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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES ACT OF 1934
DATE OF REPORT: DECEMBER 31, 2000 COMMISSION FILE NO. 0-6032
COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
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(Exact name of registrant as specified in its charter)
DELAWARE 63-0593897
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(State of Incorporation) (I.R.S. Employer Identification No.)
15 SOUTH 20TH STREET
BIRMINGHAM, ALABAMA 35233
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(Address of principal executive offices)
(205) 297-3000
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(Registrant's telephone number)
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COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL INFORMATION
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Item 1 Audited statements of net assets available for plan benefits as of
December 31, 2000 and 1999
Item 2 Audited statement of changes in net assets available for plan
benefits for the year ended December 31, 2000
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Compass Bancshares, Inc.:
We have audited the accompanying statements of net assets available for plan
benefits of COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN (formerly
the "Compass Bancshares, Inc Profit Sharing Stock Bonus Plan") as of December
31, 2000 and 1999 and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 2000. These financial
statements and the supplemental schedules referred to below 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 auditing standards generally accepted
in the United States. These 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, 2000 and 1999 and the changes in its net assets available
for plan benefits for the year ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States.
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. The
supplemental schedules have been subjected to the auditing procedures applied in
the audits 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/ Arthur Andersen LLP
Birmingham, Alabama
June 15, 2001
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COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2000 AND 1999
2000 1999
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INVESTMENTS, AT FAIR VALUE (SEE NOTE 4) $176,898,651 $167,474,622
DIVIDENDS AND INTEREST INCOME RECEIVABLE 1,235,360 1,150,842
CASH 0 4,897
PARTICIPANT CONTRIBUTIONS RECEIVABLE 319,631 276,847
EMPLOYER CONTRIBUTIONS RECEIVABLE 112,274 1,185,440
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Total assets 178,565,916 170,092,648
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DIVIDEND PAYABLE TO PARTICIPANTS (711,623) 0
OTHER PAYABLE, NET (790,260) (183,719)
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Total liabilities (1,501,883) (183,719)
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Net assets available for plan benefits $177,064,033 $169,908,929
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The accompanying notes are an integral part of these statements.
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COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
INVESTMENT INCOME:
Dividends on Compass Bancshares, Inc. common stock $ 5,111,794
Dividends and interest 5,495,256
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Net investment income 10,607,050
NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS 2,594,304
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13,201,354
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CONTRIBUTIONS:
Participant 9,944,308
Employer 3,607,676
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13,551,984
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DISTRIBUTIONS TO PARTICIPANTS (20,758,101)
ROLLOVERS AND TRANSFERS 1,159,867
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Net increase (decrease) 7,155,104
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 169,908,929
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End of year $177,064,033
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The accompanying notes are an integral part of these statements.
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COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. ORGANIZATION
The Compass Bancshares, Inc. Employee Stock Ownership Plan (the "Plan") is a
defined contribution pension plan and was adopted on November 19, 1976,
effective January 1, 1976 for the benefit of employees of Compass Bancshares,
Inc. (the "Company"). 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 ("IRC"). The
Plan was amended effective January 1, 2000 to change the name of the plan from
Profit Sharing Stock Bonus Plan to Employee Stock Ownership Plan. The Plan was
also amended effective January 1, 2000 to pass through cash dividends to
participants entitling the Company to a deduction under Section 404(k) of the
IRC. The amendment also revises provisions for eligibility and vesting
effective January 1, 2001. The Plan is subject to the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of the Plan have been prepared on an
accrual basis in accordance with accounting principles generally accepted in the
United States.
INVESTMENT 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 on mutual funds are calculated using the average cost method.
Realized gains and losses on Compass Bancshares, Inc. common stock are
calculated using historical cost.
Net realized and unrealized appreciation (depreciation) is recorded in the
accompanying financial statements as net appreciation (depreciation) in fair
value of investments.
The Plan provides for investments in various investment securities that, in
general, are exposed to various risks such as interest rate, credit, and overall
market volatility risks. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values of
investment securities will occur in the near term and such changes could
materially affect the amounts reported in the statements of net assets available
for benefits.
The Fidelity Advisor Stable Value fund is valued at contract value, in
accordance with Statement of Position 94-4, Reporting of Investment Contracts
Held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans.
Contract value approximates fair value. Contract value represents contributions
made under the contract plus interest at the contract rate. The average yield
for the Fidelity Advisor Stable Value fund was 6.18% and 5.62% for 2000 and
1999, respectively.
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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 administrative fees were $614,005 for the year ended December
31, 2000.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 changes in net assets
during the reporting period. Actual results could differ from those estimates.
3. DESCRIPTION OF PLAN
ELIGIBILITY AND 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 15% of their compensation deferred and contributed to the Plan.
Participants may allocate their contributions, in multiples of 1%, to the
following funds:
1. Employee/Employer Company Stock Fund--Invested in common stock of
Compass Bancshares, Inc. and the Expedition Money Market Fund.
2. Expedition Equity Fund--Invested primarily (at least 80% 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.
3. Expedition 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
securities having such ratings.
4. Expedition Bond Fund--Invests in a diversified portfolio
consisting primarily of bonds (normally at least 65% 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 futures, which may present special risks not
associated with bonds and fixed-income securities generally.
5. 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.
6. 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.
7. Fidelity Advisor Overseas Fund--Invests primarily in foreign
securities. The Fund invests approximately 65% 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
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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% of its assets in any
type of debt securities for long-term growth purposes.
8. 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% 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%
of the Fund's total assets in fixed-income senior securities,
including debt securities and preferred stock.
Compass Bank is the investment advisor for the Expedition Equity Fund,
Expedition Money Market Fund, and the Expedition Bond Fund.
EMPLOYER CONTRIBUTIONS
The Employer, in its sole discretion, may make matching contributions in an
amount determined by the board of directors of the Company under the 401(k)
provisions of the Plan. These matching contributions may not exceed the lesser
of a Participant's elective contribution or 2% 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% matching amount. Such contributions are also invested in the
Employee/Employer Company Stock Fund and are allocated to employee accounts
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 year ended
December 31, 2000, the employer's earnings did not reach the targeted amount.
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 length of
employment, as follows:
YEARS VESTING
OF SERVICE PERCENTAGE
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Less than 5 0
5 or more 100
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% 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.
DISTRIBUTION OF BENEFITS
Upon retirement, disability, or death, participants become 100% vested in his or
her account. Upon termination of employment, a participant may elect to receive
an amount equal to the value of the participant's vested interest in his or her
account. The form of payment is a lump-sum distribution.
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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.
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 have been
distributed.
ROLLOVERS
During 2000, assets were rolled into the Plan from other plans that were
terminated in conjunction with banks acquired by the Company.
4. INVESTMENTS
Investments that represent five percent or more of the Plan's net assets as of
December 31, 2000 and 1999 are summarized as follows:
DECEMBER 31 2000
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NUMBER OF
SHARES/UNITS FAIR VALUE
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Common stock:
Compass Bancshares, Inc.* 5,601,187 $133,324,424
Mutual funds:
Expedition Equity Fund 2,300,480 25,788,385
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$159,112,809
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December 31, 1999
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Number of
Shares/Units Fair Value
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Common stock:
Compass Bancshares, Inc.* 5,762,393 $128,573,404
Mutual funds:
Expedition Equity Fund 1,897,397 24,514,373
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$153,087,777
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*A portion of this investment is nonparticipant-directed (Note 5)
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During 2000, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value as follows:
YEAR ENDED
DECEMBER 31, 2000
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Compass Bancshares, Inc. common stock $5,764,670
Mutual funds (3,170,366)
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Net change in fair value $2,594,304
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5. NONPARTICIPANT-DIRECTED FUNDS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed funds are as follows:
DECEMBER 31, 2000
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EMPLOYEE/ ESOP-
EMPLOYER EMPLOYER
COMPANY COMPANY
STOCK FUND STOCK FUND
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Investments at fair value:
Compass Bancshares, Inc. common stock $55,429,355 $77,895,069
Expedition Money Market Fund 620,524 224,562
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Net investments 56,049,879 78,119,631
Dividends and interest income receivable 517,010 718,350
Participant contributions receivable 65,542 0
Employer contributions receivable 112,274 0
Dividend payable to participants 0 (711,623)
Other receivable (payable), net (565,772) (224,488)
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Net assets available for plan benefits $56,178,933 $77,901,870
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December 31, 1999
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Employee/ ESOP-
Employer Employer
Company Company
Stock Fund Stock Fund
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Investments at fair value:
Compass Bancshares, Inc. common stock $50,786,540 $77,786,864
Expedition Money Market Fund 290,995 310
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Net investments 51,077,535 77,787,174
Dividends and interest income receivable 448,825 702,017
Cash 4,897 0
Participant contributions receivable 80,700 0
Employer contributions receivable 1,185,440 0
Other receivable (payable), net (183,719) 0
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Net assets available for plan benefits $52,613,678 $78,489,191
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DECEMBER 31, 2000
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EMPLOYEE/ ESOP
EMPLOYER EMPLOYER
COMPANY COMPANY
STOCK FUND STOCK FUND
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Investment income:
Dividends on Compass Bancshares, Inc. common stock $ 2,103,438 $ 3,008,356
Interest 11,762 17,031
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Net investment income 2,115,200 3,025,387
Net appreciation (depreciation) in fair value of
investments 3,279,195 2,485,475
Contributions:
Participant 3,272,433 0
Employer 2,879,489 728,187
Distributions paid to participants (7,981,062) (6,826,370)
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Net increase (decrease) 3,565,255 (587,321)
Net assets available for plan benefits:
Beginning of year 52,613,678 78,489,191
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End of year $56,178,933 $77,901,870
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6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants would become 100% vested in their employer contributions.
7. TAX STATUS
The Internal Revenue Service issued a determination letter dated December 13,
1995 stating that the Plan and related trust are designed in accordance with
applicable Internal Revenue Code ("IRC") requirements as of that date. The Plan
has been amended since receiving the determination letter. However, the Plan
administrator believes that the Plan is currently designed and is being operated
in compliance with the applicable requirements of the IRC. Therefore, the plan
administrator believes that the Plan was qualified and the related trust was
tax-exempt as of the financial statement dates.
8. RELATED PARTY TRANSACTIONS
Compass Bank, a subsidiary of the Employer, serves as trustee of the Plan,
controlling the distribution and investment of the Plan's assets. During 2000,
trustee fees were paid by the Company.
Compass Bank, a wholly owned banking subsidiary of the Company, acts as
investment manager for the Expedition Equity Fund, Expedition Bond Fund, and the
Expedition Money Market Fund.
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SCHEDULE I
COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS HELD AT END OF YEAR
FOR THE YEAR ENDED DECEMBER 31, 2000
DESCRIPTION
OF ASSETS CURRENT VALUE
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* Compass Bancshares, Inc. common stock 5,601,187 shares $133,324,424
Mutual funds:
* Expedition Equity Fund 2,300,480 units 25,788,385
* Expedition Bond Fund 79,696 units 797,661
AIM Constellation Fund 140,611 units 4,067,883
Fidelity Advisor Stable Value Portfolio 4,015,683 units 4,015,683
Fidelity Advisor Overseas Fund 101,156 units 1,726,739
Fidelity Advisor Balanced Fund 93,047 units 1,518,521
* Expedition Money Market Fund 5,705,503 units 5,659,355
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$176,898,651
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*Compass Bancshares, Inc., the issuer of the common stock, and
Compass Bank, investment manager of the Expedition Funds, are
parties-in-interest to the plan.
The accompanying notes are an integral part of this schedule.
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SCHEDULE II
COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE H, LINE 4j--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
CURRENT VALUE
OF ASSET ON
NUMBER OF PURCHASE SELLING COST OF TRANSACTION NET
IDENTITY OF PARTY INVOLVED TRANSACTIONS PRICE PRICE ASSET DATE GAIN (LOSS)
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Purchases of investments:
Compass Bancshares, Inc.
common stock 106 $9,100,569 $ 0 $ 9,100,569 $ 9,100,569 $ 0
Sales of investments:
Compass Bancshares, Inc.
common stock 137 0 8,548,330 11,554,443 11,554,443 (3,006,113)
The accompanying notes are an integral part of this schedule.
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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 OWNERSHIP PLAN
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(Name of the Plan)
JUNE 28, 2001 /S/ GARRETT R. HEGEL
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DATE GARRETT R. HEGEL
CHIEF FINANCIAL OFFICER
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EXHIBITS
EXHIBIT (23) - CONSENTS OF EXPERTS AND COUNSEL
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Administrative Committee
COMPASS BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN:
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into the Plan's previously filed Form S-8
Registration Statement File No. 33-57003.
/s/ Arthur Andersen LLP
Birmingham, Alabama
June 28, 2001