SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES ACT OF 1934
For the period ended December 31, 1998 Commission File No. 0-6032
COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
------------------------------------------------------
(Full title of the Plan)
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
----------------------------------------
(Address of principal executive offices)
(205) 933-3000
-------------------------------
(Registrant's telephone number)
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL INFORMATION
- ---------------------
Item 1 Audited statements of financial condition as of December 31, 1998
and 1997
Item 2 Audited statements of income and changes in plan equity for the three
years ended December 31, 1998
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements and Schedules
December 31, 1998, 1997, and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
Compass Bancshares, Inc.:
We have audited the accompanying statements of net assets available for
plan benefits as of December 31, 1998 and 1997 of Compass Bancshares, Inc.
Employee Stock Ownership Plan (the Plan) and the related statements of changes
in net assets available for plan benefits for each of the years in the
three-year period ended December 31, 1998. These financial statements are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
Plan as of December 31, 1998 and 1997, and the changes in net assets
available for plan benefits for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
included in Schedules I and II is presented for purposes of additional
analysis and is not a required part of the basic financial statements but
is supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. Such information has been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects
in relation to the basic financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Birmingham, Alabama
June 23, 1999
<PAGE>
<TABLE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Investments, at fair value:
Compass Bancshares, Inc.
common stock - (cost of $58,020,100
and $48,199,858 for 1998 and 1997, respectively) $147,149,606 179,395,672
Mutual funds:
Federated Capital Preservation Fund (cost of
$3,581,465) - 3,581,465
Expedition Equity Fund (cost of $13,686,513 and
$11,316,000 for 1998 and 1997, respectively) 19,273,285 14,337,261
Expedition Bond Fund (cost of $866,255 and
$499,312 for 1998 and 1997, respectively) 904,289 526,832
AIM Constellation Fund (cost of $1,724,579 and
$1,149,890 for 1998 and 1997, respectively) 1,870,821 1,012,996
Evergreen Foundation Balanced Fund (cost of $486,519) - 525,920
Vanguard International Growth Fund (cost of $801,483) - 728,428
Expedition Money Market Fund (at cost which
approximates fair value) 5,209,167 3,348,308
Fidelity Advisor Stable Value Portfolio (cost of
$3,538,075) 3,538,075 -
Fidelity Advisor Overseas Fund (cost of $971,206) 932,133 -
Fidelity Advisor Balanced Fund (cost of $1,145,332) 1,092,894 -
------------- -------------
179,970,270 203,456,882
Dividends and interest income receivable 1,021,935 1,008,594
Cash 1,003,743 229,291
Employee contributions receivable 569,393 435,524
Employer contributions receivable 349,054 3,725,619
Other payable, net (922,488) -
------------- -------------
Net assets available for plan benefits $181,991,907 208,855,910
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Plan Benefits
December 31, 1998, 1997, and 1996
<CAPTION>
1998 1997 1996
-------------- ------------ ------------
<S> <C> <C> <C>
Investment income:
Dividends on Compass Bancshares,
Inc. common stock $ 4,167,576 3,921,890 3,512,058
Dividends 1,665,785 2,211,509 -
Interest 228,245 182,077 329,851
-------------- ------------ ------------
Net investment income 6,061,606 6,315,476 3,841,909
Net realized gain on sale of investments 6,357,974 5,781,685 3,539,120
Unrealized appreciation (depreciation)
of investments (39,265,005) 62,880,898 16,735,603
-------------- ------------ ------------
(26,845,425) 74,978,059 24,116,632
Contributions:
Employee 8,106,291 10,533,159 3,784,030
Employer 6,172,864 3,738,790 4,774,512
-------------- ------------ ------------
14,279,155 14,271,949 8,558,542
Distributions to participants (17,374,854) (13,263,735) (11,081,988)
Rollovers and transfers 3,077,121 1,559,965 3,951,687
-------------- ------------ ------------
Net increase (decrease) (26,864,003) 77,546,238 25,544,873
Net assets available for plan benefits:
Beginning of year 208,855,910 131,309,672 105,764,799
-------------- ------------ ------------
End of year $ 181,991,901 208,855,910 131,309,672
============== ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1998, 1997 and 1996
(1) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of Compass Bancshares, Inc.
Employee Stock Ownership Plan (the Plan) have been prepared on an
accrual basis in accordance with generally accepted accounting
principles.
(b) Investments in Securities
Corporate securities are valued based on quotations obtained from
national securities exchanges. Mutual funds are valued at their current
unit value. Purchases and sales of securities are
recorded on a trade-date basis. Realized gains and losses are
calculated using the average cost method.
(c) Plan Expenses
The trust department of Compass Bank (the Trustee) is trustee for the
Plan. Compass Bank is a wholly-owned banking subsidiary of Compass
Bancshares, Inc. (the Company or Employer). Administrative fees are
paid directly by the Company. Trustee administration fees were
$864,375, $694,069, and $449,271, for the years ended December 31,
1998, 1997 and 1996, respectively. The Plan is obligated to pay
administrative fees not paid by the Company.
(d) Federal Income Taxes
A determination letter has been received from the Internal Revenue
Service stating that the Plan qualifies under Section 401 of the
Internal Revenue Code and that the Plan is exempt from federal income
tax. Amounts contributed by the employer and Plan earnings and
appreciation in the value of investments will not be taxed to the
employee until a distribution is received from the Plan, except for
appreciation in the value of Compass Bancshares, Inc. common stock which
will not be taxed until the participant disposes of that stock.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan administrator to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of the
changes in net assets during the reporting period. Actual
results could differ from those estimates.
(f) Year 2000 (Unaudited)
The Plan is administered by the Trust Division of Compass Bank.
Compass Bank is aware of the issues associated with the programming
code in existing computer systems as the millennium (Year 2000)
approaches. The Year 2000 issue is complex as
virtually every computer operation will be affected in some way by
the rollover of the two-digit year value to 00. The issue is whether
computer systems will properly recognize date sensitive information
when the year changes to 2000. Systems that do not properly recognize
such information could generate erroneous data or cause a system to fail.
Management has assessed the impact of Year 2000 issues on the Company's
computer systems and applications, developed a remediation plan, and
determined that its impact will be immaterial. Conversion and
implementation activities for mission critical systems are in process
and management expects implementation and testing to be completed by
the middle of 1999. Estimates of the completion date for implementation
and testing of mission critical systems are based on assumptions which
management believes are reasonable and appropriate.
(2) Organization
The Plan was adopted on November 19, 1976, effective January 1, 1976. The
Plan was amended, effective April 1, 1986, to include a salary reduction
feature which permits employees who participate (Participants) in the Plan
to defer and save part of their compensation, as provided for under Section
401(k) of the Internal Revenue Code. The Plan is subject to the applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended (ERISA).
(3) Description of Plan
(a) Participant Contributions
Employees automatically become Participants on the first day of January
or July following completion of one year of service. Participants may
elect to have up to 10 percent of their compensation deferred and
contributed to the Plan. There were 4,395, 4,290, and 4,070,
participants as of December 31, 1998, 1997, and 1996, respectively.
Participants may allocate their contributions, in multiples of 1
percent, to the following funds:
1) Employee/Employer Company Stock Fund - Invested entirely in common
stock of Compass Bancshares, Inc.
2) ESOP - Employer Company Stock Fund - Invested entirely in common
stock of Compass Bancshares, Inc.
3) Expedition Equity Fund - In 1997, all balances previously held in
the Growth Stock Fund, the Value Stock Fund, or the Contrarian Stock
Fund were converted to shares of the Expedition Equity Fund. The
Fund invests primarily (at least 80 percent of its total assets) in
common stocks issued by mid and large capitalization companies. The
Fund invests in stocks of private companies that are subject to wide
market value (price) fluctuations based on market and economic
conditions and perceptions, and, therefore involves a high level of
investment risk.
4) Federated Capital Preservation Fund - Invested solely in one or more
guaranteed income contracts entered into with insurance companies
with the objective of providing high current income and stability of
principal. The Plan's investment in this Fund was discontinued
in 1998.
5) Expedition Money Market Fund (previously Starburst Money
Market Fund) - Invests in high quality money market instruments that
are either rated in the highest short-term rating category by one or
more nationally recognized statistical rating organizations or of
comparable quality to such securities having such ratings.
6) Expedition Bond Fund - Invests in a diversified portfolio consisting
primarily of bonds (normally at least 65 percent in bonds), as well
as other fixed income securities. The Fund may also invest in
certain securities, including mortgage-related securities, foreign
securities and financial futures and options on financial fixtures,
which may present special risks not associated with bonds and fixed-
income securities generally.
7) Vanguard International Growth Fund - Invests in stocks of non-U.S.
companies. About two-thirds of the Funds assets are invested in
small and medium size companies, and the remaining assets are
invested in large companies. The Plan's investment in this Fund was
discontinued in 1998.
8) AIM Constellation Fund - Invests primarily in U.S. companies. The
Fund's investment advisor emphasizes medium-sized and small-
sized emerging growth companies. The Fund is also invested in
companies that are likely to benefit from new or innovative
products, services, or processes.
9) Evergreen Foundation Balanced Fund - Invests in a combination of
common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, corporate and U.S. Government debt
obligations and short-term debt obligations. The Fund anticipates
that at least 25 percent of its net assets will consist of fixed-
income securities. The balance is invested in equity securities or
securities convertible into equity securities. The Plan's investment
in this Fund was discontinued in 1998.
10) Fidelity Advisor Stable Value Portfolio - Invests in short and
long-term investment contracts issued by insurance companies (GICs),
investment contracts issued by commercial banks (BICs), synthetic
investment contracts, and cash equivalents. The Plan began investing
in this Fund in 1998.
11) Fidelity Advisor Overseas Fund - Invests primarily in foreign
securities. The Fund invests approximately 65 percent of the total
assets in these securities. The Fund may also invest in U.S.
issuers. The Fund normally diversifies its investments across
different countries and regions taking into account the size of the
market in each country and region relative to the size of the
international market as a whole. The Fund expects to invest
primarily in equity securities but may also invest up to 35 percent
of its assets in any type of debt securities for long-term growth
purposes. The Plan began investing in this Fund in 1998.
12) Fidelity Advisor Balanced Fund - Invests in a diversified portfolio
of equity and fixed-income securities with income, growth of income,
and capital appreciation potential. The Fund's advisor manages the
Fund to maintain a balance between stocks and bonds. The Fund
invests approximately 60 percent of the Fund's assets in stocks and
other equity securities and the remainder in bonds and other fixed-
income securities. The Fund also invests at least 25 percent of the
Fund's total assets in fixed-income senior securities, including
debt securities and preferred stock. The Plan began investing in
this Fund in 1998.
Compass Bank is the investment advisor for the Expedition Equity Fund,
the Expedition Money Market Fund, and the Expedition Bond Fund.
(b) Employer Contributions
The Employer, in its sole discretion, may make matching contributions in
an amount determined by the board of directors of the Company. These
matching contributions may not exceed the lesser of a Participant's
elective contribution or 2 percent of such Participant's base
compensation. These matching contributions are invested in the
Employee/Employer Company Stock Fund.
If the Employer's earnings reach a targeted amount, the Employer may
contribute an additional 1 percent matching amount. Such contributions
are also invested in the Employee/Employer Company Stock Fund and
are allocated to employee amounts based on relative compensation. Upon
reaching the targeted amount, the Employer may also elect to make
a contribution to the ESOP-Employer Company Stock Fund under the
employee stock ownership provisions of the Plan. For the years
ended December 31, 1998, 1997, and 1996, the
employer's earnings reached the targeted amount.
(c) Vesting
Participants have a fully-vested and nonforfeitable interest in the
portion of their accounts attributable to their 401(k) contributions and
the Employer's matching contributions to the Employee/Employer Company
Stock Fund, including earnings thereon. A Participant acquires
a vested interest in amounts attributable to the ESOP-Employer
Company Stock Fund based on the length of employment as follows:
Years of Service Vesting Percentage
---------------- ------------------
Less than 5 0
5 or more 100
(d) Forfeitures
If a Participant incurs a "break in service," as defined in the Plan,
for any reason other than permanent disability, death or normal
retirement, and is not 100 percent vested in the employer discretionary
contributions, the nonvested portion is forfeited. Forfeited amounts
attributable to employer discretionary contributions are allocated among
eligible Participants in the same manner as employer discretionary
contributions.
(e) Withdrawal Provisions
Participants may request that all or part of their accounts attributable
to elective contributions, adjusted for gain or loss thereon, be paid to
them to meet an immediate and heavy financial hardship for which funds
are not reasonably available to them from other sources. The amount
paid to a Participant in this fashion is taxable and may not be
repaid to the Plan.
(f) Priorities Upon Termination
Upon termination of the Plan, all Participants' funds shall become fully
vested. The trust will continue until the Plan benefits of each
Participant has been distributed.
(g) Rollovers
During 1998, 1997 and 1996, assets were rolled into the Plan from the
plans that were associated with banks acquired by the Company.
(4) Investments
The investments of the Plan as of December 31, 1998 and 1997 are
summarized as follows:
<TABLE>
<CAPTION>
Fair
value
per
Number of share Fair
December 31, 1998 shares/units Cost or unit value
----------------- ------------ ------------ ------- -----------
<S> <C> <C> <C> <C>
Common stock -
Compass Bancshares, Inc. 3,866,000 $ 58,020,100 38.06 147,149,606
Mutual funds-
Expedition Equity Fund 1,681,788 13,686,513 11.46 19,273,285
Expedition Bond Fund 89,622 866,255 10.09 904,289
AIM Constellation Fund 61,298 1,724,579 30.52 1,870,821
Expedition Money Market Fund 5,209,167 5,209,167 1.00 5,209,167
Fidelity Advisor Stable Value
Portfolio 353,808 3,538,075 10.00 3,538,075
Fidelity Advisor Overseas Fund 53,756 971,206 17.34 932,133
Fidelity Advisor Balanced Fund 58,319 1,145,332 18.74 1,092,894
------------ -----------
$ 85,161,227 179,970,270
============ ===========
</TABLE>
<TABLE>
<CAPTION>
Fair
value
per
Number of share Fair
December 31, 1997 shares/units Cost or unit value
----------------- ------------ ------------ ------- -----------
<S> <C> <C> <C> <C>
Common stock -
Compass Bancshares, Inc. 4,100,473 $ 48,199,858 43.75 179,395,672
Mutual funds-
Expedition Equity Fund 1,518,778 11,316,000 9.44 14,337,261
Expedition Bond Fund 53,431 499,312 9.86 526,832
Vanguard International Growth Fund 44,633 801,483 16.39 728,428
AIM Constellation Fund 38,400 1,149,890 26.38 1,012,996
Evergreen Foundation Fund 27,278 486,519 19.28 525,920
Federated Capital Preservation Fund 358,146 3,581,465 10.00 3,581,465
Expedition Money Market Fund 3,348,308 3,348,308 1.00 3,348,308
------------ -----------
$ 69,382,835 203,456,882
============ ===========
</TABLE>
The net unrealized appreciation (depreciation) of investments and change in
net unrealized appreciation (depreciation) of investments follows:
<TABLE>
<CAPTION>
Employee Employee Employee Employee
Benefit Benefit Benefit Benefit
Compass Growth Stock Value Contrarian Stock Short-term,
Bancshares, Inc. Collective Stock Collective Expedition High Quality
Common Investment Collective Investment Equity Bond Collective
Stock Fund Investment Fund Fund Investment Fund
---------------- ------------ ---------- ---------------- ------------ ---------------
<S> <C> <c. <C> <C> <C> <C>
Balance at December 31, 1995 $ 52,470,327 436,077 672,053 870,422 - 8,668
1996 appreciation 15,557,401 406,380 589,901 165,668 - 16,159
------------- -------- --------- --------- ----------- -------
Balance at December 31, 1996 68,027,728 842,457 1,261,954 1,036,090 3,140,501 * 24,827
1997 appreciation
(depreciation) 63,168,086 * * * (119,240)* **
------------- -------- --------- --------- ----------- -------
Balance at December 31, 1997 131,195,814 3,021,261
1998 appreciation
(depreciation) (42,066,308) 2,565,511
------------- -------- --------- --------- ----------- -------
Balance at December 31, 1998 $ 89,129,506 5,586,772
============= ======== ========= ========= =========== =======
</TABLE>
* The Growth Stock Fund and Contrarian Stock Fund were combined into
the Expedition Equity Fund in 1997.
** The High Quality Bond Fund became the Expedition Bond Fund in 1997.
<TABLE>
<CAPTION>
Federated Evergreen Vanguard
Expedition Capital AIM Foundation International
Bond Preservation Constellation Balanced Growth
Fund Fund Fund Fund Fund
---------- ------------ ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 - - - - -
1996 appreciation - 94 - - -
-------- ------ --------- ------- --------
Balance at December 31, 1996 24,827** 94 - - -
1997 appreciation
(depreciation) 2,693 (94) (136,893) 39,401 (73,055)
-------- ------ --------- ------- --------
Balance at December 31, 1997 27,520 - (136,893) 39,401 (73,055)
1998 appreciation
(depreciation) 10,514 283,135 (39,401) 73,055
-------- ------ --------- ------- --------
Balance at December 31, 1998 38,034 - 146,242 - -
======== ====== ========= ======= ========
</TABLE>
<TABLE>
<CAPTION>
Fidelity Fidelity
Advisor Advisor
Overseas Balanced Combined
Fund Fund funds
---------- ------------ -----------
<S> <C> <C> <C>
Balance at December 31, 1995 - - 54,457,547
1996 appreciation - - 16,735,603
-------- ---------- ------------
Balance at December 31, 1996 - - 71,193,150
1997 appreciation
(depreciation) - - 62,880,898
-------- ---------- ------------
Balance at December 31, 1997 - - 134,074,048
1998 appreciation
(depreciation) (39,073) (52,438) (39,265,005)
-------- ---------- ------------
Balance at December 31, 1998 (39,073) (52,438) 94,809,043
======== ========== ============
</TABLE>
(5) Investment Sales
Gains (losses) on disposals of Plan investments realized durng the Plan
years 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate Realized
cost proceeds gains (losses)
------------ ---------- --------------
<S> <C> <C> <C>
1998:
- -------------------------------
Compass Bancshares, Inc.
common stock $ 12,995,946 18,804,205 5,808,259
Mutual Funds 26,411,482 26,961,197 549,715
------------ ---------- ----------
$ 39,407,428 45,765,402 6,357,974
============ ========== ==========
1997:
- -------------------------------
Compass Bancshares, Inc.
common stock $ 2,224,102 7,104,495 4,880,393
Mutual Funds 23,274,606 24,175,898 901,292
------------ ---------- ----------
$ 25,498,708 31,280,393 5,781,685
============ ========== ==========
1996:
- -------------------------------
Compass Bancshares, Inc.
common stock $ 2,485,740 5,455,746 2,970,006
Mutual Funds 22,547,065 23,116,179 569,114
------------ ---------- ----------
$ 25,032,805 28,571,925 3,539,120
============ ========== ==========
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1998, 1997, and 1996
(6) Investment Funds
The financial information on each investment fund option is presented
below:
</TABLE>
<TABLE>
<CAPTION>
Fidelity
Employee/ ESOP - Expedition Advisor Fidelity Fidelity
Employer Employer Expedition Money Expedition AIM Stable Advisor Advisor
Company Company Equity Market Bond Constellation Value Overseas Balanced Combined
Stock Fund Stock Fund Fund Fund Fund Fund Portfolio Fund Fund funds
----------- ----------- ---------- ---------- ----------- ------------- --------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31,
1998
Investments
at fair
value:
Compass
Bancshares,
Inc.
common
stock $54,155,268 92,994,338 - - - - - - - 147,149,606
Expedition
Equity
Fund - - 19,273,285 - - - - - - 19,273,285
Expedition
Bond
Fund - - - - 904,289 - - - - 904,289
AIM
Constellation
Fund - - - - - 1,870,821 - - - 1,870,821
Expedition
Money
Market
Fund 1,003,553 1,031,619 - 3,173,995 - - - - - 5,209,167
Fidelity
Advisor
Stable
Value
Portfolio - - - - - - 3,538,075 - - 3,538,075
Fidelity
Advisor
Overseas
Fund - - - - - - - 932,133 - 932,133
Fidelity
Advisor
Balanced
Fund - - - - - - - - 1,092,894 1,092,894
----------- ---------- ---------- ---------- ---------- ----------- --------- ------- --------- -----------
Net
investment
income 55,158,821 94,025,957 19,273,285 3,173,995 904,289 1,870,821 3,538,075 932,133 1,092,894 179,970,270
Dividends
and
interest
income
receivable 376,163 645,646 - - - - 126 - - 1,021,935
Cash 1,003,743 - - - - - - - - 1,003,743
Employee
contributions
receivable 364,912 - 87,070 43,808 5,641 22,186 16,950 11,338 17,488 569,393
Employer
contributions
receivable 228,440 120,614 - - - - - - - 349,054
Other
receivable
(payable), net (1,181,292) 258,804 - - - - - - - (922,488)
----------- ---------- ---------- ---------- ---------- ----------- --------- ------- --------- -----------
Net assets
available
for plan
benefits $55,950,787 95,051,021 19,360,355 3,217,803 909,930 1,893,007 3,555,151 943,471 1,110,382 181,991,907
=========== ========== ========== ========== ========== =========== ========= ======= ========= ===========
</TABLE>
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1998, 1997, and 1996
<TABLE>
<CAPTION>
Federated
Employee/ Capital Exped- ESOP - Expedition AIM Evergreen Vanguard
Employer Preserv- Expedition ition Employer Money Constel- Foundation Int'l
Company ation Equity Bond Company Market lation Balanced Growth Combined
Stock Fund Fund Fund Fund Stock Fund Fund Fund Fund Fund Funds
----------- --------- ---------- ------- ----------- ---------- --------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31,
1997
Investments
at fair
value:
Compass
Bancshares,
Inc.
common
stock $61,993,553 - - - 117,402,119 - - - - 179,395,672
Federated
Capital
Preservation
Fund - 3,581,465 - - - - - - - 3,581,465
Expedition
Equity
Fund - - 14,337,261 - - - - - - 14,337,261
Expedition
Bond
Fund - - - 526,832 - - - - - 526,832
AIM
Constellation
Fund - - - - - - 1,012,996 - - 1,012,996
Evergreen
Foundation
Balanced
Fund - - - - - - - 525,920 - 525,920
Vanguard
International
Growth
Fund - - - - - - - - 728,428 728,428
Expedition
Money
Market
Fund - - - - 646,257 2,702,051 - - - 3,348,308
----------- --------- ---------- ------- ----------- ---------- --------- ------- ------- -----------
Net
investment
income 61,993,553 3,581,465 14,337,261 526,832 118,048,376 2,702,051 1,012,996 525,920 728,428 203,456,882
Dividends
and
interest
income
receivable 335,465 17,426 - 147 640,776 14,780 - - - 1,008,594
Cash 143,093 - - - 13,066 73,132 - - - 229,291
Employee
contributions
receivable 282,588 15,865 69,168 6,907 - 12,002 22,332 10,863 15,799 435,524
Employer
contributions
receivable 673,733 - - - 3,051,886 - - - - 3,725,619
----------- --------- ---------- ------- ----------- ---------- --------- ------- ------- -----------
Net assets
available
for plan
benefits $63,428,432 3,614,756 14,406,429 533,886 121,754,104 2,801,965 1,035,328 536,783 744,227 208,855,910
=========== ========= ========== ======= =========== ========== ========= ======= ======= ===========
</TABLE>
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1998, 1997, and 1996
<TABLE>
<CAPTION>
Employee/ ESOP - Federated Expedition Vanguard
For the Employer Employer Expedition Capital Money Expedition International AIM
Year Ended Company Company Equity Preservation Market Bond Growth Constellation
December 31, 1998 Stock Fund Stock Fund Fund Fund Fund Fund Fund Fund
------------- ------------- ----------- ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Dividends on
Compass
Bancshares,
Inc.
common
stock $ 1,503,552 2,664,024 - - - - - -
Dividends - - 1,133,240 86,515 - - 32,444 131,852
Interest 6,534 35,906 - - 133,710 52,095 - -
------------- ------------- ----------- ------------ ----------- ------------- ------------- -------------
Net
investment
income 1,510,086 2,699,930 1,133,240 86,515 133,710 52,095 32,444 131,852
Net realized
gain on
sale of
investments 2,910,601 2,897,658 450,981 - - 6,882 36,074 (5,805)
Unrealized
appreciation
(depreciation)
of investments (13,768,685) (28,297,623) 2,565,511 - - 10,514 73,055 283,135
------------- ------------- ----------- ------------ ----------- ------------- ------------- -------------
(9,347,998) (22,700,035) 4,149,732 86,515 133,710 69,491 141,573 409,182
Contributions:
Employee 3,671,697 - 2,036,469 209,307 929,017 90,559 119,589 485,635
Employer 3,298,488 2,874,376 - - - - - -
------------- ------------- ----------- ------------ ----------- ------------- ------------- -------------
6,970,185 2,874,376 2,036,469 209,307 929,017 90,559 119,589 485,635
Distributions
paid to
participants (5,250,549) (8,274,880) (1,790,903) (411,973) (1,150,051) (67,103) (92,551) (107,030)
Rollovers and
transfers 150,717 1,397,456 558,628 (3,498,605) 503,162 283,097 (912,838) 69,892
------------- ------------- ----------- ------------ ----------- ------------- ------------- -------------
Net increase
(decrease) (7,477,645) (26,703,083) 4,953,926 (3,614,756) 415,838 376,044 (744,227) 857,679
Net assets
available for
Plan benefits:
Beginning of
year 63,428,432 121,754,104 14,406,429 3,614,756 2,801,965 533,886 744,227 1,035,328
------------- ------------- ----------- ------------ ----------- ------------- ------------- -------------
End of year $55,950,787 95,051,021 19,360,355 - 3,217,803 909,930 - 1,893,007
============= ============= =========== ============ =========== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Fidelity
Evergreen Advisor Fidelity Fidelity
Foundation Stable Advisor Advisor
Balanced Value Overseas Balanced Combined
Fund Portfolio Fund Fund funds
------------ ------------ ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
December 31, 1998
Investment
income:
Compass
Bancshares,
Inc.
common
stock - - - - 4,167,576
Dividends 22,528 110,225 16,206 132,775 1,665,785
Interest - - - - 228,245
--------- ----------- ---------- ----------- --------------
Net investment
income 22,528 110,225 16,206 132,775 6,061,606
Net realized gain on
sale of investments 83,596 - (16,824) (5,189) 6,357 974
Unrealized
appreciation of
(depreciation)
investments (39,401) - (39,073) (52,438) (39,265,005)
--------- ----------- ---------- ----------- --------------
66,723 110,225 (39,691) 75,148 (26,845,425)
Contributions:
Employee 84,677 211,921 136,599 130,821 8,106,291
Employer - - - - 6,172,864
--------- ----------- ---------- ----------- --------------
84,677 211,921 136,599 130,821 14,279,155
Distributions paid
to participants (15,897) (121,485) (25,628) (66,804) (17,374,854)
Rollovers and
transfers (672,286) 3,354,490 872,191 971,217 3,077,121
--------- ----------- ---------- ----------- --------------
Net increase
(decrease) (536,783) 3,555,151 943,471 1,110,382 (26,864,003)
Net assets
available for
Plan benefits:
Beginning of year 536,783 - - - 208,855,910
--------- ----------- ---------- ----------- --------------
End of year - 3,555,151 943,471 1,110,382 181,991,907
========= =========== ========== =========== ==============
</TABLE>
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1998, 1997, and 1996
<TABLE>
<CAPTION>
Employee/ Federated Employee Employee Employee
For the Employer Capital Growth Value Contrarian Short-Term Expedition Expedition
Year Ended Company Preservation Equity Equity Equity High-Quality Equity Bond
December 31, 1997 Stock Fund Fund Fund Fund Fund Bond Fund Fund Fund
------------ ---------- ----------- ----------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Dividends on
Compass
Bancshares,
Inc. $ 1,330,529 210,077 - - - - 1,997,688 -
Interest 11,873 - - - - - - 14,859
------------ ---------- ----------- ----------- ----------- --------- ----------- ---------
Net
investment
income 1,342,402 210,077 - - - - 1,997,688 14,859
Net realized
gain on
sale of
investments 2,299,480 - 43,061 65,245 53,984 32,536 683,749 14,853
Unrealized
appreciation
(depreciation)
of investments 20,931,704 (94) - - - - (119,240) 2,693
------------ ---------- ----------- ----------- ----------- --------- ----------- ---------
24,573,586 209,983 43,061 65,245 53,984 32,536 2,562,197 32,405
Contributions:
Employee 3,736,597 847,000 305,825 383,832 335,519 234,109 1,532,546 134,080
Employer 686,904 - - - - - - -
------------ ---------- ----------- ----------- ----------- --------- ----------- ---------
4,423,501 847,000 305,825 383,832 335,519 234,109 1,532,546 134,080
Distributions
paid to
participants (2,845,034) (976,144) (313,514) (281,494) (285,597) (140,437) (2,743,606) (294,005)
Rollovers and
transfers 332,868 (408,206) (3,772,004) (4,622,735) (4,070,802) (709,185) 13,055,292 661,406
------------ ---------- ----------- ----------- ----------- --------- ----------- ---------
Net increase
(decrease) 26,484,921 (327,367) (3,736,632) (4,455,152) (3,966,896) (582,977) 14,406,429 533,886
Net assets
available for
Plan benefits:
Beginning of
year 36,943,511 3,942,123 3,736,632 4,455,152 3,966,896 582,977 - -
------------ ---------- ----------- ----------- ----------- --------- ----------- ---------
End of year $63,428,432 3,614,756 - - - - 14,406,429 533,886
============ ========== =========== =========== =========== ========= =========== =========
</TABLE>
<TABLE>
<CAPTION>
ESOP Expedition AIM Evergreen
Employer Money Constel- Foundation
Company Market lation Balanced Vanguard Unallocated Combined
Stock Fund Fund Fund Fund Fund Fund Funds
------------- ---------- ---------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997
Investment income:
Dividends - Compass
Bancshares, Inc. $ 2,591,361 - - 3,744 - - 6,133,399
Interest 20,694 134,651 - - - - 182,077
------------- ---------- ---------- ---------- ---------- --------- -------------
Net investment
income 2,612,055 134,651 - 3,744 - - 6,315,476
Net realized gain on
sale of investments 2,580,913 - 728 6,443 693 - 5,781,685
Unrealized
appreciation of
(depreciation)
investments 42,236,382 - (136,893) 39,401 (73,055) - 62,880,898
------------- ---------- ---------- ---------- ---------- --------- -------------
47,429,350 134,651 (136,165) 49,588 (72,362) - 74,978,059
Contributions:
Employee - 510,832 1,225,385 487,978 799,456 - 10,533,159
Employer 3,051,886 - - - - - 3,738,790
------------- ---------- ---------- ---------- ---------- --------- -------------
3,051,886 510,832 1,225,385 487,978 799,456 - 14,271,949
Distributions paid
to participants (4,512,855) (548,578) (53,892) (120,729) (147,850) - (13,263,735)
Rollovers and
transfers - 808,104 - 119,946 164,983 298 1,559,965
------------- ---------- ---------- ---------- ---------- --------- -------------
Net increase
(decrease) 45,968,381 905,009 1,035,328 536,783 744,227 298 77,546,238
Net assets
available for
Plan benefits:
Beginning of year 75,785,723 1,896,956 - - - (298) 131,309,672
------------- ---------- ---------- ---------- ---------- --------- -------------
End of year $121,754,104 2,801,965 1,035,328 536,783 744,227 - 208,855,910
============= ========== ========== ========== ========== ========= =============
</TABLE>
<PAGE>
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
ESOP -
Employee/ Federated Employee Employee Employee Employee Employee Employer
For the Employer Growth Capital Starburst Value Contrarian Short-Term, Company
Year Ended Company Equity Preservation Money Equity Equity High Quality Stock Unallocated
December 31, 1996 Stock Fund Fund Fund Market Fund Fund Fund Bond Fund Fund Funds
----------- --------- --------- --------- --------- --------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends on Compass
Bancshares, Inc.
common stock $ 1,109,479 - - - - - - 2,402,579 -
Interest 4,955 - 225,427 93,168 - - - 6,301 -
----------- --------- --------- --------- --------- --------- -------- ----------- -------
Net investment income 1,114,434 - 225,427 93,168 - - - 2,408,880 -
Net realized gain on sale
of investments 832,227 128,174 (64) - 154,473 280,347 6,184 2,137,779 -
Unrealized appreciation
of investments 5,302,014 406,380 94 - 589,901 165,668 16,159 10,255,387 -
----------- --------- --------- --------- --------- --------- -------- ----------- -------
7,248,675 534,554 225,457 93,168 744,374 446,015 22,343 14,802,046 -
----------- --------- --------- --------- --------- --------- -------- ----------- -------
Contributions:
Employee 1,487,008 526,064 481,363 140,138 498,963 591,567 58,927 - -
Employer 1,845,693 - - - - - - 2,928,819 -
----------- --------- --------- --------- --------- --------- -------- ----------- -------
3,332,701 526,064 481,363 140,138 498,963 591,567 58,927 2,928,819 -
----------- --------- --------- --------- --------- --------- -------- ----------- -------
Distributions paid to
participants (2,776,922) (267,654) (679,933) (497,939) (253,256) (314,921) (49,264) (6,237,340) (4,759)
Rollovers and transfers 1,310,653 690,522 (503,838) 501,988 919,474 625,502 407,386 - -
----------- --------- --------- --------- --------- --------- -------- ----------- -------
Net increase (decrease) 9,115,107 1,483,486 (476,951) 237,355 1,909,555 1,348,163 439,392 11,493,525 (4,759)
Net assets available for
Plan benefits:
Beginning of year 27,828,404 2,253,146 4,419,074 1,659,601 2,545,597 2,618,733 143,585 64,292,198 4,461
----------- --------- --------- --------- --------- --------- -------- ----------- -------
End of year $36,943,511 3,736,632 3,942,123 1,896,956 4,455,152 3,966,896 582,977 75,785,723 (298)
=========== ========= ========= ========= ========= ========= ======== ========== =======
</TABLE>
<PAGE>
Schedule 1
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Number of Fair
shares/units Cost value
------------ ------------ -----------
<S> <C> <C> <C>
*Compass Bancshares, Inc. 3,866,000 $ 58,020,100 147,149,606
Mutual funds :
*Expedition Equity Fund 1,681,788 13,686,513 19,273,285
*Expedition Bond Fund 89,622 866,255 904,289
AIM Constellation Fund 61,298 1,724,579 1,870,821
Fidelity Advisor Stable Value Portfolio 353,808 3,538,075 3,538,075
Fidelity Advisor Overseas Fund 53,756 971,206 932,133
Fidelity Advisor Balanced Fund 58,319 1,145,332 1,092,894
*Expedition Money Market Fund 5,209,167 5,209,167 5,209,167
------------ -----------
$ 85,161,227 179,970,270
============ ===========
</TABLE>
* Compass Bancshares, Inc., the issuer of the common stock and investment
manager of the Expedition Funds, is a party-in-interest to the plan.
<PAGE>
<PAGE>
Schedule 2
COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Item 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Description Current
of asset value of
in asset on
number Purchase Selling Cost of transaction Net gain
Identity of party involved of shares price price asset date (loss)
------------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchase of investments:
Compass Bancshares, Inc.
common stock 845,620 $ 22,816,188 - 22,816,188 22,816,188 -
Expedition Money Market
Fund 18,160,778 18,160,778 - 18,160,778 18,160,778 -
Sale of investments:
Compass Bancshares, Inc.
common stock 1,080,093 - 18,804,205 12,995,946 12,995,946 5,808,259
Expedition Money Market
Fund 16,299,919 - 16,299,919 16,299,919 16,299,919 -
</TABLE>
<PAGE>
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
COMPASS BANCSHARES, INC. EMPLOYEE STOCK OPTION PLAN
---------------------------------------------------
(Name of the Plan)
June 29, 1999 /s/ Garrett R. Hegel
- ------------- -----------------------
DATE GARRETT R. HEGEL
CHIEF FINANCIAL OFFICER
<PAGE>
EXHIBITS
Exhibit (23) - Consents of experts and counsel
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Administrative Committee
Compass Bancshares, Inc. Employee Stock Ownership Plan:
We consent to incorporation by reference in the registration statement on
Form S-8 of Compass Bancshares, Inc. Employee Stock Ownership Plan of our
report dated June 23, 1999, relating to the statements of net assets
available for plan benefits of Compass Bancshares, Inc. Employee Stock
Ownership Plan as of December 31, 1998 and 1997, and the related statements
of changes in net assets available for plan benefits and related schedules
for each of the years in the three-year period ended December 31, 1998, which
report appears in the December 31, 1998 Annual Report on Form 11-K of Compass
Bancshares, Inc. Employee Stock Ownership Plan.
/s/ KPMG Peat Marwick LLP
Birmingham, Alabama
June 23, 1999
