loans to other real estate owned
    
    $
    6,780
    
    
    $
    4,749Loans to facilitate the sale of other real estate owned
    
    
    375
    
    
    
    150Loans to finance stock purchases
    
    
    995
    
    
    
    303Change in unrealized loss on available for sale investment
securities
    
    
    (39,530
    )
    
    
    (14,063
    )Issuance of restricted stock, net of cancellations
    
    
    11,681
    
    
    
    4,547Treasury stock exchanged for acquisition earnouts
    
    
    6,269
    
    
    
    5,840Treasury stock purchased for deferred compensation plan
    
    
    7,943
    
    
    
    Allowance transferred to other liabilities
    
    
    
    
    
    
    12,189Business combinations and divestitures:Common stock issued
    
    
    253,992
    
    
    
    7,869Assets acquired
    
    
    2,012,632
    
    
    
    8,092Liabilities assumed
    
    
    1,568,569
    
    
    
    21Assets sold
    
    
    
    
    
    
    13Liabilities sold
    
    
    
    
    
    
    78
  - 7 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 1  General
     Critical Accounting Policies
  Allowance for Loan Losses
 Derivative Instruments
 Consolidation
 - 8 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
 Income Taxes
 Goodwill Calculation and Impairment
 Stock-Based Compensation
 Accounting for Stock-Based Compensation. Accounting for Stock Issued to Employees Share-Based Payments
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2005Net income:As reported
    
    $
    105,988
    
    
    $
    198,972Deduct: Total share-based employee compensation
expense determined under fair value based method
for all awards, net of tax
    
    
    2,124
    
    
    
    4,042Pro forma net income
    
    $
    103,864
    
    
    $
    194,930Basic earnings per share:As reported
    
    $
    0.86
    
    
    $
    1.61Pro forma
    
    
    0.84
    
    
    
    1.58Diluted earnings per share:As reported
    
    $
    0.83
    
    
    $
    1.57Pro forma
    
    
    0.82
    
    
    
    1.54
  - 9 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
   Website Availability of Reports Filed with the SEC
 www.compassbank.com
 NOTE 2  Business Combinations and Divestitures
 TexasBank Acquisition
    Assets:Cash and cash equivalents
    
    $
    41,918Federal funds sold and securities
purchased under agreements to resell
    
    
    24,888Investment securities available for sale
    
    
    77,526Investment securities held to maturity
    
    
    63,397Net loans
    
    
    1,387,248Premises and equipment, net
    
    
    38,002Intangible assets
    
    
    385,071Other assets
    
    
    36,500Total assets
    
    $
    2,054,550Liabilities:Deposits
    
    $
    1,475,862Fed funds purchased and securities
sold under agreements to repurchase
    
    
    20,878Other short-term borrowings
    
    
    2,688FHLB and other borrowings
    
    
    51,722Other liabilities
    
    
    17,419Total liabilities
    
    
    1,568,569Net assets acquired
    
    $
    485,981
 - 10 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest income
    
    $
    511,463
    
    
    $
    393,764
    
    
    $
    989,085
    
    
    $
    763,511Interest expense
    
    
    223,781
    
    
    
    138,655
    
    
    
    422,143
    
    
    
    259,439Net interest income
    
    
    287,682
    
    
    
    255,109
    
    
    
    566,942
    
    
    
    504,072Provision for loan losses
    
    
    27,322
    
    
    
    28,566
    
    
    
    44,950
    
    
    
    49,578Net interest income after provision for loan losses
    
    
    260,360
    
    
    
    226,543
    
    
    
    521,992
    
    
    
    454,494Noninterest income
    
    
    181,366
    
    
    
    180,975
    
    
    
    351,750
    
    
    
    336,672Noninterest expense
    
    
    265,850
    
    
    
    237,468
    
    
    
    549,634
    
    
    
    473,887Net income before income tax expense
    
    
    175,876
    
    
    
    170,050
    
    
    
    324,108
    
    
    
    317,279Income tax expense
    
    
    60,505
    
    
    
    58,515
    
    
    
    112,351
    
    
    
    107,669Net income
    
    $
    115,371
    
    
    $
    111,535
    
    
    $
    211,757
    
    
    $
    209,610Basic earnings per share
    
    $
    0.90
    
    
    $
    0.87
    
    
    $
    1.65
    
    
    $
    1.63Diluted earnings per share
    
    $
    0.88
    
    
    $
    0.85
    
    
    $
    1.61
    
    
    $
    1.60
 Other Business Combinations
    Divestitures
  NOTE 3  Capital Securities and Preferred Stock
 Capital Securities
  Consolidation of Variable Interest Entities, an interpretation
of ARB No. 51
 - 11 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
   Class B Preferred Stock
    Maturity
    
    
    June 30,
    
    
    December 31,Dates
    
    
    2006
    
    
    2005(in Thousands)Capital Securities:8.23% debentures payable to Compass Trust I *
    
    
    2027
    
    
    $
    103,093
    
    
    $
    103,0937.35% debentures payable to Compass Trust III *
    
    
    2032
    
    
    
    309,279
    
    
    
    309,279LIBOR plus 2.60% floating rate debentures
payable to TexasBanc Capital Trust I *
    
    
    2034
    
    
    
    25,774
    
    
    
    Fair value of and unamortized fees on hedged
capital securities
    
    
    2027, 2032
    
    
    
    (8,903
    )
    
    
    (1,969
    )Class B Preferred Stock
    
    
    
    
    
    
    18,112
    
    
    
    18,077Total Capital Securities and Preferred Stock
    
    
    
    
    
    $
    447,355
    
    
    $
    428,480
 
 *
    
    - Majority of amounts qualify for Tier I Capital Subordinated Debentures
  - 12 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 NOTE 4  Earnings Per Share
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In Thousands Except Per Share Data)(Unaudited)BASIC EARNINGS PER SHARE:Net income
    
    $
    115,371
    
    
    $
    105,988
    
    
    $
    223,280
    
    
    $
    198,972Weighted average shares outstanding
    
    
    128,690
    
    
    
    123,617
    
    
    
    126,201
    
    
    
    123,452Basic earnings per share
    
    $
    0.90
    
    
    $
    0.86
    
    
    $
    1.77
    
    
    $
    1.61DILUTED EARNINGS PER SHARE:Net income
    
    $
    115,371
    
    
    $
    105,988
    
    
    $
    223,280
    
    
    $
    198,972Weighted average shares outstanding
    
    
    128,690
    
    
    
    123,617
    
    
    
    126,201
    
    
    
    123,452Net effect of nonvested restricted stock and
the assumed exercise of stock options  based
on the treasury stock method using the
average
market price for the period
    
    
    2,705
    
    
    
    2,595
    
    
    
    2,722
    
    
    
    2,955Weighted average diluted shares outstanding
    
    
    131,395
    
    
    
    126,212
    
    
    
    128,923
    
    
    
    126,407Diluted earnings per share
    
    $
    0.88
    
    
    $
    0.83
    
    
    $
    1.73
    
    
    $
    1.57
 NOTE 5  Segment Information
        - 13 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
    For the Three Months Ended June 30, 2006
(in Thousands)
 CorporateCorporate
    
    
    Retail
    
    
    Wealth
    
    
    
    
    
    
    Support andBanking
    
    
    Banking
    
    
    Management
    
    
    Treasury
    
    
    Other
    
    
    ConsolidatedIncome StatementNet interest income
    
    $
    121,033
    
    
    $
    122,652
    
    
    $
    15,675
    
    
    $
    10,188
    
    
    $
    18,134
    
    
    $
    287,682Noninterest income
    
    
    36,914
    
    
    
    127,632
    
    
    
    10,994
    
    
    
    7,480
    
    
    
    (1,654
    )
    
    
    181,366Noninterest expense
    
    
    59,501
    
    
    
    130,226
    
    
    
    13,106
    
    
    
    5,265
    
    
    
    57,752
    
    
    
    265,850Segment income (loss)
    
    $
    98,446
    
    
    $
    120,058
    
    
    $
    13,563
    
    
    $
    12,403
    
    
    $
    (41,272
    )
    
    
    203,198Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,322Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,876Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,505Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    115,371Balance SheetAverage assets
    
    $
    13,568,247
    
    
    $
    9,053,516
    
    
    $
    1,564,339
    
    
    $
    7,085,335
    
    
    $
    1,890,529
    
    
    $
    33,161,966Average loans
    
    
    13,512,638
    
    
    
    8,854,707
    
    
    
    1,564,316
    
    
    
    
    
    
    
    (105,944
    )
    
    
    23,825,717Average deposits
    
    
    5,826,218
    
    
    
    12,558,408
    
    
    
    1,281,282
    
    
    
    2,860,321
    
    
    
    (7,656
    )
    
    
    22,518,573Period-end assets
    
    $
    14,063,294
    
    
    $
    9,244,660
    
    
    $
    1,606,839
    
    
    $
    7,097,747
    
    
    $
    1,600,952
    
    
    $
    33,613,492Period-end loans
    
    
    13,800,630
    
    
    
    8,964,621
    
    
    
    1,594,037
    
    
    
    
    
    
    
    (127,173
    )
    
    
    24,232,115Period-end deposits
    
    
    6,312,002
    
    
    
    12,862,817
    
    
    
    1,289,433
    
    
    
    2,472,186
    
    
    
    (99,179
    )
    
    
    22,837,259
 
 CorporateCorporate
    
    
    Retail
    
    
    Wealth
    
    
    
    
    
    
    Support andBanking
    
    
    Banking
    
    
    Management
    
    
    Treasury
    
    
    Other
    
    
    ConsolidatedIncome StatementNet interest income
    
    $
    94,306
    
    
    $
    109,370
    
    
    $
    13,521
    
    
    $
    4,897
    
    
    $
    14,376
    
    
    $
    236,470Noninterest income
    
    
    35,176
    
    
    
    115,630
    
    
    
    9,442
    
    
    
    16,816
    
    
    
    (1,633
    )
    
    
    175,431Noninterest expense
    
    
    49,026
    
    
    
    108,363
    
    
    
    11,529
    
    
    
    4,893
    
    
    
    48,784
    
    
    
    222,595Segment income (loss)
    
    $
    80,456
    
    
    $
    116,637
    
    
    $
    11,434
    
    
    $
    16,820
    
    
    $
    (36,041
    )
    
    
    189,306Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,800Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,506Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,518Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    105,988Balance SheetAverage assets
    
    $
    10,422,526
    
    
    $
    8,342,378
    
    
    $
    1,299,951
    
    
    $
    7,699,153
    
    
    $
    1,348,822
    
    
    $
    29,112,830Average loans
    
    
    10,406,161
    
    
    
    8,154,140
    
    
    
    1,301,793
    
    
    
    
    
    
    
    (269,949
    )
    
    
    19,592,145Average deposits
    
    
    4,734,582
    
    
    
    9,997,316
    
    
    
    1,198,010
    
    
    
    2,374,016
    
    
    
    (22,390
    )
    
    
    18,281,534Period-end assets
    
    $
    10,725,776
    
    
    $
    8,685,138
    
    
    $
    1,333,164
    
    
    $
    7,738,348
    
    
    $
    1,018,998
    
    
    $
    29,501,424Period-end loans
    
    
    10,548,882
    
    
    
    8,390,044
    
    
    
    1,323,093
    
    
    
    
    
    
    
    (211,897
    )
    
    
    20,050,122Period-end deposits
    
    
    4,894,724
    
    
    
    10,081,511
    
    
    
    1,174,193
    
    
    
    2,091,066
    
    
    
    (24,428
    )
    
    
    18,217,066
 - 14 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 For the Six Months Ended June 30, 2006
(in Thousands)
 CorporateCorporate
    
    
    Retail
    
    
    Wealth
    
    
    
    
    
    
    Support andBanking
    
    
    Banking
    
    
    Management
    
    
    Treasury
    
    
    Other
    
    
    ConsolidatedIncome StatementNet interest income
    
    $
    225,796
    
    
    $
    239,084
    
    
    $
    30,570
    
    
    $
    21,401
    
    
    $
    31,092
    
    
    $
    547,943Noninterest income
    
    
    73,941
    
    
    
    237,435
    
    
    
    21,300
    
    
    
    15,135
    
    
    
    (1,101
    )
    
    
    346,710Noninterest expense
    
    
    116,539
    
    
    
    249,686
    
    
    
    27,143
    
    
    
    10,784
    
    
    
    106,068
    
    
    
    510,220Segment income (loss)
    
    $
    183,198
    
    
    $
    226,833
    
    
    $
    24,727
    
    
    $
    25,752
    
    
    $
    (76,077
    )
    
    
    384,433Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,434Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339,999Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,719Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    223,280Balance SheetAverage assets
    
    $
    12,641,144
    
    
    $
    8,967,848
    
    
    $
    1,526,303
    
    
    $
    7,223,665
    
    
    $
    1,686,233
    
    
    $
    32,045,193Average loans
    
    
    12,591,792
    
    
    
    8,771,884
    
    
    
    1,526,223
    
    
    
    
    
    
    
    (95,758
    )
    
    
    22,794,141Average deposits
    
    
    5,360,682
    
    
    
    11,965,583
    
    
    
    1,263,869
    
    
    
    2,849,627
    
    
    
    14,079
    
    
    
    21,453,840Period-end assets
    
    $
    14,063,294
    
    
    $
    9,244,660
    
    
    $
    1,606,839
    
    
    $
    7,097,747
    
    
    $
    1,600,952
    
    
    $
    33,613,492Period-end loans
    
    
    13,800,630
    
    
    
    8,964,621
    
    
    
    1,594,037
    
    
    
    
    
    
    
    (127,173
    )
    
    
    24,232,115Period-end deposits
    
    
    6,312,002
    
    
    
    12,862,817
    
    
    
    1,289,433
    
    
    
    2,472,186
    
    
    
    (99,179
    )
    
    
    22,837,259
 
 CorporateCorporate
    
    
    Retail
    
    
    Wealth
    
    
    
    
    
    
    Support andBanking
    
    
    Banking
    
    
    Management
    
    
    Treasury
    
    
    Other
    
    
    ConsolidatedIncome StatementNet interest income
    
    $
    185,447
    
    
    $
    214,931
    
    
    $
    26,960
    
    
    $
    12,499
    
    
    $
    28,206
    
    
    $
    468,043Noninterest income
    
    
    78,725
    
    
    
    213,355
    
    
    
    18,856
    
    
    
    19,238
    
    
    
    (4,778
    )
    
    
    325,396Noninterest expense
    
    
    99,068
    
    
    
    214,853
    
    
    
    23,516
    
    
    
    9,584
    
    
    
    97,446
    
    
    
    444,467Segment income (loss)
    
    $
    165,104
    
    
    $
    213,433
    
    
    $
    22,300
    
    
    $
    22,153
    
    
    $
    (74,018
    )
    
    
    348,972Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,073Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,899Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,927Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    198,972Balance SheetAverage assets
    
    $
    10,286,621
    
    
    $
    8,195,079
    
    
    $
    1,297,654
    
    
    $
    7,699,075
    
    
    $
    1,339,664
    
    
    $
    28,818,093Average loans
    
    
    10,278,848
    
    
    
    8,010,729
    
    
    
    1,299,466
    
    
    
    
    
    
    
    (284,488
    )
    
    
    19,304,555Average deposits
    
    
    4,741,099
    
    
    
    9,843,285
    
    
    
    1,202,670
    
    
    
    2,157,049
    
    
    
    (30,274
    )
    
    
    17,913,829Period-end assets
    
    $
    10,725,776
    
    
    $
    8,685,138
    
    
    $
    1,333,164
    
    
    $
    7,738,348
    
    
    $
    1,018,998
    
    
    $
    29,501,424Period-end loans
    
    
    10,548,882
    
    
    
    8,390,044
    
    
    
    1,323,093
    
    
    
    
    
    
    
    (211,897
    )
    
    
    20,050,122Period-end deposits
    
    
    4,894,724
    
    
    
    10,081,511
    
    
    
    1,174,193
    
    
    
    2,091,066
    
    
    
    (24,428
    )
    
    
    18,217,066
 - 15 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 NOTE 6  Loans and Allowance for Loan Losses
  June 30,
    
    
    December 31,2006
    
    
    2005(in Thousands)Commercial loans:Commercial, financial and agricultural
    
    $
    4,527,826
    
    
    $
    3,896,207Real estate  construction
    
    
    5,987,935
    
    
    
    4,233,148Commercial real estate  mortgage
    
    
    4,166,562
    
    
    
    4,080,164Total commercial loans
    
    
    14,682,323
    
    
    
    12,209,519Consumer loans:Residential real estate  mortgage
    
    
    2,239,651
    
    
    
    1,916,951Equity lines of credit
    
    
    1,702,776
    
    
    
    1,614,608Equity loans
    
    
    1,326,004
    
    
    
    1,160,481Credit card
    
    
    521,104
    
    
    
    523,148Consumer  direct
    
    
    507,616
    
    
    
    423,278Consumer  indirect
    
    
    3,252,641
    
    
    
    3,524,230Total consumer loans
    
    
    9,549,792
    
    
    
    9,162,696Total
    
    $
    24,232,115
    
    
    $
    21,372,215
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(in Thousands)Balance at beginning of period
    
    $
    282,457
    
    
    $
    246,565
    
    
    $
    267,173
    
    
    $
    258,339Add: Provision charged to income
    
    
    27,322
    
    
    
    27,800
    
    
    
    44,434
    
    
    
    48,073Allowance acquired (transferred)
    
    
    (4,079
    )
    
    
    
    
    
    
    11,179
    
    
    
    (12,189
    )Deduct: Net charge-offs (recoveries):Commercial, financial and
agricultural
    
    
    3,628
    
    
    
    2,522
    
    
    
    5,256
    
    
    
    3,248Commercial real estate  mortgage
    
    
    346
    
    
    
    516
    
    
    
    1,445
    
    
    
    680Real estate  construction
    
    
    179
    
    
    
    305
    
    
    
    268
    
    
    
    255Residential real estate  mortgage
    
    
    322
    
    
    
    316
    
    
    
    502
    
    
    
    775Equity lines of credit
    
    
    273
    
    
    
    48
    
    
    
    734
    
    
    
    660Equity loans
    
    
    (29
    )
    
    
    300
    
    
    
    219
    
    
    
    820Credit card
    
    
    5,316
    
    
    
    9,191
    
    
    
    10,143
    
    
    
    17,102Consumer  direct
    
    
    2,228
    
    
    
    1,800
    
    
    
    3,106
    
    
    
    4,057Consumer- indirect
    
    
    4,294
    
    
    
    4,659
    
    
    
    11,970
    
    
    
    11,918Total net charge-offs
    
    
    16,557
    
    
    
    19,657
    
    
    
    33,643
    
    
    
    39,515Balance at end of period
    
    $
    289,143
    
    
    $
    254,708
    
    
    $
    289,143
    
    
    $
    254,708
  June 30,
    
    
    December 31,2006
    
    
    2005(in Thousands)Nonaccrual loans
    
    $
    53,166
    
    
    $
    47,578Renegotiated loans
    
    
    3,276
    
    
    
    698Total nonperforming loans
    
    
    56,442
    
    
    
    48,276Other real estate, net
    
    
    11,803
    
    
    
    11,510Total nonperforming assets
    
    $
    68,245
    
    
    $
    59,786
 - 16 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 NOTE 7  Securitized Assets
   NOTE 8  Investments
  June 30, 2006Securities in a loss position
    
    
    Securities in a loss positionfor less than 12 months
    
    
    for 12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(in Thousands)Investment securities available for sale:Debt securities:U.S. Treasury and other U.S. Government
agencies and corporations
    
    $
    9,869
    
    
    $
    39
    
    
    $
    9,772
    
    
    $
    184
    
    
    $
    19,641
    
    
    $
    223Mortgage-backed pass-through securities
    
    
    330,492
    
    
    
    4,464
    
    
    
    337,938
    
    
    
    18,724
    
    
    
    668,430
    
    
    
    23,188Collateralized mortgage obligations
    
    
    563,467
    
    
    
    14,245
    
    
    
    2,454,990
    
    
    
    96,995
    
    
    
    3,018,457
    
    
    
    111,240States and political subdivisions
    
    
    106,145
    
    
    
    1,287
    
    
    
    33,441
    
    
    
    1,541
    
    
    
    139,586
    
    
    
    2,828Equity securities
    
    
    1,045
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    1,045
    
    
    
    26Total
    
    $
    1,011,018
    
    
    $
    20,061
    
    
    $
    2,836,141
    
    
    $
    117,444
    
    
    $
    3,847,159
    
    
    $
    137,505
 December 31, 2005Securities in a loss position
    
    
    Securities in a loss positionfor less than 12 months
    
    
    for 12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(in Thousands)Investment securities available for sale:Debt securities:U.S. Treasury and other U.S. Government
agencies and corporations
    
    $
    44,845
    
    
    $
    138
    
    
    $
    55
    
    
    $
    1
    
    
    $
    44,900
    
    
    $
    139Mortgage-backed pass-through securities
    
    
    150,147
    
    
    
    2,312
    
    
    
    276,093
    
    
    
    10,136
    
    
    
    426,240
    
    
    
    12,448Collateralized mortgage obligations
    
    
    902,859
    
    
    
    13,080
    
    
    
    2,644,937
    
    
    
    65,567
    
    
    
    3,547,796
    
    
    
    78,647States and political subdivisions
    
    
    35,369
    
    
    
    758
    
    
    
    
    
    
    
    
    
    
    
    35,369
    
    
    
    758Equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,133,220
    
    
    $
    16,288
    
    
    $
    2,921,085
    
    
    $
    75,704
    
    
    $
    4,054,305
    
    
    $
    91,992
   - 17 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
  NOTE 9  Derivatives, Hedging and Off-Balance Sheet Activities
 Accounting for Derivative Instruments and Hedging Activities
  June 30, 2006
    
    December 31, 2005Other
    
    
    
    
    
    OtherThan
    
    
    
    
    
    ThanTrading
    
    Trading
    
    Trading
    
    Trading(in Thousands)Forward and futures contracts
    
    $
    336,316
    
    
    $
    25,022
    
    
    $
    304,233
    
    
    $
    25,948Interest rate swap agreements:Pay fixed versus receive float
    
    
    1,824,742
    
    
    
    150,000
    
    
    
    1,723,291
    
    
    
    200,000Receive fixed versus pay float
    
    
    1,824,742
    
    
    
    1,821,745
    
    
    
    1,703,799
    
    
    
    1,258,108Pay float versus receive float
    
    
    22,000
    
    
    
    
    
    
    
    22,000
    
    
    
    Written options
    
    
    400,111
    
    
    
    
    
    
    
    401,950
    
    
    
    Purchased options
    
    
    380,110
    
    
    
    
    
    
    
    381,941
    
    
    
    
 Accounting for Derivative Instruments and Hedging
Activities Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.
   June 30, 2006
    
    December 31, 2005Notional
    
    Carrying
    
    Notional
    
    CarryingValue
    
    Value
    
    Value
    
    Value(in Thousands)Cash Flow Hedges:Interest rate swap agreements
    
    $
    650,000
    
    
    $
    (6,207
    )
    
    $
    400,000
    
    
    $
    (1,110
    )Fair Value Hedges:Interest rate swap agreements
    
    
    1,321,745
    
    
    
    (41,995
    )
    
    
    1,058,108
    
    
    
    22,535Forward contracts (1)
    
    
    25,022
    
    
    
    90
    
    
    
    25,948
    
    
    
    (99
    )
 
 (1)
    
    Derivatives related to the Companys mortgage banking activities Interest-Rate Risk
  Fair-Value Hedges
  - 18 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
   Cash-Flow Hedges
  Off-Balance Sheet Activities
   - 19 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
  NOTE 10  Shareholders Equity
    NOTE 11  Goodwill and Other Acquired Intangible Assets
   Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Value(in Thousands)Nonamortizing goodwill
    
    $
    728,607
    
    
    $
    (53,806
    )
    
    $
    674,801Amortizing intangible assets:Core deposit intangibles
    
    $
    71,927
    
    
    $
    (39,358
    )
    
    $
    32,569Other customer intangibles
    
    
    44,977
    
    
    
    (14,907
    )
    
    
    30,070Total amortizing intangible assets
    
    $
    116,904
    
    
    $
    (54,265
    )
    
    $
    62,639
  - 20 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 NOTE 12  Commitments, Contingencies and Guarantees
     June 30,
    
    December 31,2006
    
    2005(in Thousands)Commitments to extend credit
    
    $
    12,706,086
    
    
    $
    11,498,497Standby and commercial letters of credit
    
    
    1,009,701
    
    
    
    942,176
       - 21 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
    NOTE 13  Stock-Based Compensation
  Accounting for Stock-Based Compensation. Accounting for Stock Issued to Employees Share-Based Payments
  Six MonthsEndedJune 30, 2006Dividend Yield
    
    
    3.55
    %Expected volatility
    
    
    0.2169Risk-free interest rate
    
    
    4.98
    %Expected life
    
    5.0
    years
  - 22 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
  Weighted
    
    
    
    
    
    
    AggregateShares
    
    
    Average
    
    
    Contractual
    
    
    IntrinsicUnderlying
    
    
    Exercise
    
    
    Term
    
    
    ValueOptions
    
    
    Price
    
    
    (years)
    
    
    (in Thousands)Outstanding, beginning of the period
    
    
    8,011,142
    
    
    $
    31.54Granted
    
    
    611,221
    
    
    
    55.75Exercised
    
    
    (807,640
    )
    
    
    27.45Cancelled
    
    
    (10,500
    )
    
    
    43.17Outstanding, end of the period
    
    
    7,804,223
    
    
    $
    33.84
    
    
    
    6.37
    
    
    $
    169,820Exercisable, end of the period
    
    
    6,689,448
    
    
    $
    31.24
    
    
    
    5.90
    
    
    $
    162,955
    Restricted
    
    
    Grant DateStock
    
    
    Fair ValueNonvested, beginning of the period
    
    
    456,744
    
    
    $
    45.53Granted
    
    
    243,978
    
    
    
    54.92Vested
    
    
    (116,841
    )
    
    
    49.25Forfeited
    
    
    (68,180
    )
    
    
    50.09Nonvested, end of the period
    
    
    515,701
    
    
    $
    48.53
 NOTE 14  Defined Benefit Pension Plan
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In Thousands)Service cost
    
    $
    1,738
    
    
    $
    1,833
    
    
    $
    3,698
    
    
    $
    3,804Interest cost
    
    
    2,480
    
    
    
    2,334
    
    
    
    5,049
    
    
    
    4,764Expected return on plan assets
    
    
    (3,248
    )
    
    
    (3,032
    )
    
    
    (6,636
    )
    
    
    (6,078
    )Amortization of prior service cost
    
    
    9
    
    
    
    6
    
    
    
    17
    
    
    
    17Amortization of net loss
    
    
    697
    
    
    
    736
    
    
    
    1,527
    
    
    
    1,595Net periodic benefit cost
    
    $
    1,676
    
    
    $
    1,877
    
    
    $
    3,655
    
    
    $
    4,102
  - 23 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
  NOTE 15  Recently Issued Accounting Standards
 Consolidation of Variable Interest Entities
 Consolidation of Variable Interest Entities Consolidation of Variable
Interest Entities, an interpretation of ARB No. 51,
  Accounting for Certain Loans or Debt Securities Acquired in a Transfer
 Accounting for Certain Loans or Debt Securities Acquired in a Transfer.
 Share-Based Payments
 Share-Based Payments, , Accounting for Stock-Based Compensation.
 - 24 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
 Accounting Changes and Error Corrections
 Accounting Changes and Error Corrections, a Replacement
of APB Opinion 20 and FASB Statement No. 3.
 Accounting for Certain Hybrid Financial Instruments
 Accounting for Certain Hybrid Financial
Instruments  an amendment of FASB Statements No. 133 and 140 Accounting for Derivative Instruments and Hedging Activities Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
 Accounting for Servicing of Financial Assets
 Accounting for Servicing of Financial Assets  an
amendment of FASB Statement No. 140 Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
 Accounting for Uncertainty in Income Taxes
 Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 Accounting for Income Taxes
 - 25 -




---



##### Table of Contents



Item 2  Managements Discussion and Analysis of Results of Operations and Financial Condition
 Results of Operations
 Forward-Looking Information
    Overview
     Net Interest Income
   26




---



##### Table of Contents



For the Quarter EndingMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2005
    
    
    2005
    
    
    2005
    
    
    2005Actual
    
    
    Actual
    
    
    Actual
    
    
    Actual
    
    
    Total(in Thousands)Hedging derivatives positive
impact to net interest margin
    
    $
    2,167
    
    
    $
    2,394
    
    
    $
    1,684
    
    
    $
    1,013
    
    
    $
    7,258
 For the Quarter EndingMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2006
    
    
    2006
    
    
    2006
    
    
    2006
    
    
    TotalActual
    
    
    Actual
    
    
    Projected*
    
    
    Projected*
    
    
    Projected*(in Thousands)Hedging derivatives positive
impact to net interest margin
    
    $
    2,010
    
    
    $
    1,630
    
    
    $
    1,010
    
    
    $
    176
    
    
    $
    4,826
 
 *
    
    Projected impact based on June 30, 2006 interest rates. - 27 -




---



##### Table of Contents



July 1, 2006throughDecember 31,
    
    For the Year Ended December 31,2006
    
    2007
    
    2008
    
    Thereafter($ in Thousands)Non-trading interest rate derivativesCash Flow HedgesNotional maturity
    
    $
    150,000
    
    
    $
    
    
    
    $
    500,000
    
    
    $
    Weighted average coupon received
on maturities
    
    
    5.16
    %
    
    
    
    %
    
    
    4.88
    %
    
    
    
    %Weighted average time to maturity (months)
    
    
    1
    
    
    
    
    
    
    
    19
    
    
    
    Fair Value HedgesNotional maturity
    
    $
    64,000
    
    
    $
    341,500
    
    
    $
    
    
    
    $
    916,245Weighted average coupon received
on maturities
    
    
    4.79
    %
    
    
    7.37
    %
    
    
    
    %
    
    
    5.96
    %Weighted average time to maturity (months)
    
    
    4
    
    
    
    8
    
    
    
    
    
    
    
    141
   Three Months EndedJune 30, 2006Change2005To
    
    
    Attributed to2006
    
    
    Volume
    
    
    Rate
    
    
    MixInterest income:Federal funds sold and securities
purchased
under agreements to resell
    
    $
    328
    
    
    $
    33
    
    
    $
    274
    
    
    $
    21Trading account assets
    
    
    106
    
    
    
    101
    
    
    
    3
    
    
    
    2Investment securities available for sale
    
    
    5,898
    
    
    
    (2,103
    )
    
    
    8,387
    
    
    
    (386
    )Investment securities held to maturity
    
    
    (4,099
    )
    
    
    (4,701
    )
    
    
    711
    
    
    
    (109
    )Loans
    
    
    139,570
    
    
    
    63,537
    
    
    
    62,523
    
    
    
    13,510Increase in interest income
    
    $
    141,803
    
    
    $
    56,867
    
    
    $
    71,898
    
    
    $
    13,038Interest expense:Deposits
    
    $
    67,321
    
    
    $
    18,910
    
    
    $
    39,219
    
    
    $
    9,192Federal funds purchased and securities
sold under agreements to repurchase
    
    
    6,088
    
    
    
    (8,162
    )
    
    
    19,701
    
    
    
    (5,451
    )Other short-term borrowings
    
    
    9,785
    
    
    
    3,931
    
    
    
    1,161
    
    
    
    4,693FHLB and other borrowings
    
    
    6,885
    
    
    
    (2,953
    )
    
    
    10,544
    
    
    
    (706
    )Increase in interest expense
    
    $
    90,079
    
    
    $
    11,726
    
    
    $
    70,625
    
    
    $
    7,728
 - 28 -




---



##### Table of Contents



Six Months EndedJune 30, 2006Change2005To
    
    
    Attributed to2006
    
    
    Volume
    
    
    Rate
    
    
    MixInterest income:Federal funds sold and securities
purchased
under agreements to resell
    
    $
    644
    
    
    $
    156
    
    
    $
    391
    
    
    $
    97Trading account assets
    
    
    177
    
    
    
    175
    
    
    
    1
    
    
    
    1Investment securities available for sale
    
    
    11,103
    
    
    
    (738
    )
    
    
    11,937
    
    
    
    (96
    )Investment securities held to maturity
    
    
    (10,391
    )
    
    
    (10,641
    )
    
    
    300
    
    
    
    (50
    )Loans
    
    
    242,756
    
    
    
    101,881
    
    
    
    119,308
    
    
    
    21,567Increase in interest income
    
    $
    244,289
    
    
    $
    90,833
    
    
    $
    131,937
    
    
    $
    21,519Interest expense:Deposits
    
    $
    117,160
    
    
    $
    34,110
    
    
    $
    69,663
    
    
    $
    13,387Federal funds purchased and securities
sold under agreements to repurchase
    
    
    17,173
    
    
    
    (13,606
    )
    
    
    40,730
    
    
    
    (9,951
    )Other short-term borrowings
    
    
    13,754
    
    
    
    4,830
    
    
    
    2,119
    
    
    
    6,805FHLB and other borrowings
    
    
    15,550
    
    
    
    (3,701
    )
    
    
    20,135
    
    
    
    (884
    )Increase in interest expense
    
    $
    163,637
    
    
    $
    21,633
    
    
    $
    132,647
    
    
    $
    9,357
 Noninterest Income and Noninterest Expense
   - 29 -




---



##### Table of Contents



Income Taxes
  Provision and Allowance for Loan Losses
  Credit  Nonperforming Assets and Past Due Loans
    - 30 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Allowance for Loan Losses/Nonperforming Assets
 Six Months EndedJune 30,2006
    
    
    2005Allowance for Loan LossesBalance at beginning of period
    
    $
    267,173
    
    
    $
    258,339Add: Provision charged to income
    
    
    44,434
    
    
    
    48,073Allowance acquired (transferred)
    
    
    11,179
    
    
    
    (12,189
    )Deduct: Loans charged off
    
    
    48,381
    
    
    
    55,129Loan recoveries
    
    
    (14,738
    )
    
    
    (15,614
    )Net charge-offs
    
    
    33,643
    
    
    
    39,515Balance at end of period
    
    $
    289,143
    
    
    $
    254,708Net charge-offs as a percentage of
average loans (annualized)
    
    
    0.30
    %
    
    
    0.41
    %
 June 30, 2006
    
    
    December 31, 2005Nonperforming AssetsNonaccrual loans
    
    $
    53,166
    
    
    $
    47,578Renegotiated loans
    
    
    3,276
    
    
    
    698Total nonperforming loans
    
    
    56,442
    
    
    
    48,276Other real estate, net
    
    
    11,803
    
    
    
    11,510Total nonperforming assets
    
    $
    68,245
    
    
    $
    59,786Accruing loans ninety days or more past due
    
    $
    14,862
    
    
    $
    14,539Other repossessed assets
    
    
    565
    
    
    
    763Allowance as a percentage of loans
    
    
    1.19
    %
    
    
    1.25
    %Total nonperforming loans as a percentage
of loans
    
    
    0.23
    
    
    
    0.23Total nonperforming assets as a percentage
of loans and ORE
    
    
    0.28
    
    
    
    0.28Accruing loans ninety days or more past due as a
percentage of loans
    
    
    0.06
    
    
    
    0.07Allowance for loan losses as a percentage of
nonperforming loans
    
    
    512.28
    
    
    
    553.43Allowance for loan losses as a percentage of
nonperforming assets
    
    
    423.68
    
    
    
    446.88
 31




---



##### Table of Contents



Financial Condition
 Overview
  Assets and Funding
  Liquidity and Capital Resources
       - 32 -




---



##### Table of Contents



- 33 -




---



##### Table of Contents



Item 3  Quantitative and Qualitative Disclosures About Market Risk
   Principal
    
    
    PercentageAmount of Earning
    
    
    Increase/(Decrease)Assets, Interest
    
    
    in Interest Income/ExpenseBearing Liabilities
    
    
    Down 100
    
    
    Up 100and Swaps
    
    
    Basis Points
    
    
    Basis Points(in Thousands)(Unaudited)June 30, 2006:Assets which reprice in: *One year or less
    
    $
    17,097,662
    
    
    
    (6.60
    )%
    
    
    6.67
    %Over one year
    
    
    13,686,030
    
    
    
    (1.23
    )
    
    
    1.12$
    30,783,692
    
    
    
    (4.55
    )
    
    
    4.55Liabilities which reprice in:One year or less
    
    $
    19,411,930
    
    
    
    (9.23
    )%
    
    
    11.75
    %Over one year
    
    
    4,524,944
    
    
    
    (1.47
    )
    
    
    2.71$
    23,936,874
    
    
    
    (7.40
    )
    
    
    9.61Total net interest income sensitivity
    
    
    
    
    
    
    (2.02
    )%
    
    
    0.04
    %December 31, 2005:Assets which reprice in: *One year or less
    
    $
    14,557,658
    
    
    
    (7.48
    )%
    
    
    7.59
    %Over one year
    
    
    13,839,052
    
    
    
    (2.16
    )
    
    
    1.46$
    28,396,710
    
    
    
    (5.19
    )
    
    
    4.96Liabilities which reprice in:One year or less
    
    $
    17,488,014
    
    
    
    (11.64
    )%
    
    
    15.11
    %Over one year
    
    
    4,665,004
    
    
    
    (0.82
    )
    
    
    2.17$
    22,153,018
    
    
    
    (8.24
    )
    
    
    11.04Total net interest income sensitivity
    
    
    
    
    
    
    (3.01
    )%
    
    
    0.59
    %
 
 *
    
    Excludes noninterest earning trading account assets  - 34 -




---



##### Table of Contents



Item 4  Controls and Procedures
   - 35 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 PART II. OTHER INFORMATION
 
 Item 1  Legal Proceedings
   
 Item 1A  Risk Factors
  
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares that May YetTotal Number of
    
    
    Average Price
    
    
    Part of Publicly
    
    
    Be PurchasedShares Purchased (1)
    
    
    Paid Per Share
    
    
    Announced Program (2)
    
    
    Under the Program (2)April 1, 2006 
April 30, 2006
    
    
    4,884
    
    
    $
    51.45
    
    
    
    
    
    
    
    3,088,600May 1, 2006 
May 31, 2006
    
    
    384
    
    
    
    53.26
    
    
    
    
    
    
    
    3,088,600June 1, 2006 
June 30, 2006
    
    
    164,258
    
    
    
    48.60
    
    
    
    163,570
    
    
    
    2,925,030Total
    
    
    169,526
    
    
    $
    48.69
    
    
    
    163,570
 
 (1)
    
    This column includes (a) purchases of the Companys common stock under the Companys publicly announced share
repurchase program described in (2) below and (b) the surrender to the Company by plan participants of shares of
common stock to satisfy the exercise price and tax withholdings related to the exercise of employee stock
options and restricted stock during the period indicated.(2)
    
    In 2003, the Company announced that its Board of Directors authorized management to purchase approximately 4.1
million shares of the Companys outstanding common stock. 
 Item 4  Submission of Matters to a Vote of Security Holders
  i.
    
    Election of Directors:Charles W. Daniel, William Eugene Davenport,
Charles E. McMahen were elected upon receipt of the following votes
for / withheld, respectively, 101,280,436 / 3,510,110, 100,952,363 /
3,838,183, and 103,431,777 / 1,358,769.ii.
    
    Approval and ratification of the 2006 Incentive Compensation Plan:
The Compass Bancshares, Inc. 2006 Incentive Compensation Plan was
approved and ratified by the shareholders upon receipt of the
following votes for/against/abstain, respectively, 64,933,363 /
7,886,031 / 1,149,574.
 - 36 -




---



##### Table of Contents



Item 5  Other Information
 Named Executive Officers
  2006 Annual Base Salaries and 2005 Bonus Awards
 Other Information
 Performance Criteria for 2006 Bonus Awards.
 Director Compensation
  
 Item 6  Exhibits
 (3)
    
    Articles of Incorporation and By-Laws of Compass Bancshares, Inc.
 (a)
    
    Restated Certificate of Incorporation of Compass Bancshares, Inc., as amended,
dated May 17, 1982 (incorporated by reference to Exhibit 3.1 to Compass Bancshares,
Inc.s Registration Statement on Form S-4, Registration No. 333-129940, filed November
23, 2005 with the Commission)(b)
    
    Certificate of Amendment, dated May 20, 1986, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
333-129940, filed November 23, 2005 with the Commission)
 - 37 -




---



##### Table of Contents



Exhibits  continued
 (c)
    
    Certificate of Amendment, dated May 15, 1987, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.3 to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
333-129940, filed November 23, 2005 with the Commission)(d)
    
    Certificate of Amendment, dated November 3, 1993, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.4 to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
333-129940, filed November 23, 2005 with the Commission)(e)
    
    Certificate of Amendment, dated September 16, 1994, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.5 to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
333-129940, filed November 23, 2005 with the Commission)(f)
    
    Certificate of Amendment, dated May 15, 1998, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.6 to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
333-129940, filed November 23, 2005 with the Commission)(g)
    
    Certificate of Amendment, dated May 1, 2002, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.7 to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
333-129940, filed November 23, 2005 with the Commission)(h)
    
    Bylaws of Compass Bancshares, Inc. as amended and restated as of March 15, 1982
and amended on February 17, 1986 and February 15, 1988
 (4)
    
    Instruments Defining the Rights of Security Holders, Including Indentures
 Instruments defining the rights of the holders of long-term debt of Compass Bancshares,
Inc. and its subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii) of
Regulation S-K. Compass Bancshares, Inc. hereby agrees to furnish copies of such
instruments to the Commission upon request.
 (10)
    
    Material Contracts
 (a)
    
    Compass Bancshares, Inc., 1996 Long Term Incentive Plan (incorporated by
reference to Exhibit 4(g) to Compass Bancshares, Inc.s Registration Statement on Form
S-8, Registration No. 333-15117, filed October 30, 1996 with the Commission) *(b)
    
    Compass Bancshares, Inc., 1999 Omnibus Incentive Compensation Plan
(incorporated by reference to Exhibit 10(a) to Compass Bancshares, Inc.s Registration
Statement on Form S-8, Registration No. 333-86455, filed September 2, 1999 with the
Commission) *(c)
    
    Employment Agreement, dated December 14, 1994, between Compass Bancshares, Inc.
and D. Paul Jones, Jr. (incorporated by reference to Exhibit 10(e) to Compass
Bancshares, Inc.s March 31, 2000 Form 10-Q, file number 000-06032, filed May 15, 2000
with the Commission) *(d)
    
    Employment Agreement, dated December 14, 1994, between Compass Bancshares, Inc.
and Garrett R. Hegel (incorporated by reference to Exhibit 10(g) to Compass Bancshares,
Inc.s March 31, 2000 Form 10-Q, file number 000-06032, filed May 15, 2000 with the
Commission) *(e)
    
    Employment Agreement, dated November 24, 1997, between Compass Bancshares, Inc.
and James D. Barri (incorporated by reference to Exhibit 10(j) to Compass Bancshares,
Inc.s March 31, 2000 Form 10-Q, file number 000-06032, filed May 15, 2000 with the
Commission) *(f)
    
    Employment Agreement, dated December 14, 1994, between Compass Bancshares, Inc.
and G. Ray Stone (incorporated by reference to Exhibit 10(i) to Compass Bancshares,
Inc.s Registration Statement on Form S-4, Registration No. 333-15373, filed November
1, 1996 with the Commission) *(g)
    
    Employment Agreement, dated March 1, 1998, between Compass Bancshares, Inc. and
Clayton D. Pledger (incorporated by reference to Exhibit 10(g) to Compass Bancshares,
Inc.s December 31, 2001 Form 10-K, file number 000-06032, filed March 11, 2002 with
the Commission) *
 - 38 -




---



##### Table of Contents



Exhibits  continued
 (h)
    
    First Amendment to Employment Agreement, dated March 31, 1997, between Compass
Bancshares, Inc. and D. Paul Jones, Jr. (incorporated by reference to Exhibit 10(h) to
Compass Bancshares, Inc.s December 31, 2004 Form 10-K, file number 001-31272, filed
February 28, 2005 with the Commission) *(i)
    
    First Amendment to Employment Agreement, dated April 14, 1997, between Compass
Bancshares, Inc. and Garrett R. Hegel (incorporated by reference to Exhibit 10(i) to
Compass Bancshares, Inc.s December 31, 2004 Form 10-K, file number 001-31272, filed
February 28, 2005 with the Commission) *(j)
    
    First Amendment to Employment Agreement, dated April 18, 1997, between Compass
Bancshares, Inc. and G. Ray Stone (incorporated by reference to Exhibit 10(j) to
Compass Bancshares, Inc.s December 31, 2004 Form 10-K, file number 001-31272, filed
February 28, 2005 with the Commission) *(k)
    
    Amendment to Employment Agreement, dated October 12, 2001, between Compass
Bancshares, Inc. and D. Paul Jones, Jr. (incorporated by reference to Exhibit 10(i) to
Compass Bancshares, Inc.s December 31, 2001 Form 10-K, file number 000-06032, filed
March 11, 2002 with the Commission) *(l)
    
    Amendment to Employment Agreement, dated October 12, 2001, between Compass
Bancshares, Inc. and Garrett R. Hegel (incorporated by reference to Exhibit 10(j) to
Compass Bancshares, Inc.s December 31, 2001 Form 10-K, file number 000-06032, filed
March 11, 2002 with the Commission) *(m)
    
    Amendment to Employment Agreement, dated October 12, 2001, between Compass
Bancshares, Inc. and James D. Barri (incorporated by reference to Exhibit 10(l) to
Compass Bancshares, Inc.s December 31, 2001 Form 10-K, file number 000-06032, filed
March 11, 2002 with the Commission) *(n)
    
    Amendment to Employment Agreement, dated October 12, 2001, between Compass
Bancshares, Inc. and Clayton D. Pledger (incorporated by reference to Exhibit 10(h) to
Compass Bancshares, Inc.s December 31, 2001 Form 10-K, file number 000-06032, filed
March 11, 2002 with the Commission) *(o)
    
    Amendment to Employment Agreement, dated October 12, 2001, between Compass
Bancshares, Inc. and G. Ray Stone (incorporated by reference to Exhibit 10(o) to
Compass Bancshares, Inc.s December 31, 2004 Form 10-K, file number 001-31272, filed
February 28, 2005 with the Commission) *(p)
    
    Compass Bancshares, Inc. Employee Stock Ownership Benefit Restoration Plan, as
amended and restated as of January 1, 2003 (incorporated by reference to Exhibit 10(p)
to Compass Bancshares, Inc.s March 31, 2006 Form 10-Q, file number 001-31272, filed
May 8, 2006 with the Commission) *(q)
    
    Compass Bancshares, Inc. Supplemental Retirement Plan, dated May 1, 1997
(incorporated by reference to Exhibit 10(k) to Compass Bancshares, Inc.s December 31,
1999 Form 10-K, file number 000-06032, filed March 23, 2000 with the Commission) *(r)
    
    Deferred Compensation Plan for Compass Bancshares, Inc., as amended and
restated as of January 1, 2005 *(s)
    
    Compass Bancshares, Inc. Special Supplemental Retirement Plan, as amended and
restated as of January 1, 2005 *(t)
    
    Compass Bancshares, Inc. Director & Executive Stock Purchase Plan (formerly
known as Monthly Investment Plan), as Amended and Restated, effective as of September
1, 2001 (incorporated by reference to Exhibit 4.8 to Compass Bancshares, Inc.s
Registration Statement on Form S-8, Registration No. 333-26884, filed July 31, 2001
with the Commission) *(u)
    
    Compass Bancshares, Inc. 2002 Incentive Compensation Plan (incorporated by
reference to Exhibit 4.9 to Compass Bancshares, Inc.s Registration Statement on Form
S-8, Registration No. 333-90806, filed June 19, 2002 with the Commission) *(v)
    
    2005 Form of Performance Contingent Restricted Stock Agreement (incorporated by
reference to Exhibit 10.1 to Compass Bancshares, Inc.s Form 8-K, file number
001-31272, filed February 22, 2005 with the Commission) *
 - 39 -




---



##### Table of Contents



Exhibits  continued
 (w)
    
    2005 Form of Amendment Number One to the Performance Contingent Restricted
Stock Award Agreement (incorporated by reference to Compass Bancshares, Inc.s Form
8-K, file number 001-31272, filed October 21, 2005 with the Commission) *(x)
    
    2005 Form of Incentive Stock Option Agreement (D. Paul Jones, Jr.)
(incorporated by reference to Exhibit 10.2 to Compass Bancshares, Inc.s Form 8-K, file
number 001-31272, filed February 22, 2005 with the Commission) *(y)
    
    2005 Form of Incentive Stock Option Agreement (G. Ray Stone) (incorporated by
reference to Exhibit 10.3 to Compass Bancshares, Inc.s Form 8-K, file number
001-31272, filed February 22, 2005 with the Commission) *(z)
    
    2005 Form of Incentive Stock Option Agreement (Garrett R. Hegel, James D. Barri
and Clayton D. Pledger) (incorporated by reference to Exhibit 10.4 to Compass
Bancshares, Inc.s Form 8-K, file number 001-31272, filed February 22, 2005 with the
Commission) *(aa)
    
    Compass Bancshares, Inc. 2006 Incentive Compensation Plan (incorporated by
reference to Exhibit 4.9 to Compass Bancshares, Inc.s Registration Statement on Form
S-8, Registration No. 333-135154, filed June 20, 2006 with the Commission) *(ab)
    
    2006 Form of Performance Contingent Restricted Stock Agreement (D. Paul Jones,
Jr.) (incorporated by reference to Exhibit 10.1 to Compass Bancshares, Inc.s Form
8-K, file number 001-31272, filed May 31, 2006 with the Commission) *(ac)
    
    2006 Form of Performance Contingent Restricted Stock Agreement (G. Ray Stone)
(incorporated by reference to Exhibit 10.2 to Compass Bancshares, Inc.s Form 8-K, file
number 001-31272, filed May 31, 2006 with the Commission) *(ad)
    
    2006 Form of Performance Contingent Restricted Stock Agreement (Garrett R.
Hegel, James D. Barri and Clayton D. Pledger) (incorporated by reference to Exhibit
10.3 to Compass Bancshares, Inc.s Form 8-K, file number 001-31272, filed May 31, 2006
with the Commission) *(ae)
    
    2006 Form of Incentive Stock Option Agreement (D. Paul Jones, Jr.)
(incorporated by reference to Exhibit 10.4 to Compass Bancshares, Inc.s Form 8-K, file
number 001-31272, filed May 31, 2006 with the Commission) *(af)
    
    2006 Form of Incentive Stock Option Agreement (G. Ray Stone) (incorporated by
reference to Exhibit 10.5 to Compass Bancshares, Inc.s Form 8-K, file number
001-31272, filed May 31, 2006 with the Commission)*(ag)
    
    2006 Form of Incentive Stock Option Agreement (Garrett R. Hegel, James D. Barri
and Clayton D. Pledger) (incorporated by reference to Exhibit 10.6 to Compass
Bancshares, Inc.s Form 8-K, file number 001-31272, filed May 31, 2006 with the
Commission) *(ah)
    
    Form of Stock Option Agreement for Non-Employee Directors (incorporated by
reference to Exhibit 10(cc) to Compass Bancshares, Inc.s March 31, 2005 Form 10-Q,
file number 001-31272, filed May 6, 2005 with the Commission) *(ai)
    
    Summary of Compensation Arrangements for Named Executive Officers and Directors
*(aj)
    
    Distribution Agreement, dated March 13, 2006, among Compass Bank and Compass
Bancshares, Inc., and Citigroup Global Markets Inc., Keefe, Bruyette & Woods, Inc.
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler
ONeill & Partners, L.P. as agents (incorporated by reference to Exhibit 10(ae) to
Compass Bancshares, Inc.s March 31, 2006 Form 10-Q, file number 001-31272, filed May
8, 2006 with the Commission)
 - 40 -




---



##### Table of Contents



Exhibits  continued
 (ak)
    
    Issuing and Paying Agency Agreement, dated March 13, 2006, between Compass
Bank, as issuer, and Compass Bank, as issuing and paying agent (incorporated by
reference to Exhibit 10(af) to Compass Bancshares, Inc.s March 31, 2006 Form 10-Q,
file number 001-31272, filed May 8, 2006 with the Commission)(31)(a)
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by D. Paul
Jones, Jr., Chief Executive Officer(31)(b)
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Garrett. R.
Hegel, Chief Financial Officer(32)(a)
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 by D. Paul Jones, Jr., Chief Executive Officer(32)(b)
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 by Garrett R. Hegel, Chief Financial Officer
 Certain financial statement schedules and exhibits have been omitted because they are either not
required or the information is otherwise included in the Notes to Consolidated Financial
Statements.
 
 *
    
    Management contract or compensatory plan or arrangement - 41 -




---



##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 SIGNATURES
  August 8, 2006
    
    
    
    By:
    
    /s/ Garrett R. HegelDate
    
    
    
    
    
    Garrett R. HegelChief Financial Officer
 - 42 -