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) 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 COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Financial Statements and Schedules December 31, 1998, 1997, and 1996 (With Independent Auditors' Report Thereon) 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 COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Statement of Net Assets Available for Plan Benefits December 31, 1998 and 1997 1998 1997 ------------- ------------- 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 ============= ============= See accompanying notes to financial statements. COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Statements of Changes in Net Assets Available for Plan Benefits December 31, 1998, 1997, and 1996 1998 1997 1996 -------------- ------------ ------------ 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 ============== ============ ============ See accompanying notes to financial statements. 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: Fair value per Number of share Fair December 31, 1998 shares/units Cost or unit value ----------------- ------------ ------------ ------- ----------- 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 ============ =========== Fair value per Number of share Fair December 31, 1997 shares/units Cost or unit value ----------------- ------------ ------------ ------- ----------- 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 ============ =========== The net unrealized appreciation (depreciation) of investments and change in net unrealized appreciation (depreciation) of investments follows: 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 ---------------- ------------ ---------- ---------------- ------------ --------------- <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 ============= ======== ========= ========= =========== ======= * 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. Federated Evergreen Vanguard Expedition Capital AIM Foundation International Bond Preservation Constellation Balanced Growth Fund Fund Fund Fund Fund ---------- ------------ ------------- ---------- ------------- 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 - - ======== ====== ========= ======= ======== Fidelity Fidelity Advisor Advisor Overseas Balanced Combined Fund Fund funds ---------- ------------ ----------- 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 ======== ========== ============ (5) Investment Sales Gains (losses) on disposals of Plan investments realized durng the Plan years 1998, 1997 and 1996 are as follows: Aggregate Aggregate Realized cost proceeds gains (losses) ------------ ---------- -------------- 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 ============ ========== ========== 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: 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 ----------- ----------- ---------- ---------- ----------- ------------- --------- -------- --------- ------------ 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 =========== ========== ========== ========== ========== =========== ========= ======= ========= =========== COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998, 1997, and 1996 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 ----------- --------- ---------- ------- ----------- ---------- --------- ------- ------- ----------- 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 =========== ========= ========== ======= =========== ========== ========= ======= ======= =========== COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998, 1997, and 1996 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 ------------- ------------- ----------- ------------ ----------- ------------- ------------- ------------- 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 ============= ============= =========== ============ =========== ============= ============= ============= Fidelity Evergreen Advisor Fidelity Fidelity Foundation Stable Advisor Advisor Balanced Value Overseas Balanced Combined Fund Portfolio Fund Fund funds ------------ ------------ ----------- ------------ ---------------- 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 ========= =========== ========== =========== ============== COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998, 1997, and 1996 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 ------------ ---------- ----------- ----------- ----------- ------------ ----------- ---------- 	 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 ============ ========== =========== =========== =========== ========= =========== ========= ESOP Expedition AIM Evergreen Employer Money Constel- Foundation Company Market lation Balanced Vanguard Unallocated Combined Stock Fund Fund Fund Fund Fund Fund Funds ------------- ---------- ---------- ---------- ---------- --------- ------------- 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 ============= ========== ========== ========== ========== ========= ============= COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1997, 1996, and 1995 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 ----------- --------- --------- --------- --------- --------- -------- ----------- ------- 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) =========== ========= ========= ========= ========= ========= ======== ========== ======= Schedule 1 COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 Number of Fair shares/units Cost value ------------ ------------ ----------- *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 ============ =========== * Compass Bancshares, Inc., the issuer of the common stock and investment manager of the Expedition Funds, is a party-in-interest to the plan. Schedule 2 COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1998 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) ------------- ------------ ----------- ------------ ----------- ----------- 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 - 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 EXHIBITS Exhibit (23) - Consents of experts and counsel