##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Period Ended
June 30, 2005
    
    Commission File
No. 1-31272
 
 (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
  Class
    
    Outstanding at July 31, 2005Common Stock, $2 Par Value
    
    124,353,573




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PART I. FINANCIAL INFORMATION
    
    PageItem 1
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004
    
    
    4Consolidated Statements of Changes In Shareholders Equity for the Six Months Ended June 30, 2005 and 2004
    
    
    5Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2
    
    Managements Discussion and Analysis of Results of Operations and Financial Condition
    
    
    24Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4
    
    Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    
    34Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 4
    
    Submission of Matters to Vote of Security Holders
    
    
    34Item 6
    
    Exhibits
    
    
    35EX-31.(A) SECTION 302 CERTIFICATION OF THE CEOEX-31.(B) SECTION 302 CERTIFICATION OF THE CFOEX-32.(A) SECTION 906 CERTIFICATION OF THE CEOEX-32.(B) SECTION 906 CERTIFICATION OF THE CFO
  - 2 -




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1
 Financial Statements
 COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
 June 30, 2005
    
    December 31, 2004AssetsCash and due from banks
    
    $
    680,176
    
    
    $
    585,679Federal funds sold and securities purchased
under agreements to resell
    
    
    41,073
    
    
    
    46,948Trading account assets
    
    
    70,356
    
    
    
    60,156Investment securities available for sale
    
    
    4,598,312
    
    
    
    4,398,184Investment securities held to maturity (fair value of
$2,509,342 and $2,768,334 for 2005 and 2004, respectively)
    
    
    2,505,436
    
    
    
    2,767,099Loans
    
    
    20,050,122
    
    
    
    18,856,922Allowance for loan losses
    
    
    (254,708
    )
    
    
    (258,339
    )Net loans
    
    
    19,795,414
    
    
    
    18,598,583Premises and equipment, net
    
    
    548,328
    
    
    
    537,466Bank owned life insurance
    
    
    432,335
    
    
    
    423,942Goodwill
    
    
    316,221
    
    
    
    302,619Other assets
    
    
    515,276
    
    
    
    463,952Total assets
    
    $
    29,502,927
    
    
    $
    28,184,628Liabilities and Shareholders EquityDeposits:Noninterest bearing
    
    $
    5,858,976
    
    
    $
    5,476,140Interest bearing
    
    
    12,354,405
    
    
    
    11,563,011Total deposits
    
    
    18,213,381
    
    
    
    17,039,151Federal funds purchased and securities sold under
agreements to repurchase
    
    
    4,520,711
    
    
    
    4,532,004Other short-term borrowings
    
    
    160,018
    
    
    
    175,771FHLB and other borrowings
    
    
    4,153,381
    
    
    
    4,140,972Accrued expenses and other liabilities
    
    
    277,080
    
    
    
    251,477Total liabilities
    
    
    27,324,571
    
    
    
    26,139,375Shareholders equity:Preferred stock (25,000,000 shares authorized; issued  none)
    
    
    
    
    
    
    Common stock of $2 par value:Authorized  300,000,000 shares;Issued  133,476,827 shares in 2005 and
132,903,225 shares in 2004
    
    
    266,954
    
    
    
    265,806Treasury stock, at cost (9,271,505 shares in 2005 and
9,639,194 shares in 2004)
    
    
    (320,635
    )
    
    
    (333,351
    )Surplus
    
    
    281,754
    
    
    
    264,400Loans to finance stock purchases
    
    
    (1,009
    )
    
    
    (1,056
    )Unearned restricted stock
    
    
    (13,459
    )
    
    
    (10,624
    )Accumulated other comprehensive loss
    
    
    (32,109
    )
    
    
    (23,376
    )Retained earnings
    
    
    1,996,860
    
    
    
    1,883,454Total shareholders equity
    
    
    2,178,356
    
    
    
    2,045,253Total liabilities and shareholders equity
    
    $
    29,502,927
    
    
    $
    28,184,628
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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Income
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Interest income:Interest and fees on loans
    
    $
    293,740
    
    
    $
    223,331
    
    
    $
    563,023
    
    
    $
    455,138Interest on investment securities available for sale
    
    
    45,701
    
    
    
    50,894
    
    
    
    91,862
    
    
    
    94,906Interest on investment securities held to maturity
    
    
    30,132
    
    
    
    38,503
    
    
    
    62,255
    
    
    
    73,071Interest on federal funds sold and securities
purchased under agreements to resell
    
    
    416
    
    
    
    164
    
    
    
    629
    
    
    
    316Interest on trading account assets
    
    
    183
    
    
    
    116
    
    
    
    355
    
    
    
    256Total interest income
    
    
    370,172
    
    
    
    313,008
    
    
    
    718,124
    
    
    
    623,687Interest expense:Interest on deposits
    
    
    58,810
    
    
    
    35,925
    
    
    
    107,461
    
    
    
    71,960Interest on federal funds purchased and securities
sold under agreements to repurchase
    
    
    29,500
    
    
    
    9,908
    
    
    
    55,692
    
    
    
    20,020Interest on other short-term borrowings
    
    
    972
    
    
    
    191
    
    
    
    1,504
    
    
    
    393Interest on FHLB and other borrowings
    
    
    40,704
    
    
    
    40,245
    
    
    
    77,005
    
    
    
    81,714Total interest expense
    
    
    129,986
    
    
    
    86,269
    
    
    
    241,662
    
    
    
    174,087Net interest income
    
    
    240,186
    
    
    
    226,739
    
    
    
    476,462
    
    
    
    449,600Provision for loan losses
    
    
    27,800
    
    
    
    28,178
    
    
    
    48,073
    
    
    
    52,523Net interest income after provision for loan
losses
    
    
    212,386
    
    
    
    198,561
    
    
    
    428,389
    
    
    
    397,077Noninterest income:Service charges on deposit accounts
    
    
    78,927
    
    
    
    72,994
    
    
    
    141,576
    
    
    
    137,322Card and merchant processing fees
    
    
    24,274
    
    
    
    19,016
    
    
    
    45,604
    
    
    
    35,585Insurance commissions
    
    
    15,570
    
    
    
    12,806
    
    
    
    31,294
    
    
    
    27,393Retail investment sales
    
    
    8,448
    
    
    
    8,092
    
    
    
    17,229
    
    
    
    15,650Asset management fees
    
    
    6,646
    
    
    
    5,684
    
    
    
    13,707
    
    
    
    11,419Corporate and correspondent investment sales
    
    
    5,234
    
    
    
    4,910
    
    
    
    9,354
    
    
    
    10,873Bank owned life insurance
    
    
    4,216
    
    
    
    4,031
    
    
    
    8,456
    
    
    
    8,203Investment securities gains, net
    
    
    79
    
    
    
    
    
    
    
    79
    
    
    
    2,207Gain on sale of business
    
    
    
    
    
    
    
    
    
    
    4,791
    
    
    
    Other
    
    
    22,623
    
    
    
    22,486
    
    
    
    48,488
    
    
    
    43,278Total noninterest income
    
    
    166,017
    
    
    
    150,019
    
    
    
    320,578
    
    
    
    291,930Noninterest expense:Salaries, benefits and commissions
    
    
    118,762
    
    
    
    111,330
    
    
    
    240,106
    
    
    
    229,467Equipment
    
    
    20,170
    
    
    
    18,948
    
    
    
    40,229
    
    
    
    37,301Net occupancy
    
    
    16,833
    
    
    
    16,768
    
    
    
    33,485
    
    
    
    33,246Professional services
    
    
    15,154
    
    
    
    13,605
    
    
    
    29,234
    
    
    
    26,747Marketing
    
    
    11,476
    
    
    
    10,467
    
    
    
    23,361
    
    
    
    19,136Communications
    
    
    5,447
    
    
    
    5,838
    
    
    
    10,923
    
    
    
    11,361Amortization of intangibles
    
    
    1,588
    
    
    
    1,624
    
    
    
    3,115
    
    
    
    3,250Merger and integration
    
    
    235
    
    
    
    300
    
    
    
    469
    
    
    
    545Other
    
    
    32,930
    
    
    
    32,301
    
    
    
    63,545
    
    
    
    60,275Total noninterest expense
    
    
    222,595
    
    
    
    211,181
    
    
    
    444,467
    
    
    
    421,328Net income before income tax expense
    
    
    155,808
    
    
    
    137,399
    
    
    
    304,500
    
    
    
    267,679Income tax expense
    
    
    53,357
    
    
    
    45,654
    
    
    
    103,293
    
    
    
    89,687Net income
    
    $
    102,451
    
    
    $
    91,745
    
    
    $
    201,207
    
    
    $
    177,992Basic earnings per share
    
    $
    0.83
    
    
    $
    0.75
    
    
    $
    1.63
    
    
    $
    1.46Basic weighted average shares outstanding
    
    
    123,617
    
    
    
    122,074
    
    
    
    123,452
    
    
    
    122,069Diluted earnings per share
    
    $
    0.81
    
    
    $
    0.73
    
    
    $
    1.59
    
    
    $
    1.42Diluted weighted average shares outstanding
    
    
    126,212
    
    
    
    124,947
    
    
    
    126,407
    
    
    
    125,046Dividends per share
    
    $
    0.3500
    
    
    $
    0.3125
    
    
    $
    0.7000
    
    
    $
    0.6250
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##### 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
    
    Income (Loss)
    
    Other
    
    Equity
    
    IncomeBalance, December 31, 2003
    
    $
    263,138
    
    
    $
    (317,669
    )
    
    $
    227,404
    
    
    $
    1,668,998
    
    
    $
    37,306
    
    
    $
    (7,294
    )
    
    $
    1,871,883Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,992
    
    
    
    
    
    
    
    
    
    
    
    177,992
    
    
    $
    177,992Net change in unrealized gains / losses on securities
available for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,124
    )
    
    
    
    
    
    
    (45,124
    )
    
    
    (45,124
    )Net change in accumulated gains / losses on
cash-flow hedging instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,289
    )
    
    
    
    
    
    
    (5,289
    )
    
    
    (5,289
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    127,579Common dividends declared ($0.6250 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,162
    )
    
    
    
    
    
    
    
    
    
    
    (77,162
    )Exercise of stock options and other issuances
    
    
    1,727
    
    
    
    
    
    
    
    17,532
    
    
    
    (1,006
    )
    
    
    
    
    
    
    
    
    
    
    18,253Issuance of restricted stock, net of cancellations
    
    
    242
    
    
    
    
    
    
    
    5,217
    
    
    
    
    
    
    
    
    
    
    
    (5,970
    )
    
    
    (511
    )Advances on loans to finance stock purchases,
net of repayments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195
    )
    
    
    (195
    )Issuance of treasury stock for acquisitions, stock
options and employee benefit plans
    
    
    
    
    
    
    6,453
    
    
    
    913
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,366Amortization of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,685
    
    
    
    1,685Purchase of treasury stock
    
    
    
    
    
    
    (33,096
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,096
    )Balance, June 30, 2004
    
    $
    265,107
    
    
    $
    (344,312
    )
    
    $
    251,066
    
    
    $
    1,768,822
    
    
    $
    (13,107
    )
    
    $
    (11,774
    )
    
    $
    1,915,802Balance, December 31, 2004
    
    $
    265,806
    
    
    $
    (333,351
    )
    
    $
    264,400
    
    
    $
    1,883,454
    
    
    $
    (23,376
    )
    
    $
    (11,680
    )
    
    $
    2,045,253Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    201,207
    
    
    
    
    
    
    
    
    
    
    
    201,207
    
    
    $
    201,207Net 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    192,474Common dividends declared ($0.7000 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
    
    
    $
    1,996,860
    
    
    $
    (32,109
    )
    
    $
    (14,468
    )
    
    $
    2,178,356
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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 Six Months EndedJune 30,2005
    
    2004Operating Activities:Net income
    
    $
    201,207
    
    
    $
    177,992Adjustments to reconcile net income to cash provided by operations:Depreciation and amortization
    
    
    53,344
    
    
    
    49,941Accretion of discount and loan fees
    
    
    (3,316
    )
    
    
    (10,886
    )Provision for loan losses
    
    
    48,073
    
    
    
    52,523Net change in trading account assets
    
    
    (9,422
    )
    
    
    3,985Net gain on sale of investment securities available for sale
    
    
    (79
    )
    
    
    (2,207
    )Net gain on sale of business
    
    
    (4,791
    )
    
    
    Increase in other assets
    
    
    (45,076
    )
    
    
    (79,269
    )Increase in other liabilities
    
    
    44,429
    
    
    
    52,791Net cash provided by operating activities
    
    
    284,369
    
    
    
    244,870Investing Activities:Proceeds from maturities/calls of investment securities held to
maturity
    
    
    266,458
    
    
    
    402,288Purchases of investment securities held to maturity
    
    
    (5,000
    )
    
    
    Proceeds from sales of investment securities available for sale
    
    
    48,627
    
    
    
    215,370Proceeds from maturities/calls of investment securities available
for sale
    
    
    325,842
    
    
    
    486,405Purchases of investment securities available for sale
    
    
    (595,459
    )
    
    
    (1,139,759
    )Net decrease in federal funds sold and securities purchased under
agreements to resell
    
    
    5,875
    
    
    
    22,147Net increase in loan portfolio
    
    
    (1,242,444
    )
    
    
    (1,039,435
    )Net cash paid in acquisitions
    
    
    (202
    )
    
    
    Net cash received in sale of business
    
    
    4,726
    
    
    
    Purchases of premises and equipment, net
    
    
    (41,482
    )
    
    
    (35,491
    )Proceeds from sales of other real estate owned
    
    
    9,805
    
    
    
    14,522Net cash used by investing activities
    
    
    (1,223,254
    )
    
    
    (1,073,953
    )
  - 6 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Consolidated Statements of Cash Flows  Continued
 Six Months EndedJune 30,2005
    
    2004Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    42,921
    
    
    
    562,909Net increase in time deposits
    
    
    1,131,183
    
    
    
    38,565Net increase (decrease) in federal funds purchased and securities
sold under agreements to repurchase
    
    
    (11,293
    )
    
    
    86,525Net decrease in other short-term borrowings
    
    
    (15,753
    )
    
    
    (93,299
    )Proceeds from FHLB advances and other borrowings
    
    
    396,902
    
    
    
    1,125,100Repayment of FHLB advances and other borrowings
    
    
    (400,274
    )
    
    
    (817,774
    )Redemption of guaranteed preferred beneficial interests in
Companys junior subordinated deferrable interest debentures
    
    
    
    
    
    
    (23,000
    )Common dividends paid
    
    
    (122,266
    )
    
    
    (77,829
    )Purchase of treasury stock
    
    
    (1,786
    )
    
    
    (32,885
    )Issuance of treasury stock for stock options
    
    
    4,420
    
    
    
    2,414Repayment of loans to finance stock purchases
    
    
    350
    
    
    
    301Proceeds from exercise of stock options
    
    
    8,978
    
    
    
    17,246Net cash provided by financing activities
    
    
    1,033,382
    
    
    
    788,273Net increase (decrease) in cash and due from banks
    
    
    94,497
    
    
    
    (40,810
    )Cash and due from banks at beginning of period
    
    
    585,679
    
    
    
    726,492Cash and due from banks at end of period
    
    $
    680,176
    
    
    $
    685,682Schedule of noncash investing and financing activities:Transfers of loans to other real estate owned
    
    
    4,749
    
    
    
    11,984Loans to facilitate the sale of other real estate owned
    
    
    150
    
    
    
    723Transfers of investment securities available for sale to
investment securities held to maturity
    
    
    
    
    
    
    589,912Loans to finance stock purchases
    
    
    303
    
    
    
    496Change in unrealized gain (loss) on investment securities
available for sale
    
    
    (14,063
    )
    
    
    (65,206
    )Issuance of restricted stock, net of cancellations
    
    
    4,547
    
    
    
    5,970Treasury stock exchanged for acquisition earnouts
    
    
    5,840
    
    
    
    4,741Allowance transferred to other liabilities
    
    
    12,189
    
    
    
    Business combinations and divestitures:Common stock issued
    
    
    7,869
    
    
    
    Assets acquired
    
    
    8,092
    
    
    
    Liabilities assumed
    
    
    21
    
    
    
    Assets sold
    
    
    13
    
    
    
    Liabilities sold
    
    
    78
    
    
    
    
  - 7 -




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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 -




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##### 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 Impairment
 Stock-Based Compensation
 Accounting for Stock Issued to Employees,
    - 9 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income:As reported
    
    $
    102,451
    
    
    $
    91,745
    
    
    $
    201,207
    
    
    $
    177,992Deduct: Total share-based employee
compensation
expense determined under fair value based
method for all awards, net of tax
    
    
    2,124
    
    
    
    2,318
    
    
    
    4,042
    
    
    
    4,929Pro forma net income
    
    $
    100,327
    
    
    $
    89,427
    
    
    $
    197,165
    
    
    $
    173,063Basic earnings per share:As reported
    
    $
    0.83
    
    
    $
    0.75
    
    
    $
    1.63
    
    
    $
    1.46Pro forma
    
    $
    0.81
    
    
    $
    0.73
    
    
    $
    1.60
    
    
    $
    1.42Diluted earnings per share:As reported
    
    $
    0.81
    
    
    $
    0.73
    
    
    $
    1.59
    
    
    $
    1.42Pro forma
    
    $
    0.79
    
    
    $
    0.71
    
    
    $
    1.56
    
    
    $
    1.38
 Website Availability of Reports Filed with the SEC
  NOTE 2  Business Combinations and Divestitures
 Business Combinations
     Divestitures
  - 10 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 3  Capital Securities and Preferred Stock
 Capital Securities
     Class B Preferred Stock
    Maturity
    
    June 30,
    
    December 31,Dates
    
    2005
    
    2004(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
    
    
    
    309,279Fair value adjustment of hedged Capital Securities
    
    
    2027, 2032
    
    
    
    14,948
    
    
    
    17,657Class B Preferred Stock
    
    
    
    
    
    
    18,044
    
    
    
    18,012Total Capital Securities and Preferred Stock
    
    
    
    
    
    $
    445,364
    
    
    $
    448,041
 - 11 -




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##### 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 30,2005
    
    2004
    
    2005
    
    2004(In Thousands Except Per Share Data)(Unaudited)BASIC EARNINGS PER SHARE:Net income
    
    $
    102,451
    
    
    $
    91,745
    
    
    $
    201,207
    
    
    $
    177,992Weighted average shares outstanding
    
    
    123,617
    
    
    
    122,074
    
    
    
    123,452
    
    
    
    122,069Basic earnings per share
    
    $
    0.83
    
    
    $
    0.75
    
    
    $
    1.63
    
    
    $
    1.46DILUTED EARNINGS PER SHARE:Net income
    
    $
    102,451
    
    
    $
    91,745
    
    
    $
    201,207
    
    
    $
    177,992Weighted average shares outstanding
    
    
    123,617
    
    
    
    122,074
    
    
    
    123,452
    
    
    
    122,069Net 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
    
    
    2,595
    
    
    
    2,873
    
    
    
    2,955
    
    
    
    2,977Weighted average diluted shares outstanding
    
    
    126,212
    
    
    
    124,947
    
    
    
    126,407
    
    
    
    125,046Diluted earnings per share
    
    $
    0.81
    
    
    $
    0.73
    
    
    $
    1.59
    
    
    $
    1.42
 NOTE 5
 Segment Information
      - 12 -




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COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
    - 13 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
  For the Three Months Ended June 30, 2005
(in Thousands)
 CorporateCorporate
    
    Retail
    
    Wealth
    
    
    
    
    
    Support andBanking
    
    Banking
    
    Management
    
    Treasury
    
    Other
    
    ConsolidatedIncome
StatementNet interest income
    
    $
    98,400
    
    
    $
    118,952
    
    
    $
    15,052
    
    
    $
    17,324
    
    
    $
    (9,542
    )
    
    $
    240,186Noninterest income
    
    
    35,219
    
    
    
    118,214
    
    
    
    9,370
    
    
    
    7,401
    
    
    
    (4,187
    )
    
    
    166,017Noninterest expense
    
    
    49,054
    
    
    
    107,185
    
    
    
    11,226
    
    
    
    4,822
    
    
    
    50,308
    
    
    
    222,595Segment income (loss)
    
    $
    84,565
    
    
    $
    129,981
    
    
    $
    13,196
    
    
    $
    19,903
    
    
    $
    (64,037
    )
    
    
    183,608Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,800Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,808Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,357Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    102,451Balance SheetAverage assets
    
    $
    10,556,569
    
    
    $
    8,431,251
    
    
    $
    1,311,708
    
    
    $
    7,692,735
    
    
    $
    1,118,526
    
    
    $
    29,110,789Average loans
    
    
    10,406,168
    
    
    
    8,159,219
    
    
    
    1,301,793
    
    
    
    
    
    
    
    (275,035
    )
    
    
    19,592,145Average deposits
    
    
    4,734,582
    
    
    
    10,025,577
    
    
    
    1,198,010
    
    
    
    2,369,095
    
    
    
    (50,651
    )
    
    
    18,276,613Period-end assets
    
    $
    10,725,776
    
    
    $
    8,692,505
    
    
    $
    1,333,164
    
    
    $
    7,734,689
    
    
    $
    1,016,793
    
    
    $
    29,502,927Period-end loans
    
    
    10,548,882
    
    
    
    8,395,079
    
    
    
    1,323,093
    
    
    
    
    
    
    
    (216,932
    )
    
    
    20,050,122Period-end deposits
    
    
    4,894,724
    
    
    
    10,109,844
    
    
    
    1,174,193
    
    
    
    2,087,381
    
    
    
    (52,761
    )
    
    
    18,213,381
 
 CorporateCorporate
    
    Retail
    
    Wealth
    
    
    
    
    
    Support andBanking
    
    Banking
    
    Management
    
    Treasury
    
    Other
    
    ConsolidatedIncome StatementNet interest income
    
    $
    84,611
    
    
    $
    83,485
    
    
    $
    11,246
    
    
    $
    21,640
    
    
    $
    25,757
    
    
    $
    226,739Noninterest income
    
    
    34,836
    
    
    
    103,667
    
    
    
    7,489
    
    
    
    7,208
    
    
    
    (3,181
    )
    
    
    150,019Noninterest expense
    
    
    48,412
    
    
    
    98,831
    
    
    
    9,290
    
    
    
    3,569
    
    
    
    51,079
    
    
    
    211,181Segment income (loss)
    
    $
    71,035
    
    
    $
    88,321
    
    
    $
    9,445
    
    
    $
    25,279
    
    
    $
    (28,503
    )
    
    
    165,577Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,178Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,399Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,654Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    91,745Balance SheetAverage assets
    
    $
    9,855,200
    
    
    $
    7,382,978
    
    
    $
    1,205,296
    
    
    $
    7,779,111
    
    
    $
    1,562,961
    
    
    $
    27,785,546Average loans
    
    
    9,714,295
    
    
    
    7,130,844
    
    
    
    1,196,759
    
    
    
    
    
    
    
    (413,854
    )
    
    
    17,628,044Average deposits
    
    
    4,569,883
    
    
    
    9,286,905
    
    
    
    1,246,752
    
    
    
    1,334,215
    
    
    
    (33,980
    )
    
    
    16,403,775Period-end assets
    
    $
    9,859,425
    
    
    $
    7,531,633
    
    
    $
    1,214,818
    
    
    $
    7,772,418
    
    
    $
    1,522,798
    
    
    $
    27,901,092Period-end loans
    
    
    9,711,177
    
    
    
    7,267,544
    
    
    
    1,206,852
    
    
    
    
    
    
    
    (422,846
    )
    
    
    17,762,727Period-end deposits
    
    
    4,773,808
    
    
    
    9,279,700
    
    
    
    1,220,118
    
    
    
    1,049,610
    
    
    
    (38,415
    )
    
    
    16,284,821
 - 14 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
 For the Six Months Ended June 30, 2005
(in Thousands)
 CorporateCorporate
    
    Retail
    
    Wealth
    
    
    
    
    
    Support andBanking
    
    Banking
    
    Management
    
    Treasury
    
    Other
    
    ConsolidatedIncome
StatementNet interest income
    
    $
    190,748
    
    
    $
    228,593
    
    
    $
    29,308
    
    
    $
    38,333
    
    
    $
    (10,520
    )
    
    $
    476,462Noninterest income
    
    
    78,760
    
    
    
    217,707
    
    
    
    18,779
    
    
    
    14,420
    
    
    
    (9,088
    )
    
    
    320,578Noninterest expense
    
    
    99,016
    
    
    
    212,470
    
    
    
    23,024
    
    
    
    9,279
    
    
    
    100,678
    
    
    
    444,467Segment income (loss)
    
    $
    170,492
    
    
    $
    233,830
    
    
    $
    25,063
    
    
    $
    43,474
    
    
    $
    (120,286
    )
    
    
    352,573Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,073Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304,500Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,293Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    201,207Balance SheetAverage assets
    
    $
    10,418,824
    
    
    $
    8,282,488
    
    
    $
    1,309,189
    
    
    $
    7,693,937
    
    
    $
    1,113,875
    
    
    $
    28,818,313Average loans
    
    
    10,278,852
    
    
    
    8,016,002
    
    
    
    1,299,466
    
    
    
    
    
    
    
    (289,765
    )
    
    
    19,304,555Average deposits
    
    
    4,741,099
    
    
    
    9,870,836
    
    
    
    1,202,670
    
    
    
    2,152,708
    
    
    
    (57,825
    )
    
    
    17,909,488Period-end assets
    
    $
    10,725,776
    
    
    $
    8,692,505
    
    
    $
    1,333,164
    
    
    $
    7,734,689
    
    
    $
    1,016,793
    
    
    $
    29,502,927Period-end loans
    
    
    10,548,882
    
    
    
    8,395,079
    
    
    
    1,323,093
    
    
    
    
    
    
    
    (216,932
    )
    
    
    20,050,122Period-end deposits
    
    
    4,894,724
    
    
    
    10,109,844
    
    
    
    1,174,193
    
    
    
    2,087,381
    
    
    
    (52,761
    )
    
    
    18,213,381
 
 CorporateCorporate
    
    Retail
    
    Wealth
    
    
    
    
    
    Support andBanking
    
    Banking
    
    Management
    
    Treasury
    
    Other
    
    ConsolidatedIncome StatementNet interest income
    
    $
    165,756
    
    
    $
    162,136
    
    
    $
    21,579
    
    
    $
    42,104
    
    
    $
    58,025
    
    
    $
    449,600Noninterest income
    
    
    71,467
    
    
    
    192,671
    
    
    
    14,779
    
    
    
    16,278
    
    
    
    (3,265
    )
    
    
    291,930Noninterest expense
    
    
    98,951
    
    
    
    195,409
    
    
    
    19,757
    
    
    
    7,198
    
    
    
    100,013
    
    
    
    421,328Segment income (loss)
    
    $
    138,272
    
    
    $
    159,398
    
    
    $
    16,601
    
    
    $
    51,184
    
    
    $
    (45,253
    )
    
    
    320,202Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,523Net income before income
tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    267,679Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,687Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    177,992Balance SheetAverage assets
    
    $
    9,759,184
    
    
    $
    7,532,754
    
    
    $
    1,165,772
    
    
    $
    7,638,139
    
    
    $
    1,276,029
    
    
    $
    27,371,878Average loans
    
    
    9,611,343
    
    
    
    7,278,962
    
    
    
    1,157,157
    
    
    
    
    
    
    
    (441,393
    )
    
    
    17,606,069Average deposits
    
    
    4,488,987
    
    
    
    9,202,411
    
    
    
    1,253,011
    
    
    
    1,132,296
    
    
    
    (37,740
    )
    
    
    16,038,965Period-end assets
    
    $
    9,859,425
    
    
    $
    7,531,633
    
    
    $
    1,214,818
    
    
    $
    7,772,418
    
    
    $
    1,522,798
    
    
    $
    27,901,092Period-end loans
    
    
    9,711,177
    
    
    
    7,267,544
    
    
    
    1,206,852
    
    
    
    
    
    
    
    (422,846
    )
    
    
    17,762,727Period-end deposits
    
    
    4,773,808
    
    
    
    9,279,700
    
    
    
    1,220,118
    
    
    
    1,049,610
    
    
    
    (38,415
    )
    
    
    16,284,821
 - 15 -




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##### 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 31,2005
    
    2004(in Thousands)Commercial loans:Commercial, financial and agricultural
    
    $
    3,786,062
    
    
    $
    3,750,063Real estate  construction
    
    
    3,481,256
    
    
    
    3,027,228Commercial real estate  mortgage
    
    
    4,085,626
    
    
    
    3,943,163Total commercial loans
    
    
    11,352,944
    
    
    
    10,720,454Consumer loans:Residential real estate  mortgage
    
    
    1,738,650
    
    
    
    1,566,370Equity lines of credit
    
    
    1,513,864
    
    
    
    1,401,604Equity loans
    
    
    1,092,719
    
    
    
    1,069,614Credit card
    
    
    511,889
    
    
    
    505,090Consumer installment  direct
    
    
    413,090
    
    
    
    484,657Consumer installment  indirect
    
    
    3,426,966
    
    
    
    3,109,133Total consumer loans
    
    
    8,697,178
    
    
    
    8,136,468Total
    
    $
    20,050,122
    
    
    $
    18,856,922
  Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004(in Thousands)Balance at beginning of period
    
    $
    246,565
    
    
    $
    244,655
    
    
    $
    258,339
    
    
    $
    244,882Add: Provision charged to income
    
    
    27,800
    
    
    
    28,178
    
    
    
    48,073
    
    
    
    52,523Deduct: Allowance for loans securitized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    591Allowance transferred to other
liabilities
    
    
    
    
    
    
    
    
    
    
    12,189
    
    
    
    Net charge-offs (recoveries):Commercial, financial and
agricultural
    
    
    2,522
    
    
    
    2,374
    
    
    
    3,248
    
    
    
    5,976Commercial real estate  mortgage
    
    
    516
    
    
    
    2,534
    
    
    
    680
    
    
    
    2,641Real estate  construction
    
    
    305
    
    
    
    (33
    )
    
    
    255
    
    
    
    112Residential real estate  mortgage
    
    
    316
    
    
    
    159
    
    
    
    775
    
    
    
    515Equity lines of credit
    
    
    48
    
    
    
    351
    
    
    
    660
    
    
    
    1,077Equity loans
    
    
    300
    
    
    
    889
    
    
    
    820
    
    
    
    1,462Credit card
    
    
    9,191
    
    
    
    8,865
    
    
    
    17,102
    
    
    
    18,444Consumer installment  direct
    
    
    1,800
    
    
    
    1,500
    
    
    
    4,057
    
    
    
    3,123Consumer installment  indirect
    
    
    4,659
    
    
    
    5,621
    
    
    
    11,918
    
    
    
    12,891Total net charge-offs
    
    
    19,657
    
    
    
    22,260
    
    
    
    39,515
    
    
    
    46,241Balance at end of period
    
    $
    254,708
    
    
    $
    250,573
    
    
    $
    254,708
    
    
    $
    250,573
  June 30,
    
    December 31,2005
    
    2004(in Thousands)Nonaccrual loans
    
    $
    51,196
    
    
    $
    49,947Renegotiated loans
    
    
    716
    
    
    
    734Total nonperforming loans
    
    
    51,912
    
    
    
    50,681Other real estate
    
    
    15,832
    
    
    
    19,998Total nonperforming assets
    
    $
    67,744
    
    
    $
    70,679
 - 16 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 7
 Securitized Assets
   NOTE 8
 Investments (Other than Temporary Impairment)
  Securities 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
    
    $
    45,393
    
    
    $
    12
    
    
    $
    
    
    
    $
    
    
    
    $
    45,393
    
    
    $
    12Mortgage-backed pass-through securities
    
    
    299,005
    
    
    
    2,992
    
    
    
    129,680
    
    
    
    2,634
    
    
    
    428,685
    
    
    
    5,626Collateralized mortgage obligations
    
    
    1,918,266
    
    
    
    13,864
    
    
    
    1,439,319
    
    
    
    20,785
    
    
    
    3,357,585
    
    
    
    34,649Asset-backed securities and corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    States and political subdivisions
    
    
    3,570
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    3,570
    
    
    
    10Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity securities
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    1Total
    
    $
    2,266,237
    
    
    $
    16,879
    
    
    $
    1,568,999
    
    
    $
    23,419
    
    
    $
    3,835,236
    
    
    $
    40,298
  - 17 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 9
 Off-Balance Sheet Activities, Derivatives and Hedging
 Accounting for Derivative Instruments and Hedging Activities
  June 30,
    
    December 31,2005
    
    2004Other
    
    
    
    
    
    OtherThan
    
    
    
    
    
    ThanTrading
    
    Trading
    
    Trading
    
    Trading(in Thousands)Forward and futures contracts
    
    $
    214,460
    
    
    $
    43,614
    
    
    $
    271,863
    
    
    $
    18,708Interest rate swap agreements:Pay fixed versus receive float
    
    
    1,522,573
    
    
    
    50,000
    
    
    
    1,384,586
    
    
    
    Receive fixed versus pay float
    
    
    1,520,665
    
    
    
    1,772,472
    
    
    
    1,402,189
    
    
    
    1,503,836Written options
    
    
    91,386
    
    
    
    50,707
    (1)
    
    
    63,229
    
    
    
    19,812
    (1)Purchased options
    
    
    160,676
    
    
    
    
    
    
    
    97,358
    
    
    
    
 
 (1)
    
    Written options classified as other than trading represent interest rate loan commitments related to the Companys
mortgage banking activities   June 30, 2005
    
    December 31, 2004Notional
    
    Carrying
    
    Notional
    
    CarryingValue
    
    Value
    
    Value
    
    Value(in Thousands)Cash Flow Hedges:Interest rate swap agreements
    
    $
    750,000
    
    
    $
    (3,266
    )
    
    $
    700,000
    
    
    $
    (3,654
    )Fair Value Hedges:Interest rate swap agreements
    
    
    1,072,472
    
    
    
    61,420
    
    
    
    803,836
    
    
    
    47,291Forward contracts (1)
    
    
    43,614
    
    
    
    123
    
    
    
    18,708
    
    
    
    9
 
 (1)
    
    Derivatives related to the Companys mortgage banking activities Interest-Rate Risk
  Fair-Value Hedges
  - 18 -




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##### Table of Contents



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




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##### 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
   As of June 30, 2005Gross Carrying
    
    Accumulated
    
    Net CarryingAmount
    
    Amortization
    
    Value(in Thousands)Nonamortizing goodwill
    
    $
    369,954
    
    
    $
    (53,733
    )
    
    $
    316,221Amortizing intangible assets:Core deposit intangibles
    
    $
    63,890
    
    
    $
    (55,014
    )
    
    $
    8,876Other customer intangibles
    
    
    43,325
    
    
    
    (12,039
    )
    
    
    31,286Total amortizing intangible assets
    
    $
    107,215
    
    
    $
    (67,053
    )
    
    $
    40,162
  NOTE 12  Commitments and Contingencies
  - 20 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
   June 30,
    
    December 31,2005
    
    2004(in Thousands)Commitments to extend credit
    
    $
    12,490,327
    
    
    $
    11,265,440Standby and commercial letters of credit
    
    
    779,326
    
    
    
    716,195
        - 21 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 13  Defined Benefit Pension Plan
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In Thousands)Service cost
    
    $
    1,833
    
    
    $
    1,695
    
    
    $
    3,804
    
    
    $
    3,415Interest cost
    
    
    2,334
    
    
    
    2,116
    
    
    
    4,764
    
    
    
    4,224Expected return on plan assets
    
    
    (3,032
    )
    
    
    (2,731
    )
    
    
    (6,078
    )
    
    
    (5,313
    )Amortization of prior service cost
    
    
    6
    
    
    
    9
    
    
    
    17
    
    
    
    17Amortization of net loss
    
    
    736
    
    
    
    262
    
    
    
    1,595
    
    
    
    817Net periodic benefit cost
    
    $
    1,877
    
    
    $
    1,351
    
    
    $
    4,102
    
    
    $
    3,160
  NOTE 14  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.
 - 22 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial Statements (Unaudited)
  Share-Based Payments
 Share-Based Payments.
 Exchanges of Nonmonetary Assets
 Exchanges of Nonmonetary
Assets, an Amendment of APB Opinion No. 29
 - 23 -




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##### 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
   - 24 -




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##### Table of Contents



For the Quarter EndingMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2004
    
    2004
    
    2004
    
    2004Actual
    
    Actual
    
    Actual
    
    Actual
    
    Total(in Thousands)Hedging derivatives positive
impact to net interest margin
    
    $
    17,668
    
    
    $
    13,931
    
    
    $
    12,012
    
    
    $
    9,121
    
    
    $
    52,732
 For the Quarter EndingMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2005
    
    2005
    
    2005
    
    2005
    
    TotalActual
    
    Actual
    
    Projected*
    
    Projected*
    
    Projected*(in Thousands)Hedging derivatives positive
impact to net interest margin
    
    $
    6,329
    
    
    $
    5,634
    
    
    $
    4,548
    
    
    $
    4,475
    
    
    $
    20,986
 
 *
    
    Projected impact based on interest rates remaining at June 30, 2005 levels. - 25 -




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##### Table of Contents



July 1, 2005throughDecember 31,
    
    For the Year Ended December 31,2005
    
    2006
    
    2007
    
    Thereafter($ in Thousands)Non-trading interest rate contractsCash Flow HedgesNotional maturity
    
    $
    500,000
    
    
    $
    250,000
    
    
    $
    
    
    
    $
    Weighted average coupon received
on maturities
    
    
    2.60
    %
    
    
    2.34
    %
    
    
    
    %
    
    
    
    %Weighted
average time to maturity (months)
    
    
    1
    
    
    
    11
    
    
    
    
    
    
    
    Fair Value HedgesNotional maturity
    
    $
    65,000
    
    
    $
    20,000
    
    
    $
    323,500
    
    
    $
    663,972Weighted average coupon received
on maturities
    
    
    4.78
    %
    
    
    4.06
    %
    
    
    7.55
    %
    
    
    5.88
    %Weighted
average time to maturity (months)
    
    
    4
    
    
    
    7
    
    
    
    21
    
    
    
    108
  - 26 -




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##### Table of Contents



Three Months EndedJune 30, 2005Change2004To
    
    Attributed to2005
    
    Volume
    
    Rate
    
    MixInterest income:Federal funds sold and securities
purchased
under agreements to resell
    
    $
    252
    
    
    $
    1
    
    
    $
    249
    
    
    $
    2Trading account assets
    
    
    72
    
    
    
    66
    
    
    
    4
    
    
    
    2Investment securities available for sale
    
    
    (5,208
    )
    
    
    (638
    )
    
    
    (4,628
    )
    
    
    58Investment securities held to maturity
    
    
    (8,477
    )
    
    
    (7,947
    )
    
    
    (664
    )
    
    
    134Loans
    
    
    70,526
    
    
    
    24,903
    
    
    
    41,049
    
    
    
    4,574Increase in interest income
    
    $
    57,165
    
    
    $
    16,385
    
    
    $
    36,010
    
    
    $
    4,770Interest expense:Deposits
    
    $
    22,885
    
    
    $
    7,194
    
    
    $
    11,179
    
    
    $
    4,512Federal funds purchased and securities
sold under agreements to repurchase
    
    
    19,592
    
    
    
    (10
    )
    
    
    19,622
    
    
    
    (20
    )Other short-term borrowings
    
    
    781
    
    
    
    142
    
    
    
    367
    
    
    
    272FHLB and other borrowings
    
    
    459
    
    
    
    (6,796
    )
    
    
    8,729
    
    
    
    (1,474
    )Increase (decrease) in interest expense
    
    $
    43,717
    
    
    $
    530
    
    
    $
    39,897
    
    
    $
    3,290
 Six Months EndedJune 30, 2005Change2004To
    
    Attributed to2005
    
    Volume
    
    Rate
    
    MixInterest income:Federal funds sold and securities
purchased
under agreements to resell
    
    $
    313
    
    
    $
    (34
    )
    
    $
    389
    
    
    $
    (42
    )Trading account assets
    
    
    103
    
    
    
    95
    
    
    
    6
    
    
    
    2Investment securities available for sale
    
    
    (3,072
    )
    
    
    2,242
    
    
    
    (5,191
    )
    
    
    (123
    )Investment securities held to maturity
    
    
    (11,029
    )
    
    
    (9,986
    )
    
    
    (1,205
    )
    
    
    162Loans
    
    
    108,145
    
    
    
    43,939
    
    
    
    58,557
    
    
    
    5,649Increase in interest income
    
    $
    94,460
    
    
    $
    36,256
    
    
    $
    52,556
    
    
    $
    5,648Interest expense:Deposits
    
    $
    35,501
    
    
    $
    12,300
    
    
    $
    15,551
    
    
    $
    7,650Federal funds purchased and securities
sold under agreements to repurchase
    
    
    35,672
    
    
    
    349
    
    
    
    34,718
    
    
    
    605Other short-term borrowings
    
    
    1,111
    
    
    
    173
    
    
    
    652
    
    
    
    286FHLB and other borrowings
    
    
    (4,709
    )
    
    
    (12,307
    )
    
    
    8,945
    
    
    
    (1,347
    )Increase (decrease) in interest expense
    
    $
    67,575
    
    
    $
    515
    
    
    $
    59,866
    
    
    $
    7,194
 Noninterest Income and Noninterest Expense
  - 27 -




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##### Table of Contents



Income Taxes
  Provision and Allowance for Loan Losses
  Nonperforming Assets and Past Due Loans
    - 28 -




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##### Table of Contents



COMPASS
BANCSHARES, INC. AND SUBSIDIARIES
 Allowance for Loan Losses/Nonperforming Assets
 Six Months EndedJune 30,2005
    
    2004Allowance for Loan LossesBalance at beginning of period
    
    $
    258,339
    
    
    $
    244,882Add: Provision charged to income
    
    
    48,073
    
    
    
    52,523Deduct: Allowance for loans securitized
    
    
    
    
    
    
    591Allowance transferred to other liabilities
    
    
    12,189
    
    
    
    Loans charged off
    
    
    54,893
    
    
    
    58,742Loan recoveries
    
    
    (15,378
    )
    
    
    (12,501
    )Net charge-offs
    
    
    39,515
    
    
    
    46,241Balance at end of period
    
    $
    254,708
    
    
    $
    250,573Net charge-offs as a percentage of
average loans (annualized)
    
    
    0.41
    %
    
    
    0.53
    %
 June 30, 2005
    
    December 31, 2004Nonperforming AssetsNonaccrual loans
    
    $
    51,196
    
    
    $
    49,947Renegotiated loans
    
    
    716
    
    
    
    734Total nonperforming loans
    
    
    51,912
    
    
    
    50,681Other real estate
    
    
    15,832
    
    
    
    19,998Total nonperforming assets
    
    $
    67,744
    
    
    $
    70,679Accruing loans ninety days or more past due
    
    $
    13,725
    
    
    $
    15,509Other repossessed assets
    
    
    705
    
    
    
    656Allowance as a percentage of loans
    
    
    1.27
    %
    
    
    1.37
    %Total nonperforming loans as a percentage
of loans
    
    
    0.26
    
    
    
    0.27Total nonperforming assets as a percentage
of loans and ORE
    
    
    0.34
    
    
    
    0.37Accruing loans ninety days or more past due as a
percentage of loans
    
    
    0.07
    
    
    
    0.08Allowance for loan losses as a percentage of
nonperforming loans
    
    
    490.65
    
    
    
    509.74Allowance for loan losses as a percentage of
nonperforming assets
    
    
    375.99
    
    
    
    365.51
 - 29 -




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##### Table of Contents



Financial Condition
 Overview
  Assets and Funding
   Liquidity and Capital Resources
        - 30 -




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- 31 -




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##### 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, 2005:Assets which reprice in: *One year or less
    
    $
    13,332,915
    
    
    
    (7.89
    )%
    
    
    8.03
    %Over one year
    
    
    13,890,927
    
    
    
    (2.94
    )
    
    
    2.24$
    27,223,842
    
    
    
    (5.57
    )
    
    
    5.31Liabilities which reprice in:One year or less
    
    $
    16,885,103
    
    
    
    (16.67
    )%
    
    
    17.75
    %Over one year
    
    
    4,303,412
    
    
    
    (1.30
    )
    
    
    0.67$
    21,188,515
    
    
    
    (11.61
    )
    
    
    12.12Total net interest income sensitivity
    
    
    
    
    
    
    (1.64
    )%
    
    
    0.88
    %December 31, 2004:Assets which reprice in: *One year or less
    
    $
    12,480,418
    
    
    
    (8.94
    )%
    
    
    9.23
    %Over one year
    
    
    13,610,460
    
    
    
    (2.81
    )
    
    
    2.40$
    26,090,878
    
    
    
    (5.83
    )
    
    
    5.77Liabilities which reprice in:One year or less
    
    $
    16,491,092
    
    
    
    (24.19
    )%
    
    
    27.69
    %Over one year
    
    
    3,920,666
    
    
    
    (1.15
    )
    
    
    1.33$
    20,411,758
    
    
    
    (15.16
    )
    
    
    17.36Total net interest income sensitivity
    
    
    
    
    
    
    (1.26
    )%
    
    
    0.10
    %
 
 *
    
    Excludes noninterest earning trading account assets  - 32 -




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Item 4
 Controls and Procedures
   - 33 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 
 
 Item 1  Legal Proceedings
  
 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, 2005 
April 31, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    4,338,600May 1, 2005 
May 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,338,600June 1, 2005 
June 30, 2005
    
    
    5,714
    
    
    
    44.56
    
    
    
    
    
    
    
    4,338,600Total
    
    
    5,714
    
    
    $
    44.56
    
    
    
    
 
 (1)
    
    This column includes (a) purchases of equity instruments under the Companys publicly announced share repurchase programs described in (2)
below and (b) the surrender to the Company by plan participants of shares of common stock to satisfy the exercise price related to the
exercise of employee stock options during the period indicated.(2)
    
    On January 16, 2003, the Company announced that its Board of Directors had authorized management to purchase 6.3 million shares of the
Companys outstanding common stock from time to time through open market transactions either directly or through brokers or agents, and
has no expiration date. Additionally, on August 16, 2003, the Company announced that its Board of Directors had authorized management to
purchase an additional 4.1 million shares of the Companys outstanding common stock from time to time through open market transactions
either directly or through brokers or agents, and has no expiration date. 
 Item 4  Submission of Matters to Vote of Security Holders
  i.
    
    Election of Directors: James H. Click, Jr., Tranum Fitzpatrick, John S. Stein were elected upon receipt of
the following votes for / withheld, respectively, 106,892,169 / 904,813, 106,693,797 / 1,103,185, and
106,486,229 / 1,310,753.ii.
    
    Ratification of Appointment of Independent Accountants: The Companys Audit Committee appointed
PricewaterhouseCoopers LLP to serve as the Companys independent accountants for 2005. Shareholders ratified
the appointment of PricewaterhouseCoopers LLP as independent accountants upon the following votes:
FOR-106,658,349; AGAINST-913,179; ABSTAIN-225,453.
 - 34 -




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##### Table of Contents



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(a) to Compass Bancshares,
Inc.s December 31, 1997 Form 10-K, file number 000-06032, filed March 23, 1998, 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.
33-46086 filed with the Commission)(c)
    
    Certificate of Amendment, dated May 15, 1987, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.1.2
to Compass Bancshares, Inc.s Post-Effective Amendment No. 1 to Registration Statement
on Form S-4, Registration No. 33-10797 filed with the Commission)(d)
    
    Certificate of Amendment, dated September 16, 1994, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.5(1)
to Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
33-55899, filed with the Commission)(e)
    
    Certificate of Amendment, dated November 3, 1993, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3(d) to
Compass Bancshares, Inc.s Registration Statement on Form S-4, Registration No.
33-51919, filed with the Commission)(f)
    
    Certificate of Amendment, dated May 15, 1998, to Restated Certificate of
Incorporation of Compass Bancshares, Inc. (filed as exhibit 4.6 to Compass Bancshares,
Inc.s Registration Statement on Form S-3, Registration Statement No. 333-60725, filed
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 4.7 to
Compass Bancshares, Inc.s Registration Statement on Form S-8, Registration No.
333-90806, filed June 19, 2002 with the Commission)(h)
    
    Bylaws of Compass Bancshares, Inc. (Amended and Restated as of March 15, 1982)
(incorporated by reference to Exhibit 3(f) to Compass Bancshares, Inc.s December 31,
1997 Form 10-K, file number 000-06032, filed March 23, 1998, with the Commission)
 (4)
    
    Instruments Defining the Rights of Security Holders, Including Indentures
 (a)
    
    Form of Indenture between Compass Bancshares, Inc. (formerly Central Bancshares
of the South, Inc.) and JPMorgan Chase Bank (formerly Chemical Bank), as Senior Trustee
(incorporated by reference to Exhibit 4(g) to Compass Bancshares, Inc.s Registration
Statement on Form S-3, Registration No. 33-61018, filed with the Commission)(b)
    
    Form of Indenture between Compass Bancshares, Inc. (formerly Central Bancshares
of the South, Inc.) and JPMorgan Chase Bank (formerly Chemical Bank), as Subordinated
Trustee (incorporated by reference to Exhibit 4(f) to Compass Bancshares, Inc.s
Registration Statement on Form S-3, Registration No. 33-61018, filed with the
Commission)
 (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) *
 - 35 -




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##### Table of Contents



Item 6
 Exhibits (continued)
 (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. 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. December 31, 2001 Form 10-K, file number 000-06032, filed March 11, 2002, with the
Commission) *(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,
dated as of May 1, 1997 (incorporated by reference to Exhibit 10(j) to Compass
Bancshares, Inc.s December 31, 1999 Form 10-K, file number 000-06032, filed March 23,
2000, with the Commission) *(q)
    
    Compass Bancshares, Inc., Supplemental Retirement Plan, dated as of 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., dated as of February
1, 1996. (Amended and Restated as of May 1, 1998) (incorporated by reference to Exhibit
10(l) to Compass Bancshares, Inc.s December 31, 1999 Form 10-K, file number 000-06032,
filed March 23, 2000, with the Commission) *
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##### Table of Contents



Item 6
 Exhibits (continued)
 (s)
    
    Compass Bancshares, Inc. Special Supplemental Retirement Plan, dated as of May
1, 1997. (Amended and Restated as of February 27, 2000) (incorporated by reference to
Exhibit 10(n) to Compass Bancshares, Inc.s March 31, 2000 Form 10-Q, file number
000-06032, filed May 15, 2000, with the Commission) *(t)
    
    Amendment Number One to the Compass Bancshares, Inc., Special Supplemental
Retirement Plan, dated April 26, 2000 (incorporated by reference to Exhibit 10(q) to
Compass Bancshares, Inc.s December 31, 2001 Form 10-K, file 000-06032, filed March 11,
2002, with the Commission) *(u)
    
    Amendment Number Two to the Compass Bancshares, Inc., Special Supplemental
Retirement Plan, dated as of February 9, 2001(incorporated by reference to Exhibit
10(r) to Compass Bancshares, Inc.s December 31, 2001 Form 10-K, file number 000-06032,
filed March 11, 2002, with the Commission) *(v)
    
    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) *(w)
    
    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) *(x)
    
    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) *(y)
    
    Form of Incentive Stock Option Agreement (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) *(z)
    
    Form of Incentive Stock Option Agreement (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) *(aa)
    
    Form of Incentive Stock Option Agreement (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) *(bb)
    
    Executive Officer Compensation Arrangements (incorporated by reference to
Exhibit 10(y) to Compass Bancshares, Inc.s March 31, 2005 Form 10-Q, file number
001-31272, filed May 6, 2005, with the Commission) *(cc)
    
    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) *(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 - 37 -




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##### Table of Contents



COMPASS BANCSHARES, INC. AND SUBSIDIARIES
 
 SIGNATURES
  August 5, 2005
    
    By:
    /s/  Garrett R. HegelDate
    
    
    Garrett R. HegelChief Financial Officer - 38 -