10-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

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o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 1-31272

(Exact name of registrant as specified in its charter)

Delaware	63-0593897
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

15 South 20th Street Birmingham, Alabama	35233
(Address of principal executive offices)	(Zip Code)

(205) 297-3000

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock 7.35% Capital Securities of Compass Trust III (and guarantee of Compass Bancshares, Inc. with respect thereto)	The NASDAQ Stock Market LLC New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer þ                     Accelerated filer o                     Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of such stock on June 30, 2006, was approximately $7,039,344,863.

The number of shares of the registrant’s common stock, $2.00 par value, outstanding on January 31, 2007 was 130,335,652.

Document Incorporated by Reference

Certain information required for Part III of this report is incorporated herein by reference to the Proxy Statement to be filed for the 2007 Annual Meeting of the Company’s stockholders.

COMPASS BANCSHARES, INC.

TABLE OF CONTENTS

FORM 10-K

DECEMBER 31, 2006

PART I
ITEM 1. BUSINESS	2
ITEM 1A. RISK FACTORS	7
ITEM 1B. UNRESOLVED STAFF COMMENTS	9
ITEM 2. PROPERTIES	10
ITEM 3. LEGAL PROCEEDINGS	10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	11
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	11
ITEM 6. SELECTED FINANCIAL DATA	12
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	93
ITEM 9A. CONTROLS AND PROCEDURES	94
ITEM 9B. OTHER INFORMATION	94
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	95
ITEM 11. EXECUTIVE COMPENSATION	95
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS	95
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	95
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	96
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	96
SIGNATURES	100
EX-10.(D) SUPPLEMENTAL RETIREMENT PLAN
EX-10.(E) SPECIAL SUPPLEMENTAL RETIREMENT PLAN
EX-10.(F) EMPLOYEE STOCK OWNERSHIP BENEFIT RESTORATION PLAN
EX-10.(G) SMARTINVESTOR RETIREMENT BENEFIT RESTORATION PLAN
EX-10.(U) FORM OF RESTRICTED STOCK AWARD AGREEMENT FOR NON-EMPLOYEE DIRECTORS
EX-10.(CC) SUMMARY OF COMPENSATION ARRANGEMENTS
EX-21 SUBSIDIARIES OF THE REGISTRANT
EX-23.(A) CONSENT OF ERNST & YOUNG LLP
EX-23.(B) CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-31.(A) SECTION 302 CERTIFICATION OF CEO
EX-31.(B) SECTION 302 CERTIFICATION OF CFO
EX-32.(A) SECTION 906 CERTIFICATION OF CEO
EX-32.(B) SECTION 906 CERTIFICATION OF CFO

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PART I

ITEM 1 — BUSINESS

     The term “Company” is used throughout this Annual Report on Form 10-K to refer to Compass Bancshares, Inc. and its subsidiaries. The term “Parent Company” is used to refer to Compass Bancshares, Inc. wherever a distinction between Compass Bancshares, Inc. and its subsidiaries aids in the understanding of this Annual Report on Form 10-K.

General Development of the Company

     The Company is a financial services company with its principal place of business in Birmingham, Alabama. The Parent Company was organized in 1970 as “Central and State National Corporation of Alabama.” The Company has two bank subsidiaries. The Company’s principal bank subsidiary is Compass Bank, an Alabama banking corporation headquartered in Birmingham, Alabama. Compass Bank currently operates in Texas, Alabama, Arizona, Florida, Colorado and New Mexico. The Company’s other bank subsidiary is Central Bank of the South, an Alabama banking corporation headquartered in Anniston, Alabama. Central Bank of the South has limited activities. The bank subsidiaries of the company are referred to collectively as the “Subsidiary Banks.”

Recent Developments

     On February 15, 2007 the Company’s board of directors approved, and the Company disclosed in a Form 8-K filed with the SEC on February 16, 2007, the signing of a definitive agreement under which Banco Bilbao Vizcaya Argentaria, S.A., a corporation organized under the Kingdom of Spain (“BBVA”), will acquire the Company for a combination of cash and stock. The Company’s shareholders may elect to receive either 2.8 BBVA American Depository Shares (“ADSs”) or $71.82 in cash per Company common share, subject to proration. The receipt of BBVA ADSs in the transaction, which will comprise just over half of the consideration, will be tax free to the Company’s shareholders. The aggregate consideration is composed of a fixed number of approximately 196 million shares of BBVA common stock and approximately $4.6 billion in cash.

     BBVA, which operates in 35 countries, is based in Spain and has substantial banking interests in the Americas. The transaction will facilitate BBVA’s continued growth in Texas and will create the largest regional bank across the Sunbelt. Upon completion of the transaction, the Company will rank among the top 25 banks in the United States with approximately $47 billion in total assets, $32 billion in total loans and $33 billion in total deposits. In addition, the combined company will rank fourth in deposit market share in Texas with $19.6 billion in total deposits and 326 full-service banking offices.

     Under the terms of the definitive agreement, the Company will become a wholly-owned subsidiary of BBVA. After closing, BBVA intends to merge its U. S. based banking affiliates – including the former operations of Texas Regional Bancshares, State National Bancshares and Laredo National Bancshares – with the Company.

     The transaction is subject to a number of conditions, including approval by the stockholders of the Company and BBVA and appropriate regulatory approvals. The transaction has been described more fully in our Forms 8-K filed with the SEC on February 16 and February 22, 2007.

Parent Company

     The principal role of the Parent Company is to supervise and coordinate the activities of its subsidiaries and to provide them with capital and services of various kinds. The Parent Company derives substantially all of its income from dividends from its subsidiaries. These dividends are determined on an individual basis, generally in relation to each subsidiary’s earnings and capital position.

Subsidiary Banks

     Compass Bank conducts a general commercial banking and trust business at 415 banking centers, including 164 in Texas, 89 in Alabama, 75 in Arizona, 44 in Florida, 33 in Colorado, and 10 in New Mexico. In addition, Compass Bank operates loan production offices in Georgia, Kentucky and Maryland. Compass Bank performs banking services customary for full-service banks of similar size and character. Such services include receiving demand and time deposits, making personal and commercial loans and furnishing personal and commercial checking accounts. Compass Bank, through its Wealth Management segment and wholly owned subsidiaries, St. Johns Investment Management Company and Stavis, Margolis Advisory Services, Inc., offers its customers a variety of fiduciary services, including portfolio management and administration and investment services to estates, trusts and employee benefit plans. Compass Bank, through its wholly owned subsidiary, Compass Insurance Agency, Inc., makes available to its customers and others, as agent for a variety of insurance companies, term life insurance, fixed-rate annuities, property and casualty insurance and other insurance products. Compass Mortgage Corporation, Arizona Financial Products, Inc., Compass Southwest, L.P. and Liquidity Advisors, L.P., wholly owned subsidiaries of Compass Bank, provide loans and related products to consumers and investor advisory services to Compass Bank and others.

     Compass Bank provides correspondent banking services, including educational seminars and operational and investment services, to approximately 1,000 financial institutions located throughout the United States. Through the Correspondent and Investment Services Department, Compass Bank distributes or makes available a variety of investment services and products to institutional and individual investors, including institutional sales, bond accounting, safekeeping and interest rate risk analysis services. Through its wholly owned subsidiary Compass Brokerage Services, Inc., Compass Bank also provides discount brokerage services, mutual funds and variable annuities to individuals and businesses. Compass Bank provides lease financing services to individuals and businesses through its wholly owned subsidiary Compass Financial Corporation.

Lines of Business

     The Company is currently organized along lines of business. Each line of business is a strategic unit that serves a particular group of customers with certain common characteristics by offering various products and services. The line of business results include certain overhead allocations and intercompany transactions. All intercompany transactions have been eliminated to determine the consolidated balances. The Company’s reportable operating segments are Corporate Banking, Retail Banking, Wealth Management and Treasury.

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     The Corporate Banking segment is responsible for providing a full array of banking and investment services to business banking, commercial banking and other institutional clients in each of the Company’s major metropolitan markets. The Corporate Banking segment also includes Community Banking across the Company’s six-state footprint and a National Industries unit that is responsible for serving larger national accounts, principally in targeted industries. In addition to traditional credit and deposit products, the Corporate Banking segment also supports its customers with capabilities in treasury management, leasing, accounts receivable purchasing, asset-based lending, international services, insurance and interest rate protection and investment products.

     The Retail Banking segment serves the Company’s consumer customers through its 415 full-service banking centers and through the use of alternative delivery channels such as personal computer and telephone banking. The Retail Banking segment provides individuals with comprehensive products and services, including home mortgages, credit and debit cards, deposit accounts, insurance products, mutual funds, and brokerage services. In addition, Retail Banking serves the Company’s small business customers and the Company’s indirect automobile portfolio.

     The Wealth Management segment provides specialized investment portfolio management, traditional credit products, traditional trust and estate services, financial counseling and customized services to the Company’s private clients and foundations, as well as investment management and retirement services to companies and their employees.

     The Treasury segment’s primary function is to manage the investment securities portfolio, public entity deposits, the interest rate sensitivity of the Company’s Consolidated Balance Sheets and the liquidity and funding positions of the Company.

     For financial information regarding the Company’s segments, which are presented by line of business, as of and for the years ended December 31, 2006, 2005 and 2004, see Note 21, Segment Information, in the Notes to Consolidated Financial Statements.

Business Combinations and Divestitures

     The Company may seek to combine with or acquire other financial services companies, banks and banking offices should suitable opportunities arise and has entered into an agreement with BBVA as described above under “Recent Developments.” Any agreement for a combination with the Company is subject to approval by appropriate regulatory authorities. Refer to “Supervision and Regulation” below for a discussion of certain aspects of the regulatory environment in which the Company operates. Since 1987, the Company has combined with approximately 50 financial institutions, 8 insurance agencies, 2 investment advisory firms and engaged in numerous asset and deposit purchase and sale transactions.

Business Combinations

     On March 24, 2006, the Company completed the acquisition of TexasBanc Holding Co., the parent company of TexasBank. TexasBank, a Fort Worth-based bank with approximately $1.7 billion in assets and 22 banking centers, was the largest independent commercial bank headquartered in Fort Worth. The TexasBank acquisition further enhanced the Company’s geographic position and expanded the Company’s operations within its Texas footprint. For further information on TexasBank, see Note 17, Business Combinations and Divestitures, in the Notes to Consolidated Financial Statements.

     On January 7, 2005, the Company completed the acquisition of Stavis, Margolis Advisory Services, Inc. (“SMA”), a Houston, Texas-based investment advisory firm with approximately $500 million in assets under management. SMA specializes in providing independent financial planning advisory services including investment, estate, retirement and business succession planning for high net worth individuals, corporate executives, business owners and professionals.

     On January 5, 2005, the Company completed the acquisition of Warren Benefits Group, LP (“Warren Benefits”), a Houston, Texas-based full-line general insurance brokerage firm, which specialized in providing broad-based group health and welfare plans as well as health and life insurance products.

     On October 4, 2004, the Company completed the acquisition of Sevier Insurance Agency (“Sevier”), a Birmingham, Alabama-based full-line general insurance brokerage firm, which services commercial and retail

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customers in the southeastern United States. Sevier specializes in providing property and casualty insurance, personal insurance, life insurance and surety products.

     Several of the Company's acquisition agreements included contingent consideration provisions. These provisions are generally based upon future revenue or earnings goals for a period of typically three years. At December 31, 2006, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding contingent payment provisions is approximately $10 million, primarily in the form of stock.

Divestitures

     During the first quarter of 2005, the Company completed the sale of a non-core business unit that specialized in the brokerage of oil and gas properties and, in the fourth quarter of 2005, the sale of two non-strategic banking centers in Arizona. A gain of $4.8 million was realized on the sale of the non-core business unit and a gain of $1.6 million was realized on the non-strategic banking center sale. These gains are included in gain on sale of business and branches in noninterest income in the Consolidated Statements of Income for the year ended December 31, 2005.

Competition

     The Company encounters intense competition in its businesses, generally from other banks located in Alabama, Arizona, Colorado, Florida, New Mexico, Texas and adjoining states. The Company competes for interest bearing funds with other banks, mutual funds and many non-bank issuers of commercial paper and other securities. In most of the markets served by the Company, it encounters intense competition from other financial institutions, many of which are substantially larger in terms of assets and deposits. Competition for the correspondent banking and securities sales business also exists from commercial and investment banks and brokerage firms. In the case of larger customers, competition exists with financial institutions in major metropolitan areas in the United States, many of which are larger in terms of capital, resources and personnel. Increasingly, in the conduct of certain aspects of its businesses, the Company competes with finance companies, savings and loan associations, credit unions, mutual funds, factors, insurance companies and similar financial institutions.

     The Company believes that intense competition for banking business will continue among bank holding companies with operations in Alabama, Arizona, Colorado, Florida, New Mexico, Texas and other states in which the Company operates. During 2007, the competition may further intensify if additional financial services companies enter these states through the acquisition of local financial institutions.

Employees

     At December 31, 2006, the Company had approximately 8,400 full-time equivalent employees.

Government Monetary Policy

     The Parent Company and its Subsidiary Banks are affected by the credit policies of monetary authorities including the Board of Governors of the Federal Reserve System (“Federal Reserve”). An important function of the Federal Reserve is to regulate the national supply of bank credit. Among the instruments of monetary policy used by the Federal Reserve to implement these objectives are open market operations in United States Government securities, changes in the discount rate, reserve requirements on member bank deposits and funds availability regulations. These instruments are used in varying combinations to influence the overall growth of bank loans, investments and deposits and may also affect interest rates charged on loans or paid on deposits.

     The monetary policies of the Federal Reserve authorities have had a significant effect on the operating results of financial institutions in the past and will continue to do so in the future. Changing conditions in the national economy and money markets, as well as the effect of actions by monetary and fiscal authorities can have a significant impact on interest rates, deposit levels or loan demand, which in turn may have a significant effect on the business and income of the Parent Company and its Subsidiary Banks.

SUPERVISION AND REGULATION

The Company

General

     During 2000, the Parent Company filed a declaration with the Federal Reserve to be certified as a financial holding company (“FHC”) under the Gramm-Leach-Bliley Financial Modernization Act of 1999 (“GLB Act”). As a

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bank holding company, the Parent Company is required to file with the Federal Reserve an annual report and such additional information as the Federal Reserve may require pursuant to the Bank Holding Company Act of 1956 (“BHC Act”). The Federal Reserve also may make examinations of the Parent Company and each of its subsidiaries. In addition, certain financial activities of the Company that are permitted by the GLB Act are subject to functional regulation by other state and federal regulatory authorities as described below.

     The GLB Act was enacted on November 12, 1999. The GLB Act permits bank holding companies meeting certain management, capital and community reinvestment standards to engage in a substantially broader range of non-banking activities than were permitted previously, including insurance underwriting and merchant banking activities. The Parent Company has certified that it meets these criteria. The GLB Act repealed sections 20 and 32 of the Glass Steagall Act, permitting affiliations of banks with securities firms and registered investment companies. The GLB Act permits banks to be under common control with securities firms, insurance companies, investment companies and other financial interests if these companies are subsidiaries of a FHC. Some of these affiliations are also permissible for bank subsidiaries. The GLB Act gives the Federal Reserve broad authority to regulate FHCs, but provides for functional regulation of subsidiary activities by the Securities and Exchange Commission (“SEC”), the Federal Trade Commission, state insurance and securities authorities and similar regulatory agencies.

     The GLB Act includes significant provisions regarding the privacy of financial information. These financial privacy provisions generally require a financial institution to adopt a privacy policy regarding its practices for sharing nonpublic personal information and to disclose that policy to its customers, both at the time the customer relationship is established and at least annually during the relationship. These provisions also prohibit the Company from disclosing nonpublic personal financial information to third parties unless customers have the opportunity to opt out of the disclosure.

Interstate Banking and Bank Acquisitions

     The Company continues to be regulated by the BHC Act which requires a FHC to obtain the prior approval of the Federal Reserve before it may acquire substantially all the assets of any bank or ownership or control of any voting shares of any bank if, after such acquisition, it would own or control, directly or indirectly, more than five percent of the voting shares of any such bank. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (“Interstate Act”) facilitates branching and the establishment of agency relationships across state lines and permits bank holding companies to acquire banks located in any state without regard to whether the transaction is prohibited under any state law, subject to certain state provisions, including the establishment by states of a minimum age of their local banks subject to interstate acquisition by out-of-state companies. The minimum age of local banks subject to interstate acquisition is limited to a maximum of five years.

     The states of Alabama, Arizona, Colorado, Florida, New Mexico and Texas, where the Company currently operates banking centers, each have laws relating specifically to acquisitions of banks, bank holding companies and other types of financial institutions organized in those states. The laws of each of these states currently permit out-of-state bank holding companies to acquire banks in Alabama, Arizona, Colorado, Florida, New Mexico and Texas, regardless of where the acquiror is based, subject to the satisfaction of various provisions of state law, including the requirement that the bank to be acquired has been in existence at least five years in Alabama, Arizona, Colorado, New Mexico and Texas and three years in Florida.

Limitations on Loans and Transactions

     The Federal Reserve Act generally imposes certain limitations on extensions of credit and other transactions by and between banks that are members of the Federal Reserve and other affiliates (which includes any holding company of which a bank is a subsidiary and any other non-bank subsidiary of such holding company). Banks that are not members of the Federal Reserve are also subject to these limitations. Further, federal law prohibits a bank holding company and its subsidiaries from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property or the furnishing of services.

Capital Requirements

     In December 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) was enacted. This act recapitalized the Bank Insurance Fund, of which the Subsidiary Banks are members, and the Savings Association Insurance Fund, which insures certain of the Subsidiary Banks’ deposits; substantially revised

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statutory provisions regarding capital standards; restricted certain powers of state banks; gave regulators the authority to limit officer and director compensation; and required holding companies to guarantee the capital compliance of their banks in certain instances. Among other things, FDICIA requires the federal banking agencies to take “prompt corrective action” with respect to banks that do not meet minimum capital requirements. FDICIA established five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized,” as defined by regulations adopted by the Federal Reserve, the Federal Deposit Insurance Corporation (“FDIC”) and the other federal depository institution regulatory agencies. A depository institution is well capitalized if it significantly exceeds the minimum level required by regulation for each relevant capital measure, adequately capitalized if it meets such measure, undercapitalized if it fails to meet any such measure, significantly undercapitalized if it is significantly below such measure and critically undercapitalized if it fails to meet any critical capital level set forth in the regulations. The critical capital level must be a level of tangible equity capital equal to the greater of 2 percent of total tangible assets or 65 percent of the minimum leverage ratio to be prescribed by regulation. An institution may be deemed to be in a capitalization category that is lower than is indicated by its actual capital position if it receives an unsatisfactory examination rating.

     If a depository institution fails to meet regulatory capital requirements, the regulatory agencies can require submission and funding of a capital restoration plan by the institution, place limits on its activities, require the raising of additional capital and, ultimately, require the appointment of a conservator or receiver for the institution. The obligation of a controlling FHC under FDICIA to fund a capital restoration plan is limited to the lesser of five percent of an undercapitalized subsidiary’s assets or the amount required to meet regulatory capital requirements. If the controlling FHC fails to fulfill its obligations under FDICIA and files (or has filed against it) a petition under the Federal Bankruptcy Code, the FDIC’s claim may be entitled to a priority in such bankruptcy proceeding over third party creditors of the bank holding company.

     An insured depository institution may not pay management fees to any person having control of the institution nor may an institution, except under certain circumstances and with prior regulatory approval, make any capital distribution (including the payment of dividends) if, after making such payment or distribution, the institution would be undercapitalized. FDICIA also restricts the acceptance of brokered deposits by insured depository institutions and contains a number of consumer banking provisions, including disclosure requirements and substantive contractual limitations with respect to deposit accounts.

     At December 31, 2006, the Subsidiary Banks were “well capitalized” and were not subject to any of the foregoing restrictions. The Subsidiary Banks do not rely upon brokered deposits as a primary source of deposit funding.

The Subsidiary Banks

General

     In general, federal and state banking laws and regulations govern all areas of the operations of the Subsidiary Banks, including reserves, loans, mortgages, capital, issuances of securities, payment of dividends and establishment of banking centers. Federal and state banking regulatory agencies also have the general authority to limit the dividends paid by insured banks and bank holding companies if such payments may be deemed to constitute an unsafe and unsound practice. Federal and state banking agencies also have authority to impose penalties, initiate civil and administrative actions and take other steps to prevent banks from engaging in unsafe or unsound practices.

     Compass Bank, organized under the laws of the State of Alabama, is a member of the Federal Reserve. As such, it is supervised, regulated and regularly examined by the Alabama State Banking Department and the Federal Reserve. The Subsidiary Banks are also subject to the provisions of the Federal Deposit Insurance Act and to examination by and regulations of the FDIC.

Dividend Limitations

     Compass Bank is governed by Alabama laws restricting the declaration and payment of dividends to 90 percent of annual net income until its surplus funds equal at least 20 percent of capital stock. Compass Bank has surplus in excess of this amount. As a member of the Federal Reserve, Compass Bank is subject to dividend limitations imposed by the Federal Reserve that are similar to those applicable to national banks.

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     Federal law further provides that no insured depository institution may make any capital distribution, including a cash dividend if, after making the distribution, the institution would not satisfy one or more of its minimum capital requirements. Moreover, the federal bank regulatory agencies also have the general authority to limit the dividends paid by insured banks if such payments may be deemed to constitute an unsafe and unsound practice. Insured banks are prohibited from paying dividends on their capital stock while in default in the payment of any assessment due to the FDIC except in those cases where the amount of the assessment is in dispute and the insured bank has deposited satisfactory security for the payment thereof.

Laws and Regulations

     The Community Reinvestment Act of 1977 (“CRA”), through the regulations of the Federal Reserve and the FDIC implementing that act, is intended to encourage regulated financial institutions to help meet the credit needs of its local community or communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of such financial institutions. The CRA and its implementing regulations provide that the appropriate regulatory authority will assess the records of regulated financial institutions in satisfying their continuing and affirmative obligations to help meet the credit needs of their local communities as part of their regulatory examination of the institution. The results of such examinations are made public and are taken into account upon the filing of any application to establish a domestic branch or to merge or to acquire the assets or assume the liabilities of a bank. In the case of a bank holding company, the CRA performance records of the banks involved in the transaction are reviewed in connection with the filing of an application to acquire ownership or control of shares or assets of a bank or to merge with any other bank holding company. An unsatisfactory record can substantially delay or block the transaction.

     The Company is subject to review and examination from various tax authorities. The Company is currently under examination by the Internal Revenue Service and a number of states, and it has received notices of proposed adjustments related to federal and state income taxes due for prior years, including a final assessment for the calendar years 2000 and 2001 from the State of Alabama. In December 2006, the Company and the State of Alabama settled all issues related to the final assessment for calendar years 2000 and 2001, as well as additional assessments for calendar years 2002 through 2004, resulting in no material impact to the Company’s results of operations or financial condition. Management believes that adequate provisions for income taxes have been recorded.

     The USA Patriot Act, which is designed to address potential terrorist threats, requires the Company to establish an anti-money laundering program, including customer identification programs and establish due diligence requirements with respect to its private banking operations. The Bank Secrecy Act requires the filing of currency transaction reports and suspicious activity reports with appropriate governmental authorities identifying possible criminal activity conducted through depository institutions.

     If the Company fails to comply with these or other applicable laws and regulations, it may be subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of management and in certain circumstances criminal penalties.

Website Availability of Reports Filed with the Securities and Exchange Commission

     The Company maintains an Internet website located at www.compassbank.com on which, among other things, the Company makes available, free of charge, various reports that it files with, or furnishes to, the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports. These reports are made available as soon as reasonably practicable after these reports are filed with, or furnished to, the SEC.

ITEM 1A — RISK FACTORS

     An investment in our securities may involve risks due to the nature of the businesses we engage in and activities related to those businesses. In evaluating an investment in our securities, the risk factors set forth in this section should be carefully considered, along with other matters discussed in this report and in other reports and filings we have made with the SEC.

We have entered into a definitive agreement providing for the acquisition of the Company, which is subject to a number of conditions.

     On February 15, 2007 our board of directors approved a transaction pursuant to which the Company will be acquired by Banco Bilbao Vizcaya Argentaria, S. A. (“BBVA”), a financial institution organized under the laws of the Kingdom of Spain. As a result of the transaction, the Company will become a subsidiary of BBVA. This transaction has been described in our Forms 8-K filed with the SEC on February 16 and February 22, 2007, and we expect it to close in the second half of 2007. However, the completion of the transaction is subject to a number of conditions, including approval of the stockholders of the Company and BBVA and appropriate regulatory approvals in the United States and Spain. There can be no assurance that the transaction will be completed on the anticipated terms and schedule, or that, if completed, the expected cost savings and any other synergies from the transaction will be fully realized within the anticipated timeframe. In addition, our business could be negatively impacted by any disruptions relating to the transaction, which could make it more difficult to maintain our relationships with customers, employees or suppliers.

The extent to which market interest rates change, the direction in which they move and the composition of our interest-earning assets and interest-bearing liabilities could affect net interest income.

     For example, if interest rates rise, we may pay interest on our customers’ interest-bearing deposits and our other liabilities at higher rates than the interest rates paid to us by our customers on outstanding loans that were made when interest rates were at a lower level. This situation would result in a negative interest rate spread with respect to those loans and cause an adverse effect on our earnings. In addition, the impact of unanticipated changes in interest rates on the derivative instruments we use to manage interest rate volatility could negatively affect our earnings.

The trade, monetary and fiscal policies of the federal government and its agencies may affect the economic environment in which we operate and, therefore, impact our financial condition and results of operations.

     The monetary policies of federal regulatory authorities, particularly the Board of Governors of the Federal Reserve System (“FRB”), affect our ability to attract deposits and extend loans. The FRB regulates the supply of money and credit in the United States. Its policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect the net interest margin, and can materially decrease the value of financial instruments we hold. These policies can also adversely affect borrowers, increasing the risk that they may fail to repay their loans. We cannot predict either the nature or timing of any changes in these monetary policies, including the FRB’s interest rate policies, or their impact on our financial performance.

As a financial services company, our financial condition and results of operations are significantly affected by general business and economic conditions.

     Our business and earnings are impacted by adverse changes in general economic conditions, and in the condition of the local economies or industries in which we have significant operations or assets. Periods of economic slowdown could, among other things, materially negatively affect credit quality trends, demand for credit and our ability to generate deposits.

The credit quality of our portfolio can have a significant impact on our earnings.

     Credit risk is the risk of loss due to adverse changes in a borrower’s ability to meet its financial obligations under agreed upon terms. The ability of borrowers to repay outstanding loans or the value of the collateral securing those loans may be adversely affected by increases in interest rates or weakening economic conditions. Additionally, our allowance for loan losses may be insufficient if the estimates and judgments we used to establish that allowance prove to be inaccurate.

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Our revenue may be negatively impacted by competition and changes in the markets we serve.

     The financial services industry is highly competitive, and we operate in dynamic markets that continue to change as a result of mergers, acquisitions and consolidations among major clients and competitors. We face aggressive competition from other domestic and foreign lending institutions and from other providers of financial services in our markets, some of which have greater resources than we do or offer services that we do not provide. The prices we charge for our products and services and their resulting profitability could change depending upon market demand, actions taken by our competitors and the introduction of new products and services.

Our results of operations could be affected by the success of our strategic initiatives.

     Our results of operations could be affected by the success of our initiatives to grow revenues and manage expenses or by changes, including those resulting from acquisitions and divestitures, in the composition of our business and in the geographic locations in which we operate. For example, one element of our growth strategy has been the acquisition of additional banks, bank holding companies and other businesses in order to achieve greater economies of scale or to further develop our presence in certain geographic areas or lines of business. We cannot assure you that appropriate growth opportunities will continue to exist, that we will be able to make acquisitions that satisfy our criteria or that any such acquisition will be on terms favorable to us. In addition, as part of our business strategy, we may in the future diversify our lines of business, requiring us to effectively manage the development of new business lines in which we had not previously participated. Each new acquisition or business line may require the investment of additional capital, the expansion our operational infrastructure and the significant involvement of our senior management, and could require regulatory approval. We can offer no assurances that we will be able to develop and integrate the new businesses without adversely affecting our financial performance, or that we will be able to realize the expected economic benefits of these additions.

Our financial performance depends in part on our ability to efficiently utilize technology to develop, market and deliver new and innovative products and services.

     Because technology and other changes are allowing parties to complete financial transactions that historically have involved banks, consumers can now pay bills and transfer funds directly without using a bank. The process of eliminating banks as intermediaries could result in the loss of fee income, as well as the loss of customer deposits and income generated from those deposits. If we are unable to efficiently adapt to evolving industry standards and to utilize technology to develop, market and deliver new and innovative products and services, our business and results of operations could be adversely affected.

We may experience operational or risk management failures due to technological or other factors.

     We are exposed to many types of operational risk, including legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems. Our necessary dependence upon automated systems to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect. We may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control (for example, computer viruses or electrical or telecommunications outages), which may give rise to disruption of service to customers and to financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate.

Regulation by federal and state agencies could adversely affect our business and results of operations.

     The Company and its subsidiaries are subject to voluminous and complex rules, regulations, and guidelines imposed by a number of government authorities. These regulations limit the manner in which we operate, including the amount of loans we can originate, interest we can charge on loans, fees we can charge for certain services, and dividends we may pay. Such regulation is designed to protect depositors and the federal deposit insurance fund, not holders of our securities. Monitoring compliance with applicable regulatory requirements is a significant task and failure to comply may result in penalties that could have an adverse effect on our results of operations and may harm our reputation. In addition, we may continue to become subject to heightened regulatory practices, requirements or expectations. We cannot predict whether, or the extent to which, federal or state governments and governmental organizations may change

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any of these laws, regulations or policies, or how any of these changes would adversely affect our business and prospects.

We may become subject to new legal obligations, or the resolution of pending litigation may have an adverse effect on our financial results.

     We may be involved from time to time in a variety of litigation arising out of our business. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our financial condition and results of operations, and negatively affect our ability to obtain appropriate types or levels of insurance in the future. In addition, the outcome of any such litigation may impose additional operational, legal or other obligations on us that could substantially increase our costs of doing business.

The Company and its Subsidiary Banks must meet specific capital requirements imposed by federal banking regulators.

     Sanctions for failure to meet applicable capital requirements may include regulatory enforcement actions that restrict dividend payments, require the adoption of remedial measures to increase capital, terminate Federal Deposit Insurance Corporation (“FDIC”) deposit insurance, and mandate the appointment of a conservator or receiver in severe cases, any of which may negatively affect our financial performance.

Changing conditions in the capital markets may have a significant negative effect on our business and results of operations.

     Changes in the stock markets, public debt markets and other capital markets could affect our stock price, our ability to raise necessary capital or other funding, or our ability to securitize and sell loans. In addition, our capital markets activities, such as brokerage activities, wealth management business, and corporate and correspondent banking activities, could be adversely affected by changes in the capital markets. Our access to the capital markets and liquidity could be adversely affected by direct circumstances, such as a credit downgrade, or indirect circumstances that would have market-wide consequences, such as terrorism or war, natural disasters, political events, or the default or bankruptcy of a major corporation, mutual fund or hedge fund. Similarly, market speculation about the Company or the banking industry in general may adversely affect the cost and availability of normal funding sources.

Our business could suffer upon the occurrence of events such as natural disasters, terrorist activities or military actions.

     Although we have disaster recovery plans in place, events such as natural disasters, terrorist activities or military actions could damage our facilities or otherwise disrupt our operations. Also, large scale disasters may significantly affect loan portfolios by damaging properties pledged as collateral and by impairing the ability of certain borrowers to repay their loans. In addition, if terrorist activity, acts of war or other international hostilities cause an overall economic decline in the United States, our financial condition and operating results could be materially adversely affected.

Changes in accounting rules or tax laws could have a significant adverse effect on our results.

     Although changes in U.S. generally accepted accounting principles may not have an economic impact on our business, they could negatively impact our reported financial results and affect our ability to attain targeted levels for certain performance measures. In addition, changes in domestic tax laws, rules and regulations, including the interpretation thereof by the Internal Revenue Service or other governmental bodies, could adversely affect our financial condition or results of operations.

ITEM 1B — UNRESOLVED STAFF COMMENTS

     None

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STATISTICAL DISCLOSURE

	Page(s)
Loan Portfolio		16
Selected Loan Maturity and Interest Rate Sensitivity		16
Managed Loan Portfolio		17
Investment Securities Held to Maturity and Available for Sale		18
Investment Securities Held to Maturity and Available for Sale Maturity Schedule		19
Trading Account Assets and Liabilities		20
Maturities of Time Deposits		21
Short-Term Borrowings		22
Contractual Obligations		23
Commitments		23
Net Interest Income Sensitivity		24
Return on Equity and Assets		25
Capital Ratios		26
Consolidated Average Balance Sheets and Rate/Volume Variances	30 and 31
Summary of Loan Loss Experience		33
Allocation of Allowance for Loan Losses		34
Nonperforming Assets		35

ITEM 2 — PROPERTIES

     The Company and its subsidiaries occupy various facilities principally located in Alabama, Arizona, Colorado, Florida, New Mexico and Texas that are used in the normal course of the financial services business. The properties consist of both owned and leased properties and include land for future banking center sites. The leased properties include both land and buildings that are generally under long-term leases. The principal executive office is owned by the Company and is located at 15 South 20^th Street in Birmingham, Alabama. The land on which the Company’s principal executive office is located is subject to a long-term ground lease.

ITEM 3 — LEGAL PROCEEDINGS

     The Company was informed on June 7, 2006 that the U.S. Department of Justice (the “DOJ”) might institute a civil suit in the U.S. District Court for the Northern District of Alabama against Compass Bank regarding its indirect auto lending practices as part of the DOJ’s investigation of possible discrimination under the Equal Credit Opportunity Act. The investigation focused on Compass Bank’s indirect auto lending activity to non-married co-applicants between May 2001 and May 2003. The Company believes Compass Bank’s indirect auto lending operations have complied at all times with the fair lending laws and is cooperating fully with the DOJ to resolve this matter. On January 12, 2007, the DOJ filed the civil suit and an agreed upon consent order resolving this investigation in the U.S. District Court for the Northern District of Alabama. On February 21, 2007, the Court entered the final consent order. The terms of the consent order do not have a material adverse impact on the Company’s results of operations or financial condition.

     Additionally, in the ordinary course of business, the Company is subject to legal proceedings, which involve claims for substantial monetary relief. Based upon the advice of legal counsel, management is of the opinion that the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company’s financial condition or results of operations.

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ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None

PART II

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

     The primary market for the Parent Company’s common stock is the NASDAQ Global Select Market^SM. The Parent Company’s common stock is quoted under the symbol “CBSS.” The following table is a summary of the market price ranges, closing price and dividends paid per common share of the Parent Company’s common stock by quarter for each of the last two years.

	High		Low		Close		Dividend
2006:
First Quarter	$	51.68	$	47.74	$	50.61	$	0.39
Second Quarter		56.40		50.38		55.60		0.39
Third Quarter		59.86		53.24		56.98		0.39
Fourth Quarter		60.49		55.57		59.65		0.39
2005:
First Quarter	$	48.14	$	44.20	$	45.40	$	0.35
Second Quarter		46.25		42.88		45.00		0.35
Third Quarter		49.66		44.92		45.83		0.35
Fourth Quarter		49.68		43.64		48.25		0.35

Dividends

     The payment of dividends on the Parent Company’s common stock is subject to determination and declaration by the Board of Directors of the Parent Company. In making the determination whether to and in what amount to declare dividends, the Parent Company’s Board of Directors considers a number of factors, including general economic conditions, regulatory limitations on the payment of dividends, the Company’s capital requirements, the results of operations and financial condition of the Company and tax considerations. There is no assurance that dividends will be declared or, if declared, what the amount of dividends will be, or whether such dividends will continue.

Holders

     As of January 31, 2007, there were approximately 4,800 stockholders of record of the Parent Company’s common stock.

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     Issuer Purchases of Equity Securities

					Total Number of		Maximum Number of
					Shares Purchased as		Shares that May Yet
	Total Number of		Average Price		Part of Publicly		Be Purchased
	Shares Purchased (1)		Paid Per Share		Announced Programs (2)		Under the Programs (2)
October 1, 2006 – October 31, 2006		2,615	$	56.69		—		2,921,410
November 1, 2006 – November 30, 2006		682		56.92		—		2,921,410
December 1, 2006 – December 31, 2006		1,947		59.13		—		2,921,410
Total		5,244	$	57.63		—

(1)	This column includes (a) purchases of the Company’s common stock under the Company’s publicly announced share repurchase programs described in (2) below and (b) the surrender to the Company by plan participants to satisfy the exercise price and tax withholdings related to the exercise of employee stock options and restricted stock during the period indicated.
(2)	In 2003, the Company announced that its Board of Directors authorized management to purchase 4.1 million shares of the Company’s outstanding common stock.

ITEM 6 — SELECTED FINANCIAL DATA

     The following table sets forth selected financial data for the last five years.

	2006		2005		2004		2003		2002
	(In Thousands, Except Per Share Data)
Net interest income	$	1,115,134	$	968,979	$	885,325	$	879,130	$	901,709
Provision for loan losses		89,702		117,818		105,658		119,681		136,331
Net income		460,363		401,830		360,185		328,678		344,345
Per share data:
Basic earnings	$	3.60	$	3.25	$	2.95	$	2.64	$	2.70
Diluted earnings		3.53		3.18		2.87		2.58		2.65
Cash dividends declared		1.56		1.40		1.25		1.12		1.00
Balance sheet:
Average total equity	$	2,603,166	$	2,170,062	$	1,968,948	$	1,965,710	$	1,910,148
Average assets		33,012,350		29,444,232		27,660,628		25,142,719		23,354,327
Period-end FHLB and other borrowings		3,511,601		4,111,462		4,119,771		4,794,935		4,853,816
Period-end total equity		2,824,134		2,236,029		2,056,345		1,892,574		1,965,383
Period-end assets		34,199,755		30,798,232		28,181,916		26,963,113		23,925,589

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     The following is a summary of the results of operations for each quarter of 2006 and 2005.

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
	(In Thousands, Except Per Share Data)
2006
Total interest income	$	450,198	$	511,463	$	539,456	$	543,434
Total interest expense		189,937		223,781		252,880		262,819
Net interest income		260,261		287,682		286,576		280,615
Provision for loan losses		17,112		27,322		24,226		21,042
Net interest income after provision for loan losses		243,149		260,360		262,350		259,573
Total noninterest income		165,344		181,366		178,850		185,700
Total noninterest expense		244,370		265,850		265,558		273,497
Income tax expense		56,214		60,505		56,875		53,460
Net income		107,909		115,371		118,767		118,316
Per common share:
Basic earnings		0.87		0.90		0.92		0.91
Diluted earnings		0.85		0.88		0.90		0.90
2005
Total interest income	$	347,952	$	370,172	$	399,299	$	427,729
Total interest expense		116,379		133,702		152,188		173,904
Net interest income		231,573		236,470		247,111		253,825
Provision for loan losses		20,273		27,800		34,195		35,550
Net interest income after provision for loan losses		211,300		208,670		212,916		218,275
Total noninterest income		149,965		175,431		166,496		166,786
Total noninterest expense		221,872		222,595		227,396		229,940
Income tax expense		46,409		55,518		51,296		52,983
Net income		92,984		105,988		100,720		102,138
Per common share:
Basic earnings		0.75		0.86		0.81		0.83
Diluted earnings		0.74		0.83		0.80		0.81

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The purpose of this discussion is to focus on significant changes in the financial condition and results of operations of the Company during the past three years. The discussion and analysis are intended to supplement and highlight information contained in the accompanying Consolidated Financial Statements and the selected financial data presented elsewhere in this Annual Report on Form 10-K. Financial institutions acquired by the Company during the past three years are reflected in the financial position and results of operations of the Company since the date of their acquisition.

Forward-Looking Statements

     This Annual Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could.” Forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties that could cause actual conditions, events or results to differ materially from those stated or implied by such forward-looking statements.

     A variety of factors, some of which are discussed in more detail in Item 1A — Risk Factors, may affect the operations, performance, business strategy and results of the Company including, but not limited to: financial market volatility including the level of interest rates and effects of such interest rates on derivative contracts; the strength of

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the U.S. economy in general and the strength of the local economies in which the Company operates may be different than expected resulting in deteriorating credit quality, a reduced demand for credit or a weakened ability to generate deposits; the impact of changes in laws and regulations governing the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the FRB; technological changes; unfavorable judicial or regulatory proceedings or rulings; the impact of changes in accounting principles and practices; actions and initiatives by current and potential competitors; the ability to retain key personnel; the failure of assumptions underlying the establishment of reserves for loan losses; changes in the Company’s markets resulting from consolidations of clients and competitors; new legal obligations or pending litigation; capital requirements imposed by federal bank regulators; capital market conditions; effects of natural disasters, terrorist activities and similar events; significant delay in or inability to execute strategic initiatives designed to grow revenues and/or control expenses; and the ability to consummate, and the impact of, the proposed transaction with Banco Bilbao Vizcaya Argentaria S.A., which was disclosed in the Company’s Form 8-K filed February 16, 2007.

     If the Company’s assumptions and estimates are incorrect, or if the Company or the Subsidiary Banks become subject to significant limitations as the result of litigation or regulatory action, then the Company’s actual results could vary materially from the forward-looking statements made in this report. Investors are cautioned not to place undue reliance on any forward-looking statements and to read this Annual Report on Form 10-K in conjunction with the Company’s other filings with the SEC, which are available on the SEC’s website, www.sec.gov, as well as on the Company’s website, www.compassbank.com. The Company disclaims any obligation to update any such forward-looking statements.

Critical Accounting Policies

     The accounting principles followed by the Company and the methods of applying these principles conform with generally accepted accounting principles in the United States and with general practices within the banking industry. The Company’s critical accounting policies relate to (1) the allowance for loan losses, (2) derivative instruments, (3) consolidation, (4) income taxes and (5) goodwill calculation and impairment. These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements. Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions and judgments. Certain determinations inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported.

     Allowance for Loan Losses: Management’s evaluation process to determine the adequacy of the allowance for loan losses combines four primary factors which, involve the use of estimates, assumptions and judgment: historical loss experience derived from analytical models, current trends, economic conditions and reasonably foreseeable events. Since current economic conditions can change and future events are inherently difficult to predict, the anticipated amount of estimated loan losses, and therefore the adequacy of the allowance, could change and these estimates may not reflect actual losses. Management believes the allowance for loan losses is adequate and properly recorded in the financial statements. For further discussion of the allowance for loan losses, see Provision for Loan Losses, Net Charge-Offs and Allowance for Loan Losses in the Management Discussion and Analysis section of this report.

     Derivative Instruments: In various segments of its business, the Company uses derivative financial instruments to reduce exposure to changes in interest rates and market prices for financial instruments. The application of hedge accounting requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of hedged items. The Company believes that its methods for addressing these judgmental areas are in accordance with generally accepted accounting principles in the United States and are in line with industry practices in assessing hedge effectiveness. However, if in the future the derivative financial instruments used by the Company no longer qualify for hedge accounting treatment and, consequently, the change in fair value of hedged items could not be recognized, the impact on the consolidated results of operations and reported earnings could be significant. Management believes hedge effectiveness is evaluated properly in preparation of the financial statements. All of the derivative financial instruments used by the Company have active markets and indications of fair value can be readily obtained. Further discussion regarding the Company’s use of derivatives is included in Note 12, Off-Balance Sheet Activities, Derivatives and Hedging, in the Notes to Consolidated Financial Statements.

     Consolidation: The Company utilizes certain arrangements to meet its balance sheet management, funding, liquidity and market or credit risk management needs. The majority of these activities are basic term or revolving securitization vehicles. Because these arrangements are made with separate legal entities, which qualify for special

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accounting treatment, they are not consolidated in the Company’s Consolidated Balance Sheets. The Company evaluates whether these entities should be consolidated by applying various generally accepted accounting principles and interpretations. In determining whether the financing entity should be consolidated, the Company considers whether the entity is a Qualifying Special Purpose Entity (“QSPE”) as defined in the Statement of Financial Accounting Standards (“SFAS”) 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. For non-consolidation, SFAS 140 requires the financing entity to be legally isolated, bankruptcy remote and beyond the control of the seller. Management believes these financing entities which qualify as QSPE’s fulfill the non-consolidation requirements specified in SFAS 140.

     Income Taxes: The calculation of the Company’s income tax provision is complex and requires the use of estimates and judgments in its determination. As part of the Company’s evaluation and implementation of business strategies, consideration is given to the regulations and tax laws that apply to the specific facts and circumstances for any transaction under evaluation. This analysis includes the amount and timing of the realization of income tax liabilities or benefits. Management closely monitors tax developments on both the state and federal level in order to evaluate the effect they may have on the Company’s overall tax position. Management believes the income tax provision is adequate and properly recorded in the financial statements.

     Goodwill Calculation and Impairment: Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. The Company tests goodwill on an annual basis or more frequently if events or circumstances indicate that there may have been impairment. The goodwill impairment test estimates the fair value of each reporting unit through the use of a discounted cash flows model and compares this fair value to the reporting unit’s carrying value. The goodwill impairment test requires management to make judgments in determining the assumptions used in the calculations. Management believes goodwill is not impaired and is properly recorded in the financial statements.

Net Income and Earnings Per Share

     In 2006, the Company reported net income of $460.4 million, a 15 percent increase over net income of $401.8 million in 2005, which represented a 12 percent increase from 2004 levels. Basic earnings per share for 2006 were $3.60 compared with $3.25 per share in 2005 and $2.95 per share in 2004, representing an 11 percent increase in 2006 and a 10 percent increase in 2005. Diluted earnings per share increased to $3.53 in 2006, an 11 percent increase from $3.18 per share in 2005. Diluted earnings per share in 2005 increased 11 percent over 2004 levels. Pretax income for 2006 increased $79.4 million, or 13 percent, over 2005 levels while income tax expense increased 10 percent over the same period. The effective tax rate was 33.0 percent for 2006 and 33.9 percent for 2005.

Earning Assets

     Average earning assets in 2006 increased 12 percent over 2005 levels due principally to an 18 percent increase in loans, offset partially by a 6 percent decrease in investment securities, which includes securities classified as held to maturity and available for sale. The average earning asset mix in 2006 changed slightly from 2005 with loans comprising 78 percent and 74 percent of earning assets for 2006 and 2005, respectively, and total investment securities accounted for 22 percent and 26 percent of earning assets for 2006 and 2005, respectively. One of the key drivers of the shift in the mix of average earning assets was the acquisition of TexasBank, completed in the first quarter of 2006. The mix of earning assets is monitored on a continuous basis in order to place the Company in a position to react to interest rate movements and to maximize the return on earning assets.

Loans

     Total loans outstanding at year-end 2006 increased 15 percent over previous year-end levels, due in large part to the acquisition of TexasBank in the first quarter of 2006. Real estate construction loans increased 50 percent, residential real estate mortgage loans increased 28 percent, equity lines of credit increased 11 percent, and equity loans increased 19 percent. The increases in real estate construction loans, residential real estate mortgage loans, equity lines of credit, and equity loans are the result of strong demand which was the result of a focused sales effort, a favorable interest rate environment, as well as a strong residential real estate market. Consumer indirect loans, which are primarily automobile loans, decreased 12 percent compared to 2005 levels. For additional information regarding the Company’s loan portfolio, see Note 4, Loans and Allowance for Loan Losses, and Note 5, Managed Loans, in the Notes to Consolidated Financial Statements.

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     Total loans outstanding at year-end 2005 increased 13 percent over previous year-end levels. Real estate construction loans increased 40 percent, residential real estate mortgage loans increased 22 percent, equity lines of credit increased 15 percent, and consumer indirect loans increased 13 percent. The increases in real estate construction loans, residential real estate mortgage loans, and equity lines of credit were due to a favorable interest rate environment, which resulted in strong demand. The increase in consumer indirect loans, which are primarily automobile loans, was a result of favorable interest rates and targeted growth in this market. Consumer direct loans decreased 13 percent compared to 2004 levels. The decrease in direct loans reflects a sale of student loan receivables in the amount of $85 million in 2005.

     The Loan Portfolio table presents the classifications of loans by major category at December 31, 2006, and for each of the preceding four years. The second table presents maturities of certain loan classifications at December 31, 2006, and an analysis of the rate structure for such loans with maturities greater than one year.

Loan Portfolio

	December 31
	2006					2005					2004					2003					2002
			Percent					Percent					Percent					Percent					Percent
	Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total
Commercial loans:										(In Thousands)
Commercial, financial and agricultural	$	4,376,572		17.7	%	$	3,896,207		18.2	%	$	3,750,063		19.9	%	$	3,576,115		20.6	%	$	3,693,454		22.4	%
Real estate – construction		6,365,283		25.8			4,233,148		19.8			3,027,228		16.1			2,481,281		14.3			2,531,580		15.4
Commercial real estate – mortgage		4,266,776		17.3			4,080,164		19.1			3,943,163		20.9			3,933,773		22.6			3,214,712		19.5
Total commercial loans		15,008,631		60.8			12,209,519		57.1			10,720,454		56.9			9,991,169		57.5			9,439,746		57.3
Consumer loans:
Residential real estate – mortgage		2,454,565		10.0			1,916,951		9.0			1,566,370		8.3			1,653,805		9.6			1,685,176		10.2
Equity lines of credit		1,786,211		7.2			1,614,608		7.6			1,401,604		7.4			1,122,725		6.5			978,920		5.9
Equity loans		1,382,779		5.6			1,160,481		5.4			1,069,614		5.7			1,046,881		6.0			1,322,092		8.0
Credit card		505,216		2.1			523,148		2.4			505,090		2.7			485,487		2.8			462,252		2.8
Consumer – direct		409,277		1.7			423,278		2.0			484,657		2.5			435,326		2.5			455,976		2.8
Consumer – indirect		3,118,594		12.6			3,524,230		16.5			3,109,133		16.5			2,630,409		15.1			2,137,158		13.0
Total consumer loans		9,656,642		39.2			9,162,696		42.9			8,136,468		43.1			7,374,633		42.5			7,041,574		42.7
		24,665,273		100.0	%		21,372,215		100.0	%		18,856,922		100	%		17,365,802		100	%		16,481,320		100	%
Less: Allowance for loan losses		291,050					267,173					258,339					244,882					232,830
Net loans	$	24,374,223				$	21,105,042				$	18,598,583				$	17,120,920				$	16,248,490

Selected Loan Maturity and Interest Rate Sensitivity

									Rate Structure For Loans
	Maturity								Maturing Over One Year
	One		Over One Year		Over				Fixed		Floating or
	Year or		Through Five		Five				Interest		Adjustable
	Less		Years		Years		Total		Rate		Rate
	(In Thousands)
Commercial, financial and agricultural	$	2,151,109	$	1,605,328	$	620,135	$	4,376,572	$	508,544	$	1,716,919
Real estate construction		3,187,448		2,928,619		249,216		6,365,283		230,320		2,947,515
	$	5,338,557	$	4,533,947	$	869,351	$	10,741,855	$	738,864	$	4,664,434

     Managed loans include loans recorded on the balance sheet and loans that have been securitized and sold or retained as investment securities in either the held to maturity or available for sale portfolios. A detailed discussion of securitization transactions utilized by the Company is included in Note 5, Managed Loans, in the Notes to Consolidated Financial Statements. At December 31, 2006, managed loans totaled $25.7 billion, compared to $22.6 billion at December 31, 2005 and $20.4 billion at December 31, 2004. The growth and change in mix of the Company’s managed loan portfolio is consistent with the discussion of loans recorded on the balance sheet.

-16-

Managed Loan Portfolio

	December 31
	2006					2005					2004
			Percent					Percent					Percent
			of Total					of Total					of Total
			Managed					Managed					Managed
	Amount		Loans			Amount		Loans			Amount		Loans
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	4,404,634		17.1	%	$	3,910,405		17.3	%	$	3,890,866		19.0	%
Real estate – construction		6,365,283		24.8			4,233,148		18.7			3,027,228		14.8
Commercial real estate – mortgage		4,382,024		17.1			4,202,966		18.6			3,943,163		19.3
Total commercial loans		15,151,941		59.0			12,346,519		54.6			10,861,257		53.1
Consumer loans:
Residential real estate – mortgage		3,146,151		12.3			2,786,051		12.3			2,688,768		13.1
Equity lines of credit		1,786,211		7.0			1,614,608		7.2			1,401,604		6.9
Equity loans		1,545,362		6.0			1,382,565		6.1			1,391,668		6.8
Credit card		505,216		2.0			523,148		2.3			505,090		2.5
Consumer – direct		409,277		1.6			423,278		1.9			484,657		2.4
Consumer – indirect		3,118,594		12.1			3,524,230		15.6			3,109,133		15.2
Total consumer loans		10,510,811		41.0			10,253,880		45.4			9,580,920		46.9
Total managed loans	$	25,662,752		100.0	%	$	22,600,399		100.0	%	$	20,442,177		100.0	%

Investment Securities

     The composition of the Company’s investment securities portfolio reflects the Company’s investment strategy of maximizing portfolio yields commensurate with risk and liquidity considerations. The primary objectives of the Company’s investment strategy are to maintain an appropriate level of liquidity and provide a tool to assist in controlling the Company’s interest rate sensitivity position while at the same time producing adequate levels of interest income. The Company’s investment securities are classified into one of three categories based upon management’s intent to hold the investment securities: (i) trading account assets and liabilities, (ii) investment securities held to maturity or (iii) investment securities available for sale. Investment securities held in a trading account are required to be reported at fair value, with unrealized gains and losses included in earnings. Investment securities designated to be held to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts, with such amortization and accretion being determined by the interest method. The Company has the ability, and it is management’s intention, to hold these securities to maturity. Management of the maturity of the portfolio is necessary to provide liquidity and control interest rate risk. Investment securities available for sale are recorded at fair value. Increases and decreases in the net unrealized gain or loss on the investment securities available for sale portfolio are reflected as adjustments to the carrying value of the portfolio and as an adjustment, net of tax, to accumulated other comprehensive income.

     Fair values of trading account assets and liabilities, investment securities held to maturity and investment securities available for sale are based primarily on quoted or other independent market prices. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of instruments with similar characteristics or discounted cash flows. Fair values for trading account derivatives are estimated using pricing models.

     Interest earned on investment securities held to maturity, investment securities available for sale and trading account assets and liabilities is included in interest income in the Consolidated Statements of Income. Net gains and losses on the sale of investment securities available for sale, computed principally using the specific identification method, are shown separately in noninterest income in the Consolidated Statements of Income.

     For additional financial information regarding the Company’s investment securities, see Note 3, Investment Securities Held to Maturity and Investment Securities Available for Sale, in the Notes to Consolidated Financial Statements.

-17-

     Maturities/prepayments of investment securities held to maturity in 2006, 2005 and 2004 were $368 million, $528 million and $736 million, respectively. In 2006, sales and maturities/prepayments of investment securities available for sale were $799 million and $891 million, respectively, while sales and maturities/prepayments of investment securities available for sale were $79 million and $718 million, respectively, in 2005. In 2004, sales and maturities/prepayments of investment securities available for sale were $814 million and $847 million, respectively. Net losses realized on the sale of investment securities available for sale were $14.9 million for the year ended December 31, 2006. Net gains realized on the sale of investment securities available for sale were $79,000 and $27.3 million for the year ended December 31, 2005 and 2004, respectively. At December 31, 2006, gross unrealized gains in the Company’s investment securities held to maturity portfolio totaled $5.0 million and gross unrealized losses totaled $43.3 million. At December 31, 2006, gross unrealized gains and losses in the investment securities available for sale portfolio were $22.0 million and $69.4 million, respectively, and recognized in other comprehensive income. For an analysis of unrealized gains and losses recognized in accumulated other comprehensive income, see Note 23, Comprehensive Income, in the Notes to Consolidated Financial Statements.

     Total average investment securities, including securities held to maturity and available for sale, decreased six percent in 2006 after decreasing four percent in 2005. The decrease in 2006 was primarily due to the sale and maturity/prepayment of $2.1 billion of investment securities, which was partially offset by the purchase of $1.6 billion of investment securities. The decrease in 2005 was primarily due to the sale and maturity of $1.3 billion of investment securities, which was partially offset by the purchase of $1.2 billion of investment securities. At the end of 2006, total investment securities decreased $309 million from the end of 2005. This decrease was a deliberate reduction in the Company’s investment securities portfolio which resulted in the Company choosing to reinvest some of its cash flows from the securities portfolio to fund loan growth rather than reinvesting those cash flows into investment securities. The following table reflects the carrying amount of the investment securities portfolio at the end of each of the last three years.

Investment Securities Held to Maturity and Available for Sale

	December 31
	2006			2005			2004
	(In Thousands)
Investment securities held to maturity:
U.S. Government agencies and corporations	$	25,136		$	39,275		$	60,860
Mortgage-backed pass-through securities		819,812			932,785			1,125,080
Collateralized mortgage obligations:
Agency		427,554			443,796			455,191
Non-agency		400,194			521,570			712,096
Asset-backed securities		160,624			219,583			320,058
States and political subdivisions		119,846			88,933			93,714
Other		—			—			100
	$	1,953,166		$	2,245,942		$	2,767,099
Investment securities available for sale:
U.S. Treasury	$	19,932		$	47,956		$	38,886
U.S. Government agencies and corporations		198			639			666
Mortgage-backed pass-through securities		982,221			537,288			499,525
Collateralized mortgage obligations:
Agency		2,779,454			3,505,754			3,530,987
Non-agency		255,336			234,214			2,189
Asset-backed securities and corporate bonds		—			—			1,039
States and political subdivisions		287,997			45,331			11,943
Other		410,069			414,051			325,379
		4,735,207			4,785,233			4,410,614
Net unrealized loss		(47,425	)		(80,858	)		(12,430	)
		4,687,782			4,704,375			4,398,184
Total	$	6,640,948		$	6,950,317		$	7,165,283

-18-

     The maturities and weighted average yields of the investment securities held to maturity and investment securities available for sale portfolios at the end of 2006 are presented in the following table using average expected lives including the effects of prepayments. The amounts and yields disclosed for investment securities available for sale reflect the amortized cost rather than the net carrying value (fair value) of these securities. Taxable equivalent adjustments, using a 35 percent tax rate, have been made in calculating yields on tax-exempt obligations.

Investment Securities Held to Maturity and Available for Sale Maturity Schedule

	Maturing
	Within					After One But					After Five But					After
	One Year					Within Five Years					Within Ten Years					Ten Years
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(In Thousands)
Investment securities held to maturity:
U.S. Government agencies and corporations	$	—		—	%	$	25,110		6.27	%	$	26		6.26	%	$	—		—	%
Mortgage-backed pass-through securities		2,837		5.95			628,600		4.30			182,970		5.44			5,405		6.77
Collateralized mortgage obligations		10,808		3.44			747,154		4.36			69,786		7.56			—		—
Asset-backed securities		—		—			160,624		5.03			—		—			—		—
States and political subdivisions		8,669		7.65			30,587		7.50			49,546		6.65			31,044		7.74
Other		—		—			—		—			—		—			—		—
		22,314		5.40			1,592,075		4.49			302,328		6.13			36,449		7.59
Investment securities available for sale — amortized cost:
U.S. Treasury		19,932		4.19			—		—			—		—			—		—
U.S. Government agencies and corporations		—		—			22		6.41			54		5.94			122		5.86
Mortgage-backed pass-through securities		1,019		7.50			901,006		5.53			71,857		5.48			8,339		5.55
Collateralized mortgage obligations		288,764		3.67			2,325,991		4.42			406,679		5.44			13,356		5.54
Asset-backed securities and corporate bonds		—		—			—		—			—		—			—		—
States and political subdivisions		1,312		7.36			36,350		5.84			201,961		6.03			48,374		6.45
Other		354,998		5.51			23,191		31.59			—		—			31,880		9.25
		666,025		4.68			3,286,560		4.93			680,551		5.62			102,071		7.13
Total	$	688,339		4.70		$	4,878,635		4.79		$	982,879		5.78		$	138,520		7.25

     The weighted average stated maturities of total mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”) are 19.4 years and 17.1 years, respectively, and the corresponding weighted average expected lives assumed in the above table are 4.0 years and 3.3 years, respectively. During a period of rising rates, prepayment speeds generally slow on MBS and CMOs with a resulting extension in average life, and vice versa during declining rates. At December 31, 2006, given a 100 basis point immediate and permanent parallel increase in rates, the expected average lives for MBS and CMOs would be 4.4 years and 3.5 years, respectively. Similarly, given a 100 basis point immediate and permanent parallel decrease in rates, the expected average lives for MBS and CMOs would be 3.4 and 2.6 years, respectively.

     The weighted average market prices as a percentage of par value for MBS and CMOs at December 31, 2006, were 98.3 and 98.0 percent, respectively. The market prices for MBS and CMOs generally decline in a rising rate environment due to the resulting increase in average life, the below market yield on fixed rate securities and the impact of annual and life rate caps on adjustable-rate securities. The opposite is generally true during a period of declining rates. At December 31, 2006, fixed-rate MBS and CMOs totaled $1.1 billion and $3.6 billion, respectively, with corresponding weighted average expected lives of 4.3 and 3.4 years. Adjustable-rate MBS and CMOs totaled $678 million and $211 million, respectively, with corresponding weighted average expected lives of 3.4 and 2.6 years. Substantially all adjustable-rate MBS and CMOs are subject to life rate caps, and MBS are also generally subject to a two percent annual cap. The weighted average life rate caps at December 31, 2006 were 10.1 and 11.2 percent for MBS and CMOs and the corresponding weighted average coupon rates were 5.1 and 3.8 percent, respectively.

-19-

     At December 31, 2006, given a 100 basis point immediate and permanent parallel increase in rates, the estimated market prices for MBS and CMOs would be 95.7 and 95.3 percent, respectively, of their actual market price as of each date. Given a 100 basis point immediate and permanent parallel decrease in rates, the estimated market prices for MBS and CMOs would be 100.5 and 100.1 percent, respectively, of their actual market price as of each date. For additional information regarding the Company’s investment securities, see Note 3, Investment Securities Held to Maturity and Investment Securities Available for Sale, in the Notes to Consolidated Financial Statements.

Trading Account Assets and Liabilities

     Securities carried in the Company’s trading account portfolio are primarily held for sale to institutional customers for their investment portfolios and generally are sold within 30 days of purchase. Interest rate floors, caps and swaps are sold to customers as protection against interest rate fluctuation and used as economic hedges for the Company, as discussed below. To mitigate the interest rate risk associated with the customer contracts, the Company enters into offsetting derivative contract positions. The Company manages its credit risk of default by its corporate customers through credit limit approval and monitoring procedures. Both the derivative contracts entered into with the Company’s customers and the offsetting derivative positions are recorded at their estimated fair value. Market value changes on these derivative instruments are recognized in noninterest income in the period of change. The volume of activity is directly related to general market conditions and reactions to the changes in the interest rate environment. The average balance in the trading account assets portfolio increased 14 percent from $71 million for the year ended December 31, 2005 to $81 million for the year ended December 31, 2006. The average balance in the trading account assets portfolio decreased 12 percent from $81 million for the year ended December 31, 2004 to $71 million for the year ending December 31, 2005. The average balance in the trading account liabilities portfolio increased 29 percent to $36 million for the year ended December 31, 2006, following a decrease of 11 percent to $28 million for the year ended December 31, 2005. See Note 12, Off-Balance Sheet Activities, Derivatives and Hedging, in the Notes to Consolidated Financial Statements, for a summary of interest rate contracts held in the trading account at December 31, 2006 and 2005.

     In 2005 and years prior, the Company used interest rate swaps as economic hedges. These swaps either did not qualify for hedge accounting treatment or were not qualified by the Company for hedge accounting treatment. These economic hedge swaps convert the fixed interest rate payments on certain of its debt obligations to a floating rate. Interest is exchanged periodically on the notional value, with the Company receiving the fixed rate and paying various LIBOR-based floating rates. Changes in the fair value of these derivatives and the interest exchanged are recognized in earnings in the line item trading gains (losses) and settlements on economic hedge swaps. The fair value of these derivatives is included in either trading account assets or accrued expenses and other liabilities. At both December 31, 2006 and 2005, there were no swaps held as economic hedges that were classified as trading securities.

     The following table details the composition of the Company’s trading account assets and liabilities at December 31, 2006 and 2005 (in thousands).

Trading Account Assets and Liabilities

	December 31
	2006		2005
Trading account assets:
U.S. Treasury and Government agencies	$	15,832	$	7,285
States and political subdivisions		5,867		3,376
Mortgage-backed pass-through securities		9,067		6,951
Collateralized mortgage obligations		2,671		8,767
Other debt securities		1,376		1,406
Interest rate floors, caps and swaps		51,893		48,774
Total trading account assets	$	86,706	$	76,559
Trading account liabilities:
Short sales	$	4,992	$	4,861
Interest rate floors, caps and swaps		24,566		25,401
Total trading account liabilities	$	29,558	$	30,262

-20-

     Trading account liabilities related to interest rate floors, caps and swaps are classified as other liabilities and the short-sale transactions are classified as short-term borrowings in the Company’s Consolidated Balance Sheets. These short-sale transactions could result in losses to the extent the ultimate obligation exceeds the amount of the recorded liability. The amount of the ultimate obligation under such transactions will be affected by movements in the financial markets, which are not determinable until the point at which securities are purchased to cover the short sales. The short-sale transactions relate principally to United States Government securities for which there is an active, liquid market. The Company does not expect the amount of losses, if any, on such transactions to be material because the short-sale transactions are used as a hedge against offsetting long positions in the trading account.

Deposits and Borrowed Funds

     Average deposits totaled $22 billion at December 31, 2006, a 20 percent increase over prior year levels. The increase in deposits was primarily attributable to a 19 percent increase in interest bearing transaction accounts combined with a 33 percent increase in time deposits. Additionally, the company experienced a nine percent increase in noninterest bearing accounts. As part of its overall funding strategy, the Company focuses on the mix of deposits and, in particular, maintaining an appropriate level of transaction accounts as a percentage of total deposits. During 2006 and 2005, average transaction accounts made up 68 percent and 71 percent of total deposits, respectively. Average interest bearing deposits made up 67 percent of total average interest bearing liabilities in 2006, up from 60 percent in 2005 and 56 percent in 2004.

     For additional information about deposits, see Note 8, Deposits, in the Notes to Consolidated Financial Statements.

     The following table summarizes the remaining maturities of certificates of deposit of $100,000 or more and other time deposits of $100,000 or more outstanding at December 31, 2006.

Maturities of Time Deposits

	Certificates		Other Time
	of Deposit		Deposits
	Over		Over
	$100,000		$100,000		Total
	(In Thousands)
Three months or less	$	1,992,242	$	136,837	$	2,129,079
Over three through six months		931,884		—		931,884
Over six through twelve months		365,596		—		365,596
Over twelve months		647,167		—		647,167
	$	3,936,889	$	136,837	$	4,073,726

     In addition to internal deposit generation, the Company also relies on borrowed funds as a supplemental source of funding. Borrowed funds consist of Federal Home Loan Bank (“FHLB”) advances, subordinated debentures, other long-term borrowings and short-term borrowings, primarily in the form of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings. Included in other short-term borrowings are trading account short sales, commercial paper of the Company and U.S. Treasury term investments. Average borrowed funds decreased $579 million and $510 million in 2006 and 2005, respectively. For a discussion of interest rates and maturities of FHLB and other borrowings, refer to Note 10, FHLB and Other Borrowings, and Note 11, Capital Securities and Preferred Stock, in the Notes to Consolidated Financial Statements.

     The Short-Term Borrowings table on the following page presents the distribution of the Company’s short-term borrowed funds and the corresponding weighted average interest rates at the end of each of the last three years. Also provided are the maximum outstanding amounts of borrowings, the average amounts of borrowings and the average interest rates at year-end for the last three years. For additional information regarding the Company’s short-term borrowings, see Note 9, Short-Term Borrowings, in the Notes to Consolidated Financial Statements.

-21-

Short-Term Borrowings

	Year Ended December 31
	Maximum									Average
	Outstanding				Average					Interest
	At Any		Average		Interest			Ending		Rate At
	Month End		Balance		Rate			Balance		Year-End
	(In Thousands)
2006
Federal funds purchased	$	3,555,640	$	2,918,734		4.99	%	$	2,948,855		5.23	%
Securities sold under agreements to repurchase		360,740		290,436		4.51			230,496		4.58
Short sales		22,816		5,782		4.64			4,992		4.56
Commercial paper		82,186		86,943		4.00			67,770		4.31
Other short-term borrowings		1,352,424		591,680		5.07			1,170,201		5.24
	$	5,373,806	$	3,893,575				$	4,422,314
2005
Federal funds purchased	$	4,542,326	$	3,845,028		3.23	%	$	2,802,536		4.04	%
Securities sold under agreements to repurchase		365,508		330,813		2.89			300,036		3.82
Short sales		6,979		2,828		3.51			4,861		3.33
Commercial paper		128,119		114,043		2.15			76,764		3.39
Other short-term borrowings		571,125		66,040		3.69			571,125		3.98
	$	5,614,057	$	4,358,752				$	3,755,322
2004
Federal funds purchased	$	4,374,545	$	3,906,691		1.38	%	$	4,218,045		2.17	%
Securities sold under agreements to repurchase		425,246		371,444		1.06			313,959		1.73
Short sales		4,324		2,058		2.96			2,956		2.99
Commercial paper		97,498		77,625		0.75			97,498		1.25
Other short-term borrowings		143,603		35,898		1.75			75,317		1.74
	$	5,045,216	$	4,393,716				$	4,707,775

Liquidity Management

     Liquidity is the ability of the Company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Company’s ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities it serves. Additionally, the Parent Company requires cash for various operating needs including: dividends to shareholders; business combinations; capital injections to its subsidiaries; the servicing of debt and the payment of general corporate expenses. The primary source of liquidity for the Parent Company is dividends from the Subsidiary Banks. At December 31, 2006, the Subsidiary Banks could have paid additional dividends to the Parent Company of approximately $380 million while continuing to meet the capital requirements for “well-capitalized” banks. Also, the Company has access to various capital markets. The Company does not anticipate any liquidity requirements in the near future that it will not be able to meet.

     Asset and liability management functions not only serve to assure adequate liquidity in order to meet the needs of the Company’s customers, but also to maintain an appropriate balance between interest-sensitive assets and interest-sensitive liabilities so that the Company can earn a return that meets the investment requirements of its shareholders. Daily monitoring of the sources and uses of funds is necessary to maintain an acceptable cash position that meets both requirements.

-22-

     The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities of investment securities held to maturity and available for sale and, to a lesser extent, sales of investment securities available for sale and trading account assets. Other short-term investments such as federal funds sold, securities purchased under agreements to resell and maturing interest bearing deposits with other banks, are additional sources of liquidity funding.

     The liability portion of the balance sheet provides liquidity through various customers’ interest bearing and noninterest bearing deposit accounts. Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings are additional sources of liquidity and, basically, represent the Company’s incremental borrowing capacity. These sources of liquidity are short-term in nature and are used as necessary to fund asset growth and meet short-term liquidity needs.

     During 2006, the Company funded $3.2 billion of growth in average interest earning assets through increases in interest bearing deposits and noninterest bearing deposits. Average interest bearing deposits increased $3.2 billion and average noninterest bearing deposits increased $494 million over the prior year period. For additional information about possible liquidity uses, see Note 13, Commitments, Contingencies and Guarantees, in the Notes to Consolidated Financial Statements.

     The following tables present information about the Company’s contractual obligations and commitments at December 31, 2006.

Contractual Obligations

	Payments Due by Period
			Less than 1						More than 5
	Total		Year		1 – 3 Years		3 –5 Years		Years
	(In Thousands)
FHLB and other borrowings *	$	3,511,601	$	105,932	$	899,991	$	1,175,100	$	1,330,578
Capital lease obligations		9,527		396		828		879		7,424
Operating leases		164,910		22,228		41,153		29,234		72,295
Unconditional purchase obligations		—		—		—		—		—
Certificates of deposit		7,237,663		5,654,302		999,315		520,203		63,843
Other time deposits		136,837		136,837		—		—		—
Other long-term obligations		—		—		—		—		—
	$	11,060,538	$	5,919,695	$	1,941,287	$	1,725,416	$	1,474,140

* Refer to Note 10, FHLB and Other Borrowings, and Note 11, Capital Securities and Preferred Stock, in the Notes to Consolidated Financial Statements for additional information about these obligations, including certain redemption features.

Commitments**

	Payments Due by Period
			Less than 1						More than 5
	Total		Year		1 – 3 Years		3 –5 Years		Years
	(In Thousands)
Commitments to extend credit	$	12,661,226	$	7,549,550	$	2,753,673	$	1,015,363	$	1,342,640
Standby and commercial letters of credit		1,136,441		125,048		256,892		562,428		192,073
Other contingent liabilities and commitments		—		—		—		—		—
	$	13,797,667	$	7,674,598	$	3,010,565	$	1,577,791	$	1,534,713

** Refer to Note 13, Commitments, Contingencies and Guarantees, in the Notes to Consolidated Financial Statements for additional information about these commitments.

-23-

Interest Rate Sensitivity Management

     The Company’s net interest income and the fair value of its financial instruments are influenced by changes in the level of interest rates. The Company manages its exposure to fluctuations in interest rates through policies established by its Asset/Liability Committee (“ALCO”). The ALCO meets regularly and has responsibility for approving asset/liability management policies, formulating and implementing strategies to improve balance sheet positioning and/or earnings and reviewing the interest rate sensitivity of the Company.

     Management utilizes an interest rate simulation model to estimate the sensitivity of the Company’s net interest income to changes in interest rates. Such estimates are based upon a number of assumptions for each scenario, including the level of balance sheet growth, deposit repricing characteristics and the rate of prepayments.

     The estimated impact on the Company’s net interest income sensitivity over a one-year time horizon at December 31, 2006 is shown in the table below along with comparable prior year information. Such analysis assumes a gradual and sustained parallel shift in interest rates, a static balance sheet and the Company’s estimate of how interest-bearing transaction accounts would reprice in each scenario using current yield curves at December 31, 2006 and 2005, respectively.

Net Interest Income Sensitivity

	Principal		Percentage
	Amount of Earning		Increase/(Decrease)
	Assets, Interest		in Interest Income/Expense
	Bearing Liabilities		Down 100			Up 100
	and Swaps		Basis Points			Basis Points
	(In Thousands)
December 31, 2006:
Assets which reprice in: *
One year or less	$	17,658,529		(5.79	)%		6.48	%
Over one year		13,706,928		(1.41	)		1.14
	$	31,365,457		(4.14	)		4.46
Liabilities which reprice in:
One year or less	$	20,389,514		(10.14	)%		12.73	%
Over one year		4,130,261		—			(5.71	)
	$	24,519,775		(8.34	)		9.47
Total net interest income sensitivity				(0.23	)%		(0.18	)%
December 31, 2005:
Assets which reprice in: *
One year or less	$	14,557,658		(7.48	)%		7.59	%
Over one year		13,839,052		(2.16	)		1.46
	$	28,396,710		(5.19	)		4.96
Liabilities which reprice in:
One year or less	$	17,488,014		(11.64	)%		15.11	%
Over one year		4,665,004		(0.82	)		2.17
	$	22,153,018		(8.24	)		11.04
Total net interest income sensitivity				(3.01	)%		0.59	%

* Excludes noninterest earning trading account assets

     As shown in the table above, the Company’s balance sheet sensitivity has declined in sensitivity to both rising and falling interest rates from December 31, 2005 to December 31, 2006. On the asset side of the balance sheet, the decrease in sensitivity to both rising and falling interest rates was due largely to a modest change in the mix of loans due primarily to the acquisition of TexasBank accompanied with commercial loan hedges. On the liability side of the balance sheet, the decrease in sensitivity to rising interest rates and the stability in sensitivity to falling rates was primarily the result of continued growth of term and non-term deposits, as well as funding mix changes.

-24-

     The Company enters into various interest rate protection contracts, both held and not held in the trading account, to help manage the Company’s interest rate sensitivity. Such contracts generally have a fixed notional principal amount and include interest rate swaps and interest rate caps and floors. Interest rate swaps are contracts where the Company typically receives or pays a fixed rate and a counterparty pays or receives a floating rate based on a specified index, generally the prime rate or the London Interbank Offered Rate (“LIBOR”). Interest rate caps and floors purchased are contracts whereby the Company receives, respectively, interest if the specified index rises above the cap rate or falls below the floor rate. The interest rate risk factor in these contracts is considered in the Company’s interest rate risk management program. Refer to Note 12, Off-Balance Sheet Activities, Derivatives and Hedging, in the Notes to Consolidated Financial Statements, for the composition of the Company’s interest rate protection contracts as well as a discussion of interest rate risks, credit risks and derivative instruments.

Capital Resources

     Shareholders’ equity increased by $588 million during 2006 following a $180 million increase during 2005. The increase in 2006 was the result of an increase in retained earnings coupled with a reduction of treasury stock. The increase in retained earnings was driven by the increase in the Company’s net income, while the decrease in treasury stock was primarily due to the issuance of common stock in connection with the acquisition of TexasBank in the first quarter of 2006.

     Dividends of $200 million were declared on the Company’s common stock in 2006, as compared to the $174 million declared in 2005. The annual dividend rate in 2006 was $1.56 per common share, an 11 percent increase over 2005. The dividend payout ratio, defined as dividends paid per share divided by diluted earnings per share, was 44 percent in 2006, 2005 and 2004. The Company intends to continue a dividend payout ratio that is competitive in the banking industry while maintaining an adequate level of retained earnings to support continued growth. Subsequent to year-end, the Company’s Board of Directors approved a 10 percent increase in the quarterly dividend rate, raising the annual dividend rate to an indicated $1.72 per common share for 2007. This marked the 26^th consecutive year the Company has increased its dividend rate paid to shareholders.

     A strong capital position, which is vital to the continued profitability of the Company, also promotes depositor and investor confidence and provides a solid foundation for the future growth of the organization. The Company has satisfied its capital requirements principally through the retention of earnings. The Company’s five-year compound growth rate in shareholders’ equity of 10 percent was achieved primarily through retained earnings.

     In 2003, the Company announced that its Board of Directors authorized a share repurchase program allowing for the purchase of 3.3 percent or approximately 4.1 million shares of the Company’s outstanding common stock. Through December 31, 2006, 1.2 million total shares had been purchased under the program. At December 31, 2006, approximately 2.9 million shares remained available for repurchase under the program. The timing and amount of purchases is dependent upon the availability and alternative uses of capital, market conditions and other factors. Since December 31, 2005, approximately 5.1 million shares have been issued from treasury stock at a cost of $183.5 million. Of this amount, approximately 4.9 million shares were issued in connection with the acquisition of TexasBank, at a cost of $178.5 million. The remainder of the shares issued from treasury stock relate to employee benefit plans and other acquisitions.

     The ratio of average common shareholders’ equity as a percentage of total average assets is one measure used to determine capital strength. Overall, the Company’s capital position remains strong as the ratio of average common shareholders’ equity to average assets for 2006 was 7.89 percent compared to 7.37 percent in 2005 and 7.12 percent in 2004. In order to maintain this ratio at appropriate levels with continued growth in total average assets, a corresponding level of capital growth must be achieved. The following table summarizes these and other key ratios for the Company for each of the last three years.

Return on Equity and Assets

	December 31
	2006			2005			2004
Return on average assets		1.39	%		1.36	%		1.30	%
Return on average equity		17.68			18.52			18.29
Dividend payout ratio		44.19			44.03			43.55
Average common shareholders’ equity to average assets ratio		7.89			7.37			7.12

-25-

     In addition to the capital ratios mentioned above, banking industry regulators have defined minimum regulatory capital ratios that the Parent Company and its Subsidiary Banks are required to maintain. These risk-based capital guidelines take into consideration risk factors, as defined by the banking industry regulators, associated with various categories of assets, both on and off balance sheet. Under the guidelines, capital strength is measured in two tiers that are used in conjunction with risk-adjusted assets to determine the risk-based capital ratios. Tier I Capital is defined as common shareholders’ equity, excluding the net unrealized holding gain (loss) on available for sale securities (except for net unrealized losses on marketable equity securities), plus perpetual preferred stock and certain debentures issued by the Parent Company, minus goodwill and other disallowed intangible assets. Other disallowed intangibles represent intangible assets, other than goodwill, recorded after February 19, 1992. Total Qualifying Capital is defined as Tier I Capital plus Tier II Capital components, which include such items as qualifying allowance for loan losses and qualifying subordinated debt.

     At December 31, 2006, the Company’s Tier I Capital and Total Qualifying Capital totaled $2.5 billion and $3.5 billion, respectively. The percentage ratios, as calculated under the guidelines, were 8.49 percent and 11.73 percent for Tier I and Total Qualifying Capital, respectively, at year-end 2006. These ratios are well above the minimum requirements of four percent for Tier I Capital and eight percent for Total Qualifying Capital. Tier I Capital increased by $230 million, or 10 percent, in 2006 primarily as a result of the increase in retained earnings.

     Two other important indicators of capital adequacy in the banking industry are the leverage ratio and the tangible leverage ratio. The leverage ratio is defined as Tier I Capital divided by total adjusted average quarterly assets. Average quarterly assets are adjusted by subtracting the average unrealized gain (loss) on available for sale securities (except for net unrealized losses on marketable equity securities), period-end goodwill and other disallowed assets. The tangible leverage ratio is defined similarly, except, by definition, all other intangible assets not previously excluded are removed from both the numerator and denominator. The Company’s leverage ratio was 7.61 percent at year-end 2006 and 7.70 percent at year-end 2005, while its tangible leverage ratio was 7.58 percent at year-end 2006 and 7.67 percent at year-end 2005.

     The following table shows the calculation of capital ratios for the Company for the last two years.

Capital Ratios

	December 31
	2006			2005
	(In Thousands)
Risk-based capital:
Tier I Capital	$	2,543,189		$	2,313,682
Tangible Tier I Capital		2,534,552			2,304,269
Total Qualifying Capital		3,513,448			3,038,507
Assets:
Net risk-adjusted assets	$	29,947,437		$	26,460,438
Adjusted quarterly average assets		33,426,336			30,055,681
Adjusted tangible quarterly average assets		33,417,699			30,046,268
Ratios:
Tier I Capital		8.49	%		8.74	%
Total Qualifying Capital		11.73			11.48
Leverage		7.61			7.70
Tangible leverage		7.58			7.67

     The regulatory capital ratios of the Subsidiary Banks currently exceed the minimum ratios of 5 percent leverage capital, 6 percent Tier I Capital and 10 percent Total Qualifying Capital required in 2006 for “well-capitalized” banks as defined by federal banking regulators. The Company continually monitors these ratios to ensure that the Subsidiary Banks exceed these guidelines. For further information regarding the regulatory capital ratios of the Parent Company and its Subsidiary Banks, see Note 14, Regulatory Matters and Dividends from Subsidiaries, in the Notes to Consolidated Financial Statements.

-26-

Off-Balance Sheet Activities

Sunbelt Funding Corporation

     In an effort to diversify its funding sources, the Company sponsored the establishment of Sunbelt Funding Corporation (“Sunbelt”), an asset-backed commercial paper conduit, created as a wholly-owned subsidiary of an independent third party. Sunbelt was structured as a QSPE, as defined by SFAS 140, with a limited business purpose of purchasing highly rated investment grade debt securities from the Company’s trading account portfolio and financing its purchases through the issuance of P-1/F1 rated commercial paper. As of December 31, 2006, all assets sold to the conduit were performing and no significant gains or losses were recognized on the sales.

     At December 31, 2006, all securities held by Sunbelt were either triple A rated by at least two nationally recognized statistical ratings organizations or were backed by the full faith and credit of the U.S. Government. Approximately 99 percent of the securities held by Sunbelt at December 31, 2006 were variable rate. Sunbelt’s total assets, which approximated market value, were $1.2 billion and $1.7 billion at December 31, 2006 and 2005, respectively. The Company realized fee income of $3.1 million, $5.5 million and $6.0 million for the years ended December 31, 2006, 2005 and 2004, respectively, from Sunbelt for various services including serving as investment advisor, liquidity provider, administrative agent and for providing a letter of credit. At December 31, 2006 and 2005, receivables from Sunbelt were $492,000 and $2 million, respectively. There were no outstanding payables to Sunbelt at either December 31, 2006 or 2005. The Company, under agreements with Sunbelt, may be required to purchase assets or provide alternative funding to the conduit in certain limited circumstances, including the conduit’s inability to place commercial paper or a downgrade in the Company’s short-term debt rating. Management believes if an event occurs, the Company has the ability to provide funding without any material adverse effect. The underlying assets are eligible investments for Compass Bank. The commitments, which are renewable annually at the Company’s option, are for amounts up to $2 billion. No funding or purchase of assets has occurred as of December 31, 2006.

     There is currently a proposed amendment to SFAS 140, which could result in Sunbelt no longer qualifying as a QSPE. If the amendment is finalized as currently proposed, and Sunbelt does not change its structure, Sunbelt would be consolidated into the Company. Consolidation of Sunbelt’s assets into the Company would not have a significant impact on regulatory capital ratios, as the Company would continue to exceed the minimum ratios required for well-capitalized banks as defined by federal banking regulators. See Note 1, Nature of Operations and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements.

Results of Operations

Net Interest Income

     Net interest income is the principal component of the Company’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest bearing liabilities can materially impact net interest income. The following discussion of net interest income is presented on a taxable equivalent basis, unless otherwise noted, to facilitate performance comparisons among various taxable and tax-exempt assets.

     Net interest income increased $150 million from $973 million in 2005 to $1.1 billion in 2006, following an $84 million increase in 2005 from 2004 levels. Interest income in 2006 increased $503 million to $2.1 billion, compared to $1.5 billion in 2005, an increase of 32 percent. The increase in interest income was due to a $3.2 billion increase in the volume of average earning assets coupled with a 104 basis point increase in the yield on earning assets. Interest expense increased $353 million, or 61 percent, in 2006 primarily due to a $2.6 billion increase in the volume of interest bearing liabilities and a 119 basis point increase in the rate paid on interest bearing liabilities. In 2005, interest income increased $272 million to $1.5 billion from $1.3 billion in 2004. The increase in interest income was caused by a $1.7 billion increase in the volume of average earning assets coupled with a 68 basis point increase in the yield on earning assets. Interest expense increased $188 million, or 48 percent, in 2005 due to an 81 basis point increase in the rate paid on interest bearing liabilities and an $841 million increase in the volume of interest bearing liabilities. The schedule on pages 30 and 31 provides detail regarding interest income, interest expense and net interest income due to changes in volumes, rates and mix of interest bearing assets and liabilities.

-27-

     The 2006 yield on average earning assets increased due primarily to a $3.7 billion increase in the volume of average loans coupled with a 115 basis point increase in the yield on loans, offset partially by a $431 million decrease in investment securities, including investment securities held to maturity and available for sale. The increase in the average volume of loans and loan yield is attributable to continued strong loan production throughout all of the Company’s major markets at higher rates, as well as the addition of loans from the acquisition of TexasBank during the first quarter of 2006. The increase in the loan yields is due to both the growth of loans and the repricing of variable rate loans at higher rates. The majority of the decrease in investment securities was due to the Company’s decision to utilize cash flows from the securities portfolio to fund loan growth and a modest repositioning of the available for sale portfolio in conjunction with the acquisition of TexasBank.

     Total interest expense increased 61 percent in 2006 due to an increase of $2.6 billion in the volume of average interest bearing liabilities and an increase of 119 basis points in the average rate paid on interest bearing liabilities. Interest expense on interest bearing deposits increased $259 million due to a 122 basis point increase in the rate, coupled with a $3.2 billion increase in the average volume. For borrowed funds, which represents interest bearing liabilities that are not classified as deposits, a $94 million increase in interest expense was the result of a 147 basis point increase on average rate paid on borrowed funds, partially offset by a decrease of $579 million in the average volume.

     The 2005 yield on average earning assets increased due primarily to an 89 basis point increase in the yield on loans. This increase in loan yields was primarily attributable to organic loan growth at higher rates as well as the repricing of variable rate loans at higher rates, as evidenced by the increases in the Fed Funds rate in the second half of 2004 and 2005. The increase in the volume of average earning assets in 2005 from 2004 was driven by a $2.1 billion increase in loans, offset partially by a $317 million decrease in investment securities, including securities held to maturity and available for sale.

     Total interest expense increased 48 percent in 2005 due to an increase of 81 basis points in the rate paid on interest bearing liabilities and an increase of $841 million in the volume of average interest bearing liabilities. Interest expense on interest bearing deposits increased $101 million due to a 64 basis point increase in the rate, coupled with a $1.4 billion increase in the average volume. For borrowed funds, which represents interest bearing liabilities that are not classified as deposits, an $87 million increase in interest expense was the result of a 118 basis point increase on average rate paid on borrowed funds, partially offset by a $510 million decrease in the average volume.

     Net interest income is commonly evaluated in terms of average rates using the net yield and the interest rate spread. The net yield on earning assets is computed by dividing fully taxable equivalent net interest income by average total earning assets, excluding market adjustments for investment securities available for sale and hedges. This ratio represents the difference between the average yield returned on average earning assets and the average rate paid for all funds used to support those earning assets, including both interest bearing and noninterest bearing sources of funds. The net yield on earning assets increased 11 basis points to 3.69 percent in 2006 after increasing 9 basis points to 3.58 in 2005. The increase in yield in 2006 was due to an increase of $503 million in interest income partially offset by an increase of $353 million in interest expense. The increase in the net yield in 2005 was due to an increase of $272 million in interest income partially offset by an increase of $188 million in interest expense.

     The interest rate spread measures the difference between the average yield on earning assets and the average rate paid on interest bearing liabilities. The interest rate spread eliminates the impact of noninterest bearing funds and gives a direct perspective on the effect of market interest rate movements. During 2006, the net interest rate spread decreased 15 basis points to 2.84 percent from the 2005 spread of 2.99 percent. During 2005, the net interest rate spread decreased 13 basis points from the 2004 spread of 3.12 percent. See the accompanying table entitled Consolidated Average Balance Sheets and Rate/Volume Variances on pages 30 and 31 for more information.

     During 2006, the net yield on earning assets was positively impacted by the Company’s use of interest rate contracts, primarily interest rate swaps, which increased the taxable equivalent net yield on earning assets by $3.4 million. The net yield on earning assets was positively impacted by interest rate contracts during 2005 and 2004, which increased the taxable equivalent net yield by $7.3 million and $28.8 million in 2005 and 2004, respectively.

     Derivative instruments are subject to market risk. While the Company does have trading derivatives to facilitate customer transactions and manage the Company’s interest rate exposure, the Company does not utilize derivative

-28-

instruments for speculative purposes. The following table details information regarding the notional amount, maturity date and the receive fixed coupon rate for derivative instruments used for hedging activities as of December 31, 2006, excluding derivatives related to the Company’s mortgage banking activities. The maturity date used in the table below is the first call date, when applicable. See Note 12, Off-Balance Sheet Activities, Derivatives and Hedging, in the Notes to Consolidated Financial Statements, for further information about the Company’s use of derivatives and the fair value of those instruments.

	For the Year Ended December 31
	2007			2008			2009			Thereafter
	(In Thousands)
Non-trading interest rate contracts:
Cash Flow Hedges:
Notional maturity	$	—		$	500,000		$	350,000		$	1,500,000
Weighted average coupon received on maturities		—	%		4.88	%		5.32	%		5.25	%
Weighted average time to maturity (months)		—			13			32			43
Fair Value Hedges:
Notional maturity	$	405,500		$	—		$	329,882		$	575,000
Weighted average coupon received on maturities		6.96	%		—	%		6.53	%		5.69	%
Weighted average time to maturity (months)		3			—			31			196

     The notional amounts shown in the preceding table should be viewed in the context of the Company’s overall interest rate risk management activities to assess the impact on net interest margin. The market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates. Accordingly, current market values are not necessarily indicative of the future impact of the derivative instruments on net interest income. This will depend, in large part, on the shape of the yield curve as well as the absolute level of interest rates.

     The following table presents certain interest rates on a taxable equivalent basis. The table on pages 30 and 31 contains these same percentages and all major categories of interest earning assets and interest bearing liabilities. Tax-exempt earning assets continue to make up a small percentage of total earning assets.

	December 31
	2006			2005			2004
Rate earned on interest earning assets		6.74	%		5.70	%		5.02	%
Rate paid on interest bearing liabilities		3.90			2.71			1.90
Interest rate spread		2.84			2.99			3.12
Net yield on earning assets		3.69			3.58			3.49

-29-

Consolidated Average Balance Sheets and Rate/Volume Variances

     Taxable Equivalent Basis

     (Dollars in Thousands)

	Year Ended December 31
	2006								2005
	Average			Income/		Yield/			Average			Income/		Yield/
Yield/Rate Analysis	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans [a]	$	23,713,038		$	1,735,236		7.32	%	$	20,049,588		$	1,236,153		6.17	%
Investment securities available for sale [b]		4,528,184			212,543		4.69			4,570,904			189,333		4.14
Investment securities held to maturity		2,121,500			101,269		4.77			2,509,642			121,405		4.84
Other [c]		73,127			3,649		4.99			61,410			2,347		3.82
Total earning assets		30,435,849			2,052,697		6.74			27,191,544			1,549,238		5.70
Allowance for loan losses		(285,189	)							(257,919	)
Unrealized gain (loss) on investment securities available for sale		(82,636	)							(49,453	)
Cash and due from banks		710,747								746,393
Other assets		2,233,579								1,813,667
Total assets	$	33,012,350							$	29,444,232
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing liabilities:
Interest bearing demand deposits	$	346,733			2,933		0.85		$	211,655			1,529		0.72
Savings deposits		8,424,252			187,839		2.23			7,185,061			72,657		1.01
Certificates of deposit less than $100,000 and other time deposits		3,430,703			155,259		4.53			2,542,086			88,495		3.48
Certificates of deposit of $100,000 or more		3,728,787			173,752		4.66			2,826,672			98,298		3.48
Total interest bearing deposits [b]		15,930,475			519,783		3.26			12,765,474			260,979		2.04
Federal funds purchased		2,918,734			145,515		4.99			3,845,028			124,019		3.23
Securities sold under agreements to repurchase		290,436			13,087		4.51			330,813			9,576		2.89
Other short-term borrowings [c]		684,405			33,733		4.93			182,911			4,994		2.73
FHLB and other borrowings [b]		4,000,673			217,299		5.43			4,114,354			176,605		4.29
Total interest bearing liabilities		23,824,723			929,417		3.90			21,238,580			576,173		2.71
Net interest income/net interest spread					1,123,280		2.84	%					973,065		2.99	%
Noninterest bearing demand deposits		6,196,642								5,702,201
Accrued expenses and other liabilities		387,819								333,389
Shareholders’ equity		2,603,166								2,170,062
Total liabilities and shareholders’ equity	$	33,012,350							$	29,444,232
Net yield on earning assets							3.69	%							3.58	%
Taxable equivalent adjustment:
Loans					2,303								1,224
Investment securities available for sale					3,225								560
Investment securities held to maturity					2,580								2,261
Other					38								41
Total taxable equivalent adjustment					8,146								4,086
Net interest income				$	1,115,134							$	968,979

[a]	Includes nonaccrual loans
[b]	Excludes adjustment for mark-to-market valuation
[c]	Excludes noninterest earning trading assets and liabilities

-30-

Year Ended December 31
2004								Change in Interest Income/Expense Attributable to
Average			Income/		Yield/			2006									2005
Balance			Expense		Rate			Volume			Rate			Mix			Volume			Rate			Mix
$	17,999,355		$	950,925		5.28	%	$	226,035		$	230,570		$	42,478		$	108,252		$	160,194		$	16,782
	4,401,132			181,234		4.12			(1,769	)		25,140			(161	)		6,995			880			224
	2,996,342			143,637		4.79			(18,786	)		(1,757	)		407			(23,313	)		1,498			(417	)
	60,491			1,306		2.16			448			718			136			20			1,004			17
	25,457,320			1,277,102		5.02			205,928			254,671			42,860			91,954			163,576			16,606
	(251,713	)
	24,865
	675,339
	1,754,817
$	27,660,628
$	60,211			1,134		1.88			973			275			156			2,847			(698	)		(1,754	)
	7,570,719			46,555		0.61			12,516			87,658			15,008			(2,353	)		30,283			(1,828	)
	2,004,181			63,321		3.16			30,924			26,692			9,148			16,998			6,413			1,763
	1,779,343			48,768		2.74			31,394			33,355			10,705			28,697			13,167			7,666
	11,414,454			159,778		1.40			75,807			147,980			35,017			46,189			49,165			5,847
	3,906,691			53,729		1.38			(29,919	)		67,672			(16,257	)		(851	)		72,274			(1,133	)
	371,444			3,934		1.06			(1,167	)		5,359			(681	)		(431	)		6,797			(724	)
	115,581			1,267		1.10			13,691			4,024			11,024			741			1,884			1,102
	4,589,059			169,493		3.69			(4,877	)		46,904			(1,333	)		(17,517	)		27,534			(2,905	)
	20,397,229			388,201		1.90			53,535			271,939			27,770			28,131			157,654			2,187
				888,901		3.12	%	$	152,393		$	(17,268	)	$	15,090		$	63,823		$	5,922		$	14,419
	4,999,763
	294,688
	1,968,948
$	27,660,628
						3.49	%
				764
				159
				2,613
				40
				3,576
			$	885,325

-31-

Provision for Loan Losses, Net Charge-Offs and Allowance for Loan Losses

     The provision for loan losses is the annual cost of providing an allowance or reserve for estimated losses on loans. The amount for each year is dependent upon many factors including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of loan portfolio quality, the value of collateral and general economic factors.

     Management monitors the entire loan portfolio, including loans acquired in business combinations, in an effort to identify problem loans so that risks in the portfolio can be identified on a timely basis and an appropriate allowance maintained. Loan review procedures, including loan grading, periodic credit rescoring and trend analysis of portfolio performance, are utilized by the Company’s loan review department in order to ensure that potential problem loans are identified early to lessen any potentially negative impact on the Company’s earnings. Management’s involvement continues throughout the process and includes participation in the work-out process and recovery activity. These formalized procedures are monitored internally by the loan review department whose work is monitored by regulatory agencies that provide an additional level of review on an annual basis. Such internal review procedures are quantified in ongoing reports to senior management and are used in determining whether such loans represent probable loss to the Company.

     The allowance for loan losses is established by risk group as follows:

• Large classified loans, nonaccrual loans and loans considered impaired are evaluated individually with specific reserves allocated based on management’s review.

• Smaller homogenous nonaccrual and adversely classified loans are assigned a portion of the allowance based on loan grading. Smaller past due loans are assigned a portion of the allowance using a formula that is based on the severity of the delinquency.

• The remainder of the portfolio is allocated a portion of the allowance based on past loss experience and the economic conditions for the particular loan portfolio. Allocation weights are assigned based on the Company’s historical loan loss experience, in accordance with SFAS 114, Accounting by Creditors for Impairment of a Loan, in each loan category, although a higher allocation weight may be used if current conditions indicate that loan losses may exceed historical experience.

     Additionally, a portion of the allowance is for inherent losses which are probable to exist as of the valuation date even though they may not have been identified by the objective processes used for the allocated portion of the allowance. This portion of the allowance is particularly subjective and requires judgment based upon qualitative factors. Some of the factors considered are changes in credit concentrations, loan mix, changes in underwriting practices, including the extent of portfolios of acquired institutions, historical loss experience and the general economic environment in the Company’s markets. While the total allowance is described as consisting of separate portions, these terms are primarily used to describe a process. All portions of the allowance are available to support inherent losses in the loan portfolio.

     The allowance for loan losses at December 31, 2006, was $291 million, or 1.18 percent of loans, compared with $267 million, or 1.25 percent of loans, at December 31, 2005, and $258 million, or 1.37 percent of loans, at December 31, 2004. The increase in the allowance, for both 2006 and 2005, was to provide adequate coverage for loan growth and to maintain the level of coverage based upon current economic conditions. Additionally, in March 2006, the Company acquired $11.2 million of allowance for loan losses with the purchase of TexasBank. Furthermore, on March 31, 2005, the Company transferred $12 million of allowance for loan losses related to unfunded commitments, letters of credit and fees to other liabilities. As shown in the following table, net loan charge-offs in 2006 were $77 million, or 0.32 percent of average loans, compared with $97 million, or 0.48 percent of average loans, in 2005 and $92 million, or 0.51 percent of average loans, in 2004. Management believes that the allowance for loan losses at December 31, 2006 is adequate and appropriate given past experience and the underlying strength of the loan portfolio.

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     The following table sets forth information with respect to the Company’s loans and the allowance for loan losses for the last five years.

Summary of Loan Loss Experience

	2006			2005			2004			2003			2002
	(In Thousands)
Average loans outstanding during the year	$	23,713,038		$	20,049,588		$	17,999,355		$	16,796,188		$	15,100,844
Allowance for loan losses, beginning of year	$	267,173		$	258,339		$	244,882		$	232,830		$	191,393
Charge-offs:
Commercial, financial and agricultural		15,720			15,897			14,863			23,078			26,608
Commercial real estate – mortgage		2,075			1,760			4,564			2,836			3,155
Real estate – construction		826			740			246			2,290			3,735
Residential real estate – mortgage		2,289			1,915			1,778			1,547			1,887
Equity lines of credit		1,852			1,606			2,437			2,973			1,343
Equity loans		1,041			2,021			2,549			5,065			2,926
Credit card		25,235			39,106			37,625			36,248			35,296
Consumer – direct		19,122			21,124			14,675			15,825			11,376
Consumer – indirect		38,325			41,575			38,860			33,865			23,061
Total		106,485			125,744			117,597			123,727			109,387
Recoveries:
Commercial, financial and agricultural		1,834			4,070			5,549			5,285			2,759
Commercial real estate – mortgage		77			184			274			149			211
Real estate – construction		125			93			110			472			54
Residential real estate – mortgage		89			116			133			207			390
Equity lines of credit		303			234			271			54			127
Equity loans		285			344			434			198			18
Credit card		2,976			3,019			2,830			2,038			2,015
Consumer – direct		10,527			8,508			5,966			4,786			4,570
Consumer – indirect		13,265			12,381			10,420			6,271			4,349
Total		29,481			28,949			25,987			19,460			14,493
Net charge-offs		77,004			96,795			91,610			104,267			94,894
Provision charged to income		89,702			117,818			105,658			119,681			136,331
Allowance for loans sold / securitized		—			—			(591	)		(3,362	)		—
Allowance transferred to other liabilities		—			(12,189	)		—			—			—
Allowance acquired		11,179			—			—			—			—
Allowance for loan losses, end of year	$	291,050		$	267,173		$	258,339		$	244,882		$	232,830
Net charge-offs to average loans outstanding		0.32	%		0.48	%		0.51	%		0.62	%		0.63	%

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     When determining the adequacy of the allowance for loan losses, management considers changes in the size and character of the loan portfolio, changes in nonperforming and past due loans, historical loan loss experience, the existing risk of individual loans, concentrations of loans to specific borrowers or industries and current economic conditions. The portion of the allowance that has not been identified by the Company as related to specific loan categories has been allocated to the individual loan categories on a pro rata basis for purposes of the table below.

Allocation of Allowance for Loan Losses

	December 31
	2006					2005					2004					2003					2002
			Percent of					Percent of					Percent of					Percent of					Percent of
			Loans to					Loans to					Loans to					Loans to					Loans to
	Amount		Total Loans			Amount		Total Loans			Amount		Total Loans			Amount		Total Loans			Amount		Total Loans
	(In Thousands)
Commercial, financial and agricultural	$	55,389		17.7	%	$	47,688		18.2	%	$	55,077		19.9	%	$	59,308		20.6	%	$	57,685		22.4	%
Real estate – construction		72,363		25.8			25,668		19.8			24,613		16.1			22,119		14.3			28,123		15.3
Real estate – mortgage:
Residential		38,820		22.8			22,321		22.0			17,897		21.4			14,420		22.1			14,188		24.2
Commercial		27,297		17.3			27,432		19.1			29,011		20.9			31,746		22.6			23,642		19.5
Consumer		97,181		16.4			144,064		20.9			131,741		21.7			117,289		20.4			109,192		18.6
	$	291,050		100.0	%	$	267,173		100.0	%	$	258,339		100.0	%	$	244,882		100.0	%	$	232,830		100.0	%

Nonperforming Assets

     Nonperforming assets include loans classified as nonaccrual or renegotiated and foreclosed real estate. It is the general policy of the Company to stop accruing interest income and place the recognition of interest on a cash basis when any commercial, industrial or commercial real estate loan is 90 days or more past due as to principal or interest and/or the ultimate collection of either is in doubt, unless collection of both principal and interest is assured by way of collateralization, guarantees or other security. Accrual of interest income on consumer loans, including residential real estate loans, is suspended when any payment of principal or interest, or both, is more than 120 days delinquent. Credit card loans are charged off before the end of the month when the loan becomes 180 days past due with the related interest accrued but not collected reversed against current income. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income unless the collateral for the loan is sufficient to cover the accrued interest or a guarantor assures payment of interest.

     Nonperforming assets at December 31, 2006 were $73 million, an increase of $14 million from year-end 2005. Nonperforming loans increased $8 million from year-end 2005 to $56 million. Other real estate owned (“ORE”) increased $6 million from year-end 2005.

     The recorded investment in impaired loans at December 31, 2006 and 2005 was $40 million and $39 million, respectively. The Company had specific allowance amounts related to those loans of $6 million and $8 million, respectively. There were no impaired loans without a specific allowance or discount at December 31, 2006 or 2005. The average investment in these loans for the years ended December 31, 2006 and 2005 amounted to $40 million and $37 million, respectively.

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     The following table summarizes the Company’s nonperforming assets for each of the last five years.

Nonperforming Assets

	December 31
	2006			2005			2004			2003			2002
	(In Thousands)
Nonaccrual loans	$	53,014		$	47,578		$	49,947		$	65,870		$	81,671
Renegotiated loans		3,258			698			734			218			38
Total nonperforming loans		56,272			48,276			50,681			66,088			81,709
Other real estate		17,105			11,510			19,998			29,014			17,300
Total nonperforming assets	$	73,377		$	59,786		$	70,679		$	95,102		$	99,009
Accruing loans 90 days or more past due	$	18,023		$	14,539		$	15,509		$	26,159		$	16,907
Total nonperforming loans as a percentage of loans		.23	%		.23	%		.27	%		.38	%		.50	%
Total nonperforming assets as a percentage of loans and ORE		.30			.28			.37			.55			.60
Accruing loans 90 days or more past due as a percentage of loans		.07			.07			.08			.15			.10

     Details of nonaccrual loans at December 31, 2006, 2005 and 2004 appear below (in thousands):

	2006		2005		2004
Principal balance	$	53,014	$	47,578	$	49,947
Interest that would have been recorded under original terms		5,105		4,789		4,819
Interest actually recorded		1,655		2,070		2,195

Noninterest Income

     Noninterest income consists of revenues generated from a broad range of financial services and activities, including fee-based services, profits and commissions earned through securities and insurance sales and corporate and correspondent investment sales. In addition, gains and losses realized from the sale of investment portfolio securities and trading gains (losses) and settlements on economic hedge swaps are included in noninterest income. Noninterest income totaled $711.3 million in 2006, an increase of eight percent from the prior year, and $658.7 million in 2005, an increase of five percent from that reported in 2004. On a core basis, noninterest income increased eight percent, or $50 million from 2005 levels. Core results exclude investment securities gains (losses) of $(14.9) million in 2006 and $79,000 in 2005, gain on prepayment of FHLB advances of $21.1 million in 2006, trading gains (losses) and settlements on economic hedge swaps of $(3.2) million in 2005 and gains on the sale of non-core businesses and non-strategic banking centers totaling $6.4 million in 2005.

     Fee income from service charges on deposit accounts increased five percent in 2006 following a five percent increase in 2005. Continued emphasis on the growth of low-cost personal and small business checking accounts and corporate treasury management services accounted for both an increase in the number of accounts and outstanding balances in 2006 and 2005.

     Card and merchant processing fees increased 16 percent in 2006 after an increase of 27 percent in 2005. The increase in both years is a direct reflection of the Company’s deposit gathering strategy that has resulted in an increase in the number of debit cards issued as well as an increase in debit card use by the Company’s customers. Increases in interchange income, merchant’s discounts and the volume of credit cards also accounted for increased revenues in 2006 and 2005.

     Insurance commissions increased approximately $2.3 million to $61.6 million in 2006 after an increase of $7.9 million in 2005 to $59.4 million. Income from this line item is primarily generated through commissions on the sales of insurance, primarily property and casualty, and other related products. The Company expanded its insurance business between 2003 and 2005, acquiring five insurance companies throughout its geographic markets.

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     Retail investment sales income, comprised primarily of mutual fund and annuity sales income, increased 22 percent in 2006 after increasing 8 percent in 2005. The increases in both 2006 and 2005 reflected improved overall market conditions.

     Asset management fees increased 18 percent in 2006 after increasing 27 percent in 2005. Assets under administration, which is the primary driver of income for this line item, were $7.8 billion, $7.5 billion and $7.6 billion for the years ended December 31, 2006, 2005 and 2004, respectively.

     Corporate and correspondent investment sales totaled $22.8 million in 2006 compared to $23.5 million in 2005 and $20.5 million in 2004. Income from this line item is primarily generated through commissions on the sales of bonds to approximately 1,000 correspondent banks and matched interest rate protection contracts to corporate customers. Changes in the corporate and correspondent investment sales in future years cannot be predicted accurately because of the uncertainty of changes in market conditions.

     The Company recognized investment securities gains (losses) of $(14.9) million for the year ended December 31, 2006 and $79,000 for the year ended December 31, 2005. Additionally, the Company recognized $21.1 million of gains on the prepayment of FHLB advances during the year ended December 31, 2006.

     Trading gains (losses) and settlements on economic hedge swaps represents the mark-to-market valuation adjustments and net settlements on the Company’s own economic hedges. During 2006, the Company did not maintain any economic hedges, thus the increase of $3.2 million in this caption in 2006. In 2005, trading gains (losses) and settlements on economic hedge swaps decreased to $(3.2) million compared to $11.1 million recognized in 2004. The changes in this caption between 2005 and 2004 were due to fluctuations in the market value of the Company’s economic hedges and market interest rates during that time.

     During the first quarter of 2005, the Company completed the sale of a non-core business unit that specialized in the brokerage of oil and gas properties and, in the fourth quarter of 2005, completed the sale of two non-strategic banking centers in Arizona. A gain of $4.8 million was realized on the sale of the non-core business unit and a gain of $1.6 million was realized on the non-strategic banking center sale.

Noninterest Expense

     Noninterest expense totaled $1.0 billion in 2006, an increase of 16 percent from the prior year, and $901.8 million in 2005, an increase of 4 percent from that reported in 2004. The increase in 2006 is due primarily to an increase in salaries, benefits and commissions of 17 percent from $487.8 million in 2005 to $569.8 million in 2006. The increase in salaries, benefits and commissions was driven by the expansion of the Company’s distribution network through the acquisition of TexasBank as well as the 14 additional new banking centers opened during 2006. The number of full time equivalent employees increased to 8,365 at December 31, 2006 from 8,049 at December 31, 2005.

     Equipment expense increased 11 percent in 2006 and 8 percent in 2005. Net occupancy expense also increased to $74.3 million as compared to $66.9 million in 2005 and $65.8 million in 2004. Both of these captions increased as a result of the Company’s acquisition activity over the last two years and the addition of new banking centers, as previously discussed.

     Marketing expense increased $7.1 million in 2006 and $10.6 million in 2005. The increases in marketing expense reflect a focused strategy to increase product sales throughout all of the Company’s markets. Communications expense also increased in 2006, increasing $2.7 million to $24.5 million, after remaining relatively stable in 2005 decreasing only $66,000 compared to 2004. The increase in the current year was due to expansion of the Company’s distribution network.

     Amortization of intangibles increased $6.2 million in 2006, after decreasing six percent in 2005. The increase in the current year was due entirely to the acquisition of TexasBank in the first quarter of 2006.

     Merger and integration expenses increased by $9.0 million in 2006 after increasing $366,000 in 2005. The increase in both periods was the result of the acquisition of TexasBank. Merger and integration expenses include compensation expenses, professional services, data processing systems conversion costs, broker fees incurred and other merger related expenses.

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     Other expense increased by 17 percent in 2006 to $151.9 million from $130.0 million reported in 2005. A large part of this increase was due to a write-down of the equipment related to an operating lease of $10.5 million resulting from a customer’s alleged accounting fraud. The Company’s participation in the lease prior to the write-down represented $12.9 million. This lease represented the only financing type lease classified as an operating lease on the Company’s balance sheet at December 31, 2006.

Income Taxes

     Income tax expense increased $20.8 million, or 10 percent, to $227 million for the year ended December 31, 2006. The effective tax rate as a percentage of pretax income was 33.0 percent in 2006, compared to 33.9 percent in 2005 and 33.3 percent in 2004. The statutory federal rate was 35 percent during 2006, 2005 and 2004. For further information concerning the provision for income taxes, refer to Note 18, Income Taxes, in the Notes to Consolidated Financial Statements.

Accounting Pronouncements

Consolidation of Variable Interest Entities

     In January 2003, the Financial Accounting Standards Board (“FASB”) completed its redeliberations of the project related to the consolidation of variable interest entities which culminated in the issuance of FASB Interpretation 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 states that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities and results of the activities of the variable interest entity should be included in the consolidated financial statements of the business enterprise. FIN 46 explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to determine whether to consolidate that entity. FIN 46 also requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among the parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or a combination of interests that effectively recombines risks that were previously dispersed. FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. FIN 46 originally applied in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. However, in December 2003, the FASB issued FASB Interpretation 46(Revised) (“FIN 46(R)”), Consolidation of Variable Interest Entities, an interpretation of ARB 51, which revised FIN 46 and required the adoption of FIN 46 or FIN 46(R) for periods ending after December 15, 2003. FIN 46 and FIN 46(R) do not apply to securitization structures that are QSPEs as defined within SFAS 140. The Company adopted the provisions of FIN 46(R) on December 31, 2003. The Company’s securitization structure, as of December 31, 2006, met current QSPE standards, and therefore, was not affected by the adoption of FIN 46 or FIN 46(R).

     Additionally, in August 2005, the FASB issued a proposed amendment to SFAS 140, which would amend the requirements for QSPE status. Sunbelt, the Company’s sponsored asset-backed commercial paper conduit, would no longer meet QSPE requirements if the proposed amendment was finalized as currently written. Sunbelt is investigating potential modifications to its structure in order to continue to receive off-balance sheet treatment.

Accounting for Certain Loans or Debt Securities Acquired in a Transfer

     In December 2003, the Accounting Standards Executive Committee issued Statement of Position (“SOP”) 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. The SOP is effective for loans acquired in fiscal years beginning after December 15, 2004. The SOP addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. The SOP applies to loans acquired in business combinations but does not apply to loans originated by the Company. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company. In connection with the Company’s acquisition of TexasBank, the Company identified certain loans which fell within the scope of this SOP and are being accounted for under its provisions. At December 31, 2006, the principal balance of these loans was $16 million and the associated credit discount was $5 million.

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Share-Based Payments

     In December 2004, the FASB issued SFAS 123(R), Share-Based Payment, which is a revision of SFAS 123, Accounting for Stock-Based Compensation. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes the fair value method for measurement and requires all entities to apply this fair value method in accounting for share-based payment transactions. The provisions of SFAS 123(R) were initially effective for all share-based awards granted after July 1, 2005, and to share-based awards modified, repurchased, or cancelled after that date. However, in April 2005, the SEC amended this requirement allowing companies to adopt the standard at the beginning of their next fiscal year that began after June 15, 2005. Accordingly, on January 1, 2006, the Company adopted the provisions of SFAS 123(R) using the modified prospective approach. As a result of the adoption, share-based awards expense incurred subsequent to January 1, 2006, is included in the Company’s Consolidated Statements of Income. The adoption of this standard resulted in the recognition of approximately $3.7 million of compensation expense related to stock options for the year ended December 31, 2006. Additionally, as a result of the adoption of SFAS 123(R), on January 1, 2006, the Company reclassified $11.8 million related to unvested restricted common stock from the unearned restricted stock caption to the surplus caption within the equity section of the Consolidated Balance Sheets.

Accounting Changes and Error Corrections

     In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections, a Replacement of APB Opinion 20 and FASB Statement 3. SFAS 154 amends the existing guidance and applies to the accounting for and reporting of a change in accounting principle. Additionally, SFAS 154 applies to changes required by accounting pronouncements when the pronouncement does not include explicit transition provisions. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. Accordingly, on January 1, 2006, the Company adopted the provisions of SFAS 154. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company.

Accounting for Certain Hybrid Financial Instruments

     In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements 133 and 140. SFAS 155 amends SFAS 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, to permit fair value re-measurement of any hybrid financial instrument that contains an embedded derivative that would otherwise require bifurcation. Additionally, SFAS 155 seeks to clarify which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133 and to clarify that concentrations of credit risk in the form of subordination are not embedded derivatives. This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company.

Accounting for Servicing of Financial Assets

     In March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets – an amendment of FASB Statement 140. SFAS 156 amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the initial recognition and subsequent accounting for separately recognized servicing assets and servicing liabilities. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006, with early adoption allowed. The Company chose to adopt this Statement in the first quarter of 2006. The adoption of this standard did not have a material impact on the financial condition or the results of operations of the Company.

Accounting for Uncertainty in Income Taxes

     In June 2006, the FASB issued FASB Interpretation 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The

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provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with early adoption allowed. Accordingly, on January 1, 2007, the Company adopted the provisions of this interpretation. The adoption of this interpretation is not expected to have a material impact on the financial condition or the results of operations of the Company. For further discussion refer to Note 18, Income Taxes, in the Notes to Consolidated Financial Statements.

Fair Value Measurements

     In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies to existing accounting pronouncements that require or permit fair value measurements in which FASB had previously concluded fair value is the most relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with early adoption encouraged. Management does not believe the adoption of this standard will have a material impact on the financial condition or the results of operations of the Company.

Accounting for Defined Pension and Other Postretirement Plans

     In September 2006, the FASB issued SFAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements 87, 88, 106 and 132(R). SFAS 158 requires an employer to recognize the funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. A public entity is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the first fiscal year ending after December 15, 2006. Accordingly, on December 31, 2006, the Company adopted the provisions of SFAS 158. Refer to Note 16, Benefit Plans, in the Notes to Consolidated Financial Statements for a further discussion of the impact the adoption of this standard had on the Company’s financial condition.

Considering the Effects of Misstatements

     In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) 108, Financial Statements – Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on the consideration of prior year misstatements in determining whether the current year’s financial statements are materially misstated. In providing this guidance, SAB 108 allows two alternatives, the “iron curtain” or the “rollover” method, in quantifying a current year misstatement for purposes of determining materiality. The iron curtain method focuses on how the current year’s balance sheet would be affected in correcting misstatements without considering the year in which the misstatement originated. The rollover method focuses on the amount of the misstatements that originated in the current year’s income statement. SAB 108 indicates that companies should quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of this standard did not have a material impact on the financial condition or the results of operations of the Company.

Impact of Inflation and Changing Prices

     A bank’s asset and liability structure is substantially different from that of an industrial company in that virtually all assets and liabilities of a bank are monetary in nature. Management believes the impact of inflation on financial results depends upon the Company’s ability to react to changes in interest rates and, by such reaction, reduce the inflationary impact on performance. Interest rates do not necessarily move in the same direction, or at the same magnitude, as the prices of other goods and services. As discussed previously, management seeks to manage the relationship between interest-sensitive assets and liabilities in order to protect against wide interest rate fluctuations, including those resulting from inflation.

     Various information shown elsewhere in this Annual Report on Form 10-K will assist in the understanding of how well the Company is positioned to react to changing interest rates and inflationary trends. In particular, the summary of net interest income, the maturity distributions, the compositions of the loan and securities portfolios, the data on the interest sensitivity of loans and deposits and the information related to off-balance sheet hedging activities discussed in Note 12, Off-Balance Sheet Activities, Derivatives and Hedging, in the Notes to Consolidated Financial Statements, should be considered.

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ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements required by Regulation S-X are set forth in the pages listed below. The supplementary data required by Item 302 of Regulation S-K is set forth in Item 6 – Selected Financial Data.

Compass Bancshares, Inc. and Subsidiaries
Financial Statements

	Page
Reports of Independent Registered Public Accounting Firms		41
Consolidated Balance Sheets as of December 31, 2006 and 2005		44
Consolidated Statements of Income for the years ended December 31, 2006, 2005 and 2004		45
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2006, 2005 and 2004		46
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004		47
Notes to Consolidated Financial Statements — December 31, 2006, 2005 and 2004		48

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Compass Bancshares, Inc.

     We have audited the accompanying consolidated balance sheet of Compass Bancshares, Inc. and subsidiaries as of December 31, 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Compass Bancshares, Inc. and subsidiaries at December 31, 2006 and the consolidated results of their operations and their cash flows for the year ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

     As discussed in Note 1 to the consolidated financial statements, Compass Bancshares, Inc. and subsidiaries changed its method of accounting for: (1) share-based awards as of January 1, 2006, in accordance with Financial Accounting Standards Board (FASB) Statement No. 123(R), “Share-Based Payment,” and (2) defined benefit pension and other postretirement plans as of December 31, 2006, in accordance with FASB Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.”

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Compass Bancshares, Inc.’s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2007 expressed an unqualified opinion thereon.

                                        /s/ Ernst & Young LLP

Birmingham, Alabama
February 26, 2007

-41-

Report of Independent Registered Public Accounting Firm On Internal Control Over Financial Reporting

The Board of Directors and Shareholders of Compass Bancshares, Inc.

We have audited management’s assessment, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting”, that Compass Bancshares, Inc. maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Compass Bancshares, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Compass Bancshares, Inc. maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Compass Bancshares, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Compass Bancshares, Inc. as of December 31, 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for the year ended December 31, 2006, and our report dated February 26, 2007 expressed an unqualified opinion thereon.

                                        /s/ Ernst & Young LLP

Birmingham, Alabama
February 26, 2007

-42-

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Compass Bancshares, Inc.:

In our opinion, the consolidated balance sheet as of December 31, 2005 and the related consolidated statements of income, shareholders’ equity and cash flows for each of two years in the period ended December 31, 2005 present fairly, in all material respects, the financial position of Compass Bancshares, Inc. and its subsidiaries (the Company) at December 31, 2005, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Birmingham, Alabama
February 22, 2006

-43-

Compass Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

	December 31
	2006			2005
	(In Thousands)
Assets
Cash and due from banks	$	738,168		$	805,556
Federal funds sold and securities purchased under agreements to resell		24,423			46,393
Trading account assets		86,706			76,559
Investment securities available for sale		4,687,782			4,704,375
Investment securities held to maturity (fair value of $1,914,863 and $2,212,273 for 2006 and 2005, respectively)		1,953,166			2,245,942
Loans		24,665,273			21,372,215
Allowance for loan losses		(291,050	)		(267,173	)
Net loans		24,374,223			21,105,042
Premises and equipment, net		589,264			547,195
Bank owned life insurance		474,664			441,226
Goodwill		677,314			316,197
Other assets		594,045			509,747
Total assets	$	34,199,755		$	30,798,232
Liabilities and Shareholders’ Equity
Deposits:
Noninterest bearing	$	6,459,669		$	6,097,881
Interest bearing		16,585,860			14,286,234
Total deposits		23,045,529			20,384,115
Federal funds purchased and securities sold under agreements to repurchase		3,179,351			3,102,572
Other short-term borrowings		1,242,963			652,750
FHLB and other borrowings		3,511,601			4,111,462
Accrued expenses and other liabilities		396,177			311,304
Total liabilities		31,375,621			28,562,203
Shareholders’ equity:
Preferred stock (25,000,000 shares authorized)		—			—
Common stock of $2 par value:
Authorized — 300,000,000 shares in 2006 and 2005
Issued — 135,603,484 shares in 2006 and 133,950,243 shares in 2005		271,207			267,900
Treasury stock, at cost (5,520,533 shares in 2006 and 10,411,684 shares in 2005)		(201,950	)		(377,327	)
Surplus		430,826			300,375
Loans to finance stock purchases		(2,177	)		(1,262	)
Unearned restricted stock		—			(11,811	)
Accumulated other comprehensive loss		(53,932	)		(63,156	)
Retained earnings		2,380,160			2,121,310
Total shareholders’ equity		2,824,134			2,236,029
Total liabilities and shareholders’ equity	$	34,199,755		$	30,798,232

See accompanying Notes to Consolidated Financial Statements.

-44-

Compass Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

	Year Ended December 31
	2006			2005			2004
	(In Thousands, Except Per Share Data)
Interest income:
Interest and fees on loans	$	1,732,933		$	1,234,929		$	950,161
Interest on investment securities available for sale		209,318			188,773			181,075
Interest on investment securities held to maturity		98,689			119,144			141,024
Interest on federal funds sold and securities purchased under agreements to resell		2,470			1,537			801
Interest on trading account assets		1,141			769			465
Total interest income		2,044,551			1,545,152			1,273,526
Interest expense:
Interest on deposits		519,783			260,979			159,778
Interest on federal funds purchased and securities sold under agreements to repurchase		158,602			133,595			57,663
Interest on other short-term borrowings		33,733			4,994			1,267
Interest on FHLB and other borrowings		217,299			176,605			169,493
Total interest expense		929,417			576,173			388,201
Net interest income		1,115,134			968,979			885,325
Provision for loan losses		89,702			117,818			105,658
Net interest income after provision for loan losses		1,025,432			851,161			779,667
Noninterest income:
Service charges on deposit accounts		311,520			297,080			282,808
Card and merchant processing fees		111,302			95,591			75,548
Insurance commissions		61,634			59,362			51,437
Retail investment sales		41,338			33,890			31,316
Asset management fees		33,882			28,689			22,666
Corporate and correspondent investment sales		22,799			23,487			20,457
Gain on prepayment of FHLB advances		21,084			—			—
Bank owned life insurance		20,638			17,467			17,169
Gain on sale of business and branches		—			6,391			—
Investment securities gains (losses), net		(14,889	)		79			27,336
Trading gains (losses) and settlements on economic hedge swaps		—			(3,235	)		11,053
Other		101,952			99,877			88,853
Total noninterest income		711,260			658,678			628,643
Noninterest expense:
Salaries, benefits and commissions		569,761			487,819			458,356
Equipment		91,325			81,979			76,169
Net occupancy		74,272			66,937			65,791
Professional services		63,609			61,640			57,380
Marketing		50,879			43,802			33,249
Communications		24,509			21,793			21,859
Amortization of intangibles		12,377			6,151			6,543
Merger and integration		10,659			1,641			1,275
Loss on prepayment of FHLB advances		—			—			25,136
Other		151,884			130,041			122,720
Total noninterest expense		1,049,275			901,803			868,478
Net income before income tax expense		687,417			608,036			539,832
Income tax expense		227,054			206,206			179,647
Net income	$	460,363		$	401,830		$	360,185
Basic earnings per share	$	3.60		$	3.25		$	2.95
Basic weighted average shares outstanding		127,857			123,550			122,254
Diluted earnings per share	$	3.53		$	3.18		$	2.87
Diluted weighted average shares outstanding		130,458			126,423			125,416

See accompanying Notes to Consolidated Financial Statements.

-45-

Compass Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Years Ended December 31, 2006, 2005 and 2004

													Accumulated
													Other
													Comprehensive						Total			Comprehensive
		Common		Treasury						Retained			Income						Shareholders’			Income
		Stock		Stock			Surplus			Earnings			(Loss)			Other			Equity			(Loss)
	(In Thousands)
Balance, December 31, 2003	$	263,138	$	(317,669	)	$	227,404		$	1,689,689		$	37,306		$	(7,294	)	$	1,892,574
Net income — 2004		—		—			—			360,185			—			—			360,185		$	360,185
Net change in unrealized gains (losses) on securities available for sale, net of tax		—		—			—			—			(49,422	)		—			(49,422	)		(49,422	)
Net change in accumulated gains (losses) on cash-flow hedging instruments, net of tax		—		—			—			—			(9,095	)		—			(9,095	)		(9,095	)
Net change in additional minimum pension liability, net of tax		—		—			—			—			(2,165	)		—			(2,165	)		(2,165	)
Comprehensive income																					$	299,503
Common dividends declared ($1.25 per share)		—		—			—			(153,970	)		—			—			(153,970	)
Exercise of stock options and other issuances		2,362		—			28,481			(1,358	)		—			—			29,485
Issuance of restricted stock, net of cancellations		306		—			8,265			—			—			(8,571	)		—
Issuance of treasury stock for acquisitions, stock options and benefit plans		—		18,147			250			—			—			—			18,397
Advances on loans to finance stock purchases, net of repayments		—		—			—			—			—			(247	)		(247	)
Amortization of restricted stock		—		—			—			—			—			4,432			4,432
Purchase of treasury stock		—		(33,829	)		—			—			—			—			(33,829	)
Balance, December 31, 2004		265,806		(333,351	)		264,400			1,894,546			(23,376	)		(11,680	)		2,056,345
Net income — 2005		—		—			—			401,830			—			—			401,830		$	401,830
Net change in unrealized losses on securities available for sale, net of tax		—		—			—			—			(44,297	)		—			(44,297	)		(44,297	)
Net change in accumulated losses on cash-flow hedging instruments, net of tax		—		—			—			—			3,665			—			3,665			3,665
Net change in additional minimum pension liability, net of tax		—		—			—			—			852						852			852
Comprehensive income																					$	362,050
Common dividends declared ($1.40 per share)		—		—			—			(173,524	)		—			—			(173,524	)
Exercise of stock options and other issuances		1,842		—			25,844			(1,542	)		—			—			26,144
Issuance of restricted stock, net of cancellations		252		—			6,419			—			—			(6,671	)		—
Issuance of treasury stock for acquisitions, stock options and benefit plans		—		19,271			3,712			—			—			—			22,983
Advances on loans to finance stock purchases, net of repayments		—		—			—			—			—			(206	)		(206	)
Amortization of restricted stock		—		—			—			—			—			5,484			5,484
Purchase of treasury stock		—		(63,247	)		—			—			—			—			(63,247	)
Balance, December 31, 2005		267,900		(377,327	)		300,375			2,121,310			(63,156	)		(13,073	)		2,236,029
Net income — 2006		—		—			—			460,363			—			—			460,363		$	460,363
Net change in unrealized losses on securities available for sale, net of tax		—		—			—			—			19,016			—			19,016			19,016
Net change in accumulated gains (losses) on cash- flow hedging instruments, net of tax		—		—			—			—			8,494			—			8,494			8,494
Net change in additional minimum pension liability, net of tax		—		—			—			—			(325	)		—			(325	)		(325	)
Net change in funded pension asset, net of tax		—		—			—			—			(17,961	)		—			(17,961	)		(17,961	)
Comprehensive income																					$	469,587
Common dividends declared ($1.56 per share)		—		—			—			(199,927	)		—			—			(199,927	)
Adoption of SFAS 123R		—		—			(11,811	)		—			—			11,811			—
Exercise of stock options and other issuances		2,980		—			53,043			(1,586	)		—			—			54,437
Issuance of restricted stock, net of cancellations		327		—			(327	)		—			—			—			—
Advances on loans to finance stock purchases, net of repayments		—		—			—			—			—			(915	)		(915	)
Issuance of treasury stock for acquisitions and stock options		—		186,054			77,306			—			—			—			263,360
Amortization of restricted stock and stock option grants		—		—			12,240			—			—			—			12,240
Purchase of treasury stock		—		(10,677	)		—			—			—			—			(10,677	)
Balance, December 31, 2006	$	271,207	$	(201,950	)	$	430,826		$	2,380,160		$	(53,932	)	$	(2,177	)	$	2,824,134

See accompanying Notes to Consolidated Financial Statements.

-46-

Compass Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	Year Ended December 31
	2006			2005			2004
	(In Thousands)
Operating Activities:
Net income	$	460,363		$	401,830		$	360,185
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		107,338			100,524			104,413
Amortization of stock-based compensation		12,240			5,484			4,432
Accretion of discount and loan fees		(16,019	)		(5,917	)		(18,550	)
Provision for loan losses		89,702			117,818			105,658
Net (increase) decrease in trading account assets		(9,825	)		2,530			11,004
Deferred tax benefit		(22,043	)		(31,145	)		(2,243	)
Net (gain) loss on sale of investment securities available for sale		14,889			(79	)		(27,336	)
(Gain) loss on prepayment of FHLB advances		(21,084	)		—			25,136
Gain on sale of business and branches		—			(6,391	)		—
Increase in other assets		(44,551	)		(39,632	)		(76,086	)
Increase in other liabilities		42,623			66,502			27,917
Net cash provided by operating activities		613,633			611,524			514,530
Investing Activities:
Proceeds from prepayments, maturities and calls of investment securities held to maturity		367,956			527,601			736,367
Purchases of investment securities held to maturity		(10,193	)		(5,000	)		—
Proceeds from sales of investment securities available for sale		799,163			78,594			814,036
Proceeds from prepayments, maturities and calls of investment securities available for sale		891,016			717,790			846,600
Purchases of investment securities available for sale		(1,580,205	)		(1,183,296	)		(1,731,966	)
Net decrease in federal funds sold and securities purchased under agreements to resell		46,858			555			31,217
Net increase in loan portfolio		(1,990,249	)		(2,636,218	)		(2,188,966	)
Net cash received (paid) in acquisitions/dispositions		(190,071	)		(16,945	)		268
Purchases of premises and equipment, net		(84,111	)		(69,755	)		(69,265	)
Proceeds from sales of other real estate owned		11,155			21,207			30,845
Net cash used by investing activities		(1,738,681	)		(2,565,467	)		(1,530,864	)
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts		666,583			930,127			725,615
Net increase in time deposits		516,871			2,437,410			628,458
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase		55,901			(1,429,432	)		413,380
Net increase (decrease) in other short-term borrowings		587,525			476,979			(87,766	)
Proceeds from FHLB advances and other borrowings		1,876,186			396,902			1,125,100
Repayment of FHLB advances and other borrowings		(2,499,304	)		(400,537	)		(1,793,140	)
Redemption of guaranteed preferred beneficial interests in the Company’s junior subordinated deferrable interest debentures		—			—			(23,000	)
Common dividends paid		(199,989	)		(208,756	)		(118,533	)
Purchase of treasury stock		(2,734	)		(63,247	)		(33,829	)
Issuance of treasury stock for benefit plans and stock options		3,099			9,274			9,998
Repayment of loans to finance stock purchases		982			679			616
Excess tax benefits from share-based payments		13,317			—			—
Proceeds from exercise of stock options		39,223			24,421			28,622
Net cash provided by financing activities		1,057,660			2,173,820			875,521
Net increase (decrease) in cash and due from banks		(67,388	)		219,877			(140,813	)
Cash and due from banks at beginning of the year		805,556			585,679			726,492
Cash and due from banks at end of the year	$	738,168		$	805,556		$	585,679

See accompanying Notes to Consolidated Financial Statements.

-47-

Compass Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2006, 2005 and 2004

(1) Nature of Operations and Summary of Significant Accounting Policies

     The accounting policies followed by the Company and the methods of applying these policies conform with accounting principles generally accepted in the United States and with general practices within the banking industry. Certain policies that significantly affect the determination of financial position, results of operations and cash flows are summarized below.

     Businesses acquired by the Company during the past three years and accounted for as purchases are reflected in the financial position and results of operations of the Company since the dates of their acquisition.

Basis of Presentation

     The Consolidated Financial Statements include the accounts of Compass Bancshares, Inc. and its subsidiaries, Compass Bank, the Company’s lead bank subsidiary headquartered in Birmingham, Alabama (“Compass Bank”), and Central Bank of the South (collectively with Compass Bank, the “Subsidiary Banks”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Nature of Operations

     Compass Bank operates 415 banking centers in Alabama, Arizona, Colorado, Florida, New Mexico and Texas. The banking centers in Alabama are located throughout the state while its Florida banking centers are concentrated in the Jacksonville area and in the Florida panhandle. In Texas, the banking centers are primarily located in the state’s four largest metropolitan areas of Houston, Dallas/Ft. Worth, San Antonio and Austin. The Arizona operations are primarily located in Tucson and Phoenix. The New Mexico banking centers are concentrated around the Albuquerque metropolitan area. The Colorado banking centers are concentrated around the Denver metropolitan area. See Note 21, Segment Information, for additional discussion of the Company’s business.

Use of Estimates

     The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, the most significant of which relates to the allowance for loan losses. Actual results could differ from those estimates.

Securities

     The Company’s investment securities are classified into one of three categories based upon management’s intent and ability to hold the investment securities: (i) trading account assets and liabilities, (ii) investment securities held to maturity or (iii) investment securities available for sale. Investment securities held in a trading account are required to be reported at fair value, with unrealized gains and losses included in earnings. Investment securities designated as held to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts, with such amortization and accretion determined by the interest method. The Company has the ability, and it is management’s intention, to hold such securities to maturity. Management of the maturity of the portfolio is necessary to provide liquidity and control interest rate risk. Investment securities available for sale are recorded at fair value. Increases and decreases in the net unrealized gain or loss on the portfolio of investment securities available for sale are reflected as adjustments to the carrying value of the portfolio and as an adjustment net of tax to accumulated other comprehensive income.

     Fair values of trading account assets and liabilities, investment securities held to maturity and investment securities available for sale are based primarily on quoted or other independent market prices. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of instruments with similar characteristics or discounted cash flows. Fair values for trading account derivatives are estimated using pricing models.

-48-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     Interest earned on investment securities held to maturity, investment securities available for sale and trading account assets and liabilities is included in interest income in the Consolidated Statements of Income. Net gains and losses on the sale of investment securities available for sale, computed principally on the specific identification method, are shown separately in noninterest income in the Consolidated Statements of Income.

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

     Securities purchased under agreements to resell and securities sold under agreements to repurchase are generally accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were acquired or sold plus accrued interest. The securities pledged as collateral are generally U.S. government and federal agency securities. The fair value of collateral either received from or provided to a third party is continually monitored and adjusted as deemed appropriate.

Loans

     All loans are stated at principal outstanding. Interest income on loans is recognized on the level yield method. Loan fees, net of direct costs, are reflected as an adjustment to the yield of the related loan over the term of the loan. The Company does not have a concentration of loans to any one industry.

     It is the general policy of the Company to stop accruing interest income and place the recognition of interest on a cash basis when any commercial, industrial or commercial real estate loan is 90 days or more past due as to principal or interest and/or the ultimate collection of either is in doubt, unless collection of both principal and interest is assured by way of collateralization, guarantees or other security. Accrual of interest income on consumer loans, including residential real estate loans, is suspended when any payment of principal or interest, or both, is more than 120 days delinquent. Credit card loans are charged off before the end of the month when the loan becomes 180 days past due with the related interest accrued but not collected reversed against current income. When a loan is placed on a nonaccrual status, any interest previously accrued but not collected is reversed against current income unless the collateral for the loan is sufficient to cover the accrued interest or a guarantor assures payment of interest.

     Generally, the Company evaluates loans for impairment when a portion of a loan is internally risk rated as substandard or doubtful. All nonaccrual loans not meeting the definition of smaller balance, homogeneous loans are considered impaired. Smaller balance, homogeneous loans include residential mortgages, equity loans, equity lines of credit, credit card receivables and consumer loans, primarily direct and indirect automobile loans. The Company generally measures impairment based upon the present value of the loan’s expected future cash flows, discounted at the loan’s effective interest rate, except where foreclosure or liquidation is probable or when the primary source of repayment is provided by real estate collateral. In these circumstances, impairment is measured based upon the fair value of the collateral. In addition, in certain rare circumstances, impairment may be based on the loan’s observable fair value. Impairment with regard to substantially all of the Company’s impaired loans has been measured based on the fair value of the underlying collateral. The Company’s policy for recognizing interest income on impaired loans is consistent with its nonaccrual policy.

Loans Held for Sale

     At December 31, 2006, loans held for sale included single-family real estate mortgage loans that have been designated as hedged items in a fair value hedging relationship under Statement of Financial Accounting Standards 133 (“SFAS 133”). Therefore, to the extent changes in fair value are attributable to the interest rate risk being hedged, the change in fair value is recognized in income as an adjustment to the carrying amount of loans held for sale. Otherwise, loans held for sale are accounted for under the lower of aggregate cost or market method. The fair values are based on quoted market prices of similar instruments, adjusted for differences in loan characteristics. Gains and losses on loans held for sale are included in other noninterest income.

Allowance for Loan Losses

     The amount of the provision for loan losses charged to income is determined on the basis of several factors including actual loss experience, identified loan impairment, current economic conditions and periodic examinations

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

and appraisals of the loan portfolio. Such provisions, less net loan charge-offs and allowance for loans sold/securitized, comprise the allowance for loan losses which is deducted from loans and is maintained at a level management considers to be adequate to absorb losses inherent in the portfolio.

     The Company generally follows the policy of charging off loans determined to be uncollectible by management, the Company’s loan review department or federal and state supervisory authorities. Subsequent recoveries are credited to the allowance for loan losses.

Goodwill

     Goodwill is tested at least annually for impairment through the allocation of goodwill to the Company’s reporting units based on historical revenue streams and contributions of past acquisitions. The Company has determined that its reporting units for purposes of impairment testing are its reportable segments: Corporate Banking, Retail Banking, Wealth Management and Treasury. In addition to the reportable segments, Insurance is included as a reporting unit, but does not qualify as a reportable segment.

     Each reporting unit is tested annually for impairment in the third quarter. The fair value of each of the reporting units is estimated using the expected present value of future cash flows. The Company’s impairment test indicated that no impairment existed at any of the test dates.

Intangibles

     Other identifiable intangible assets are included in other assets in the Consolidated Balance Sheets. Other identifiable intangibles that are deemed to have finite lives are amortized over their estimated useful lives and are also subject to impairment testing if events or changes in circumstances warrant an evaluation. Other identifiable intangible assets are amortized over a period based on the life of the intangible, generally 10 years for core deposits and up to 25 years for other customer intangibles.

Other Real Estate Owned

     Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the lower of outstanding principal balance or fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, such assets are carried at the lower of carrying amount or fair value less costs to sell. Revenue and expenses from operations are included in other noninterest expense.

Premises and Equipment

     Premises, equipment, assets under capital leases and leasehold improvements are stated at cost less accumulated depreciation or amortization. Depreciation is computed principally using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the lesser of the lease terms or the estimated useful lives of the improvements.

     Estimated useful lives generally are as follows:

Premises and leasehold improvements	10-40 years
Furniture and equipment	3-7 years

Income Taxes

     Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and are measured using the tax rates and laws that are expected to be in effect when the differences are anticipated to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period the change is incurred.

Merger and Integration Expenses

     Merger and integration expenses, as presented in the Consolidated Statements of Income, represent costs associated with business combinations completed by the Company and costs associated with maintaining the

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Company’s mergers and acquisition department. These costs primarily include compensation expense incurred, data processing systems conversion costs, professional fees and broker fees.

Accounting for Derivatives and Hedging Activities

     As part of the Company’s overall interest rate risk management, the Company uses derivative instruments, including interest rate swaps, caps and floors. All derivative instruments are recognized on the balance sheet at their fair value. Fair values are estimated using pricing models. On the date the derivative instrument contract is entered into, the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair-value” hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash-flow” hedge), (3) a held for trading hedge or (4) an economic hedge. Changes in the fair value of a derivative instrument that is highly effective and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on firm commitments), are recorded in the then-current-period earnings. Changes in the fair value of a derivative instrument that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in accumulated other comprehensive income in the shareholders’ equity section of the Consolidated Balance Sheets, until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). Changes in the fair value of derivative trading instruments and settlements on the instruments are reported in the then-current-period earnings.

     The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivative instruments that are designated as fair-value or cash-flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative instrument is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

     The Company discontinues hedge accounting prospectively when: (1) it is determined that the derivative instrument is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including firm commitments or forecasted transactions); (2) the derivative instrument expires or is sold, terminated or exercised; (3) the derivative instrument is de-designated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; or (5) management determines that designation of the derivative instrument as a hedge instrument is no longer appropriate.

     When hedge accounting is discontinued because it is determined that the derivative instrument no longer qualifies as an effective fair-value hedge, the derivative instrument will continue to be carried on the balance sheet at its fair value and the hedged asset or liability will no longer be adjusted for changes in fair value. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the derivative instrument will continue to be carried on the balance sheet at its fair value and any asset or liability that was recorded pursuant to recognition of the firm commitment will be removed from the balance sheet and recognized as a gain or loss in the then-current-period earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative instrument will continue to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income will be recognized immediately in earnings. When the derivative instrument is de-designated, terminated or sold, any gain or loss will remain in accumulated other comprehensive income and will be reclassified into earnings over the same period during which the underlying hedged item affects earnings. In all other situations in which hedge accounting is discontinued, the derivative instrument will be carried at its fair value on the balance sheet, with changes in its fair value recognized in the then-current-period earnings.

     Previously, the Company also used interest rate swaps as economic hedges. These swaps either do not qualify for hedge accounting treatment or have not currently been qualified by the Company for hedge accounting treatment.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

These economic hedge swaps convert the fixed interest rate payments on certain of its debt obligations to a floating rate. Interest is exchanged periodically on the notional value, with the Company receiving the fixed rate and paying various LIBOR-based floating rates. Changes in the fair value of these derivatives and the interest exchanged are recognized in earnings in the line item trading gains (losses) and settlements on economic hedge swaps. The fair value of these derivatives is included in either trading account assets or accrued expenses and other liabilities.

Securitization and Sales of Receivables

     When the Company sells receivables in securitizations of automobile loans, equity loans, residential mortgage loans and Small Business Administration loans, it may retain one or more senior tranches, subordinated tranches, servicing rights and in some cases a cash reserve account and interest-only strips, all of which are retained interests in the securitized receivables. Gains or losses on the sale of the receivables depend in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair value at the date of transfer. Subsequent to the sales, interest-only strips are carried at fair value as investment securities available for sale. To obtain fair values, quoted market prices are used if available. If quotes are not available for retained interests, the Company generally estimates fair value based on the present value of future expected cash flows using management’s estimates of the key assumptions, including: credit losses, prepayment speeds, forward yield curves and discount rates commensurate with the risks involved.

Reclassifications

     Certain reclassifications of prior years’ amounts have been made to conform to the current year presentation. Such reclassifications had no effect on net income, assets or shareholders’ equity.

Earnings per Share

     Basic earnings per share has been computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the year presented. Diluted earnings per share has been computed by dividing net income available to common shareholders and assumed conversions by the weighted average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding using the treasury stock method.

Stock-Based Compensation

     At December 31, 2006, the Company had three long-term incentive compensation plans, which are described more fully in Note 15, Stock Based Compensation. Prior to January 1, 2006, the Company accounted for these plans in accordance with the requirements specified in SFAS 123, Accounting for Stock-Based Compensation. As permitted under SFAS 123, the Company elected to apply the Accounting Principles Board (“APB”) Opinion 25, Accounting for Stock Issued to Employees, intrinsic value method of accounting for share-based compensation plans. Accordingly, prior to January 1, 2006, no employee compensation cost related to share-based awards was recognized in net income of the Company for these plans, with the exception of the acceleration charge recognized in the fourth quarter of 2005 as discussed below. However, on January 1, 2006, the Company prospectively adopted the provisions of SFAS 123(R), Share-Based Payment, which requires that all share-based awards to employees be recognized in the income statement based on their fair values. As a result, beginning on January 1, 2006, the expense associated with these share-based awards is included in the Company’s Consolidated Statements of Income. The adoption of SFAS 123(R) resulted in the recognition of $3.7 million in compensation expense related to stock options for the year ended December 31, 2006. Additionally, as a result of the adoption of FAS 123(R), on January 1, 2006, the Company reclassified $11.8 million related to unvested restricted common stock from the unearned restricted stock caption to the surplus caption within the equity section of the Consolidated Balance Sheets. For further discussion of the adoption of SFAS 123(R), see Note 15, Stock Based Compensation.

     Pro forma information regarding net income and earnings per share for the years ended December 31, 2005 and 2004 is presented as if the Company had accounted for its employee stock options under the fair value method, established by SFAS 123, Accounting for Stock-Based Compensation. The fair value for these options was estimated

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for 2005 and 2004, respectively: risk free interest rates of 3.93 percent and 3.64 percent; expected dividend yields of 4.11 percent and 4.13 percent; volatility factors of the expected market price of the Company’s common stock of 0.237 and 0.276 and a weighted-average expected life of the options of 5.4 years and 5.0 years, respectively.

     The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

     The Company’s options granted in 2005 and 2004 originally vested either entirely at the end of the third year after grant or 50 percent at the end of the first year and 25 percent at the end of each of the next two years. However, in the fourth quarter of 2005, the Company accelerated the vesting provisions of the outstanding stock options of the Company, excluding options issued to senior management and off-cycle options issued in conjunction with initial employment. As a result of this acceleration, the Company recognized approximately $840,000 of expense, which is included in the Consolidated Statements of Income for the year ended December 31, 2005. The compensation expense related to the non-accelerated options has been allocated over the remaining vesting period for purposes of pro forma disclosures, while the unrecognized compensation expense for the accelerated options was recognized in the fourth quarter of 2005. Options expire ten years after the date of grant.

     The Company’s actual and pro forma information follows (in thousands, except per share data):

	Year Ended December 31
	2005		2004
Net income:
As reported	$	401,830	$	360,185
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax		11,718		9,402
Pro forma net income	$	390,112	$	350,783
Basic earnings per share:
As reported	$	3.25	$	2.95
Pro forma		3.16		2.87
Diluted earnings per share:
As reported	$	3.18	$	2.87
Pro forma		3.09		2.80

Recently Issued Accounting Standards

Consolidation of Variable Interest Entities

     In January 2003, the Financial Accounting Standards Board (“FASB”) completed its redeliberations of the project related to the consolidation of variable interest entities which culminated in the issuance of FASB Interpretation 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 states that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities and results of the activities of the variable interest entity should be included in the consolidated financial statements of the business enterprise. FIN 46 explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to determine whether to consolidate that entity. FIN 46 also requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among the parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or a combination of interests that effectively recombines risks that were previously dispersed. FIN

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. FIN 46 originally applied in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. However, in December 2003, the FASB issued FASB Interpretation 46(Revised) (“FIN 46(R)”), Consolidation of Variable Interest Entities, an interpretation of ARB 51, which revised FIN 46 and required the adoption of FIN 46 or FIN 46(R) for periods ending after December 15, 2003. FIN 46 and FIN 46(R) do not apply to securitization structures that are QSPEs as defined within SFAS 140. The Company adopted the provisions of FIN 46(R) on December 31, 2003. The Company’s securitization structure, as of December 31, 2006, met current QSPE standards, and therefore, was not affected by the adoption of FIN 46 or FIN 46(R).

     Additionally, in August 2005, the FASB issued a proposed amendment to SFAS 140, which would amend the requirements for QSPE status. Sunbelt, the Company’s sponsored asset-backed commercial paper conduit, would no longer meet QSPE requirements if the proposed amendment was finalized as currently written. Sunbelt is investigating potential modifications to its structure in order to continue to receive off-balance sheet treatment.

Accounting for Certain Loans or Debt Securities Acquired in a Transfer

     In December 2003, the Accounting Standards Executive Committee issued Statement of Position (“SOP”) 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. The SOP is effective for loans acquired in fiscal years beginning after December 15, 2004. The SOP addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. The SOP applies to loans acquired in business combinations but does not apply to loans originated by the Company. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company. In connection with the Company’s acquisition of TexasBank, the Company identified certain loans which fell within the scope of this SOP and are being accounted for under its provisions. At December 31, 2006, the principal balance of these loans was $16 million and the associated credit discount was $5 million.

Share-Based Payments

     In December 2004, the FASB issued SFAS 123(R), Share-Based Payment, which is a revision of SFAS 123, Accounting for Stock-Based Compensation. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes the fair value method for measurement and requires all entities to apply this fair value method in accounting for share-based payment transactions. The provisions of SFAS 123(R) were initially effective for all share-based awards granted after July 1, 2005, and to share-based awards modified, repurchased, or cancelled after that date. However, in April 2005, the SEC amended this requirement allowing companies to adopt the standard at the beginning of their next fiscal year that began after June 15, 2005. Accordingly, on January 1, 2006, the Company adopted the provisions of SFAS 123(R) using the modified prospective approach. As a result of the adoption, share-based awards expense incurred subsequent to January 1, 2006, is included in the Company’s Consolidated Statements of Income. The adoption of this standard resulted in the recognition of approximately $3.7 million of compensation expense related to stock options for the year ended December 31, 2006. Additionally, as a result of the adoption of SFAS 123(R), on January 1, 2006, the Company reclassified $11.8 million related to unvested restricted common stock from the unearned restricted stock caption to the surplus caption within the equity section of the Consolidated Balance Sheets.

Accounting Changes and Error Corrections

     In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections, a Replacement of APB Opinion 20 and FASB Statement 3. SFAS 154 amends the existing guidance and applies to the accounting for and reporting of a change in accounting principle. Additionally, SFAS 154 applies to changes required by accounting pronouncements when the pronouncement does not include explicit transition provisions. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. Accordingly, on

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

January 1, 2006, the Company adopted the provisions of SFAS 154. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company.

Accounting for Certain Hybrid Financial Instruments

     In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements 133 and 140. SFAS 155 amends SFAS 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, to permit fair value re-measurement of any hybrid financial instrument that contains an embedded derivative that would otherwise require bifurcation. Additionally, SFAS 155 seeks to clarify which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133 and to clarify that concentrations of credit risk in the form of subordination are not embedded derivatives. This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company.

Accounting for Servicing of Financial Assets

     In March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets — an amendment of FASB Statement 140. SFAS 156 amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the initial recognition and subsequent accounting for separately recognized servicing assets and servicing liabilities. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006, with early adoption allowed. The Company chose to adopt this Statement in the first quarter of 2006. The adoption of this standard did not have a material impact on the financial condition or the results of operations of the Company.

Accounting for Uncertainty in Income Taxes

     In June 2006, the FASB issued FASB Interpretation 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with early adoption allowed. Accordingly, on January 1, 2007, the Company adopted the provisions of this interpretation. The adoption of this interpretation is not expected to have a material impact on the financial condition or the results of operations of the Company. For further discussion refer to Note 18, Income Taxes.

Fair Value Measurements

     In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies to existing accounting pronouncements that require or permit fair value measurements in which FASB had previously concluded fair value is the most relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with early adoption encouraged. Management does not believe the adoption of this standard will have a material impact on the financial condition or the results of operations of the Company.

Accounting for Defined Pension and Other Postretirement Plans

     In September 2006, the FASB issued SFAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements 87, 88, 106 and 132(R). SFAS 158 requires an employer to recognize the funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

comprehensive income. A public entity is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the first fiscal year ending after December 15, 2006. Accordingly, on December 31, 2006, the Company adopted the provisions of SFAS 158. Refer to Note 16, Benefit Plans, for a further discussion of the impact the adoption of this standard had on the Company’s financial condition.

Considering the Effects of Misstatements

     In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) 108, Financial Statements - - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on the consideration of prior year misstatements in determining whether the current year’s financial statements are materially misstated. In providing this guidance, SAB 108 allows two alternatives, the “iron curtain” or the “rollover” method, in quantifying a current year misstatement for purposes of determining materiality. The iron curtain method focuses on how the current year’s balance sheet would be affected in correcting misstatements without considering the year in which the misstatement originated. The rollover method focuses on the amount of the misstatements that originated in the current year’s income statement. SAB 108 indicates that companies should quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of this standard did not have a material impact on the financial condition or the results of operations of the Company.

(2) Subsequent Events (unaudited)

     On February 15, 2007 the Company’s board of directors approved, and the Company disclosed in a Form 8-K filed with the SEC on February 16, 2007, the signing of a definitive agreement under which Banco Bilbao Vizcaya Argentaria, S.A., a corporation organized under the Kingdom of Spain (“BBVA”), will acquire the Company for a combination of cash and stock. The Company’s shareholders may elect to receive either 2.8 BBVA American Depository Shares (“ADSs”) or $71.82 in cash per Company common share, subject to proration. The receipt of BBVA ADSs in the transaction, which will comprise just over half of the consideration, will be tax free to the Company’s shareholders. The aggregate consideration is composed of a fixed number of approximately 196 million shares of BBVA common stock and approximately $4.6 billion in cash.

     BBVA, which operates in 35 countries, is based in Spain and has substantial banking interests in the Americas. The transaction will facilitate BBVA’s continued growth in Texas and will create the largest regional bank across the Sunbelt. Upon completion of the transaction, the Company will rank among the top 25 banks in the United States with approximately $47 billion in total assets, $32 billion in total loans and $33 billion in total deposits. In addition, the combined company will rank fourth in deposit market share in Texas with $19.6 billion in total deposits and 326 full-service banking offices.

     Under the terms of the definitive agreement, the Company will become a wholly-owned subsidiary of BBVA. After closing, BBVA intends to merge its U. S. based banking affiliates – including the former operations of Texas Regional Bancshares, State National Bancshares and Laredo National Bancshares – with the Company.

     The transaction is subject to a number of conditions, including approval by the stockholders of the Company and BBVA and appropriate regulatory approvals. The transaction has been described more fully in our Forms 8-K filed with the SEC on February 16 and February 22, 2007.

(3) Investment Securities Held to Maturity and Investment Securities Available for Sale

     The following table presents the adjusted cost and approximate fair value of investment securities held to maturity and investment securities available for sale at December 31, 2006 and 2005 (in thousands).

	2006				2005
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Investment securities held to maturity:
U.S. Government agencies and corporations	$	25,136	$	25,554	$	39,275	$	39,730
Mortgage-backed pass-through securities		819,812		802,230		932,785		921,076
Collateralized mortgage obligations		827,748		813,955		965,366		949,395
Asset-backed securities		160,624		152,726		219,583		212,056
States and political subdivisions		119,846		120,398		88,933		90,016
Other		—		—		—		—
Total	$	1,953,166	$	1,914,863	$	2,245,942	$	2,212,273

	2006				2005
	Fair		Amortized		Fair		Amortized
	Value		Cost		Value		Cost
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. Government agencies and corporations	$	20,039	$	20,130	$	48,463	$	48,595
Mortgage-backed pass-through securities		974,947		982,221		527,785		537,288
Collateralized mortgage obligations		2,979,048		3,034,790		3,661,828		3,739,968
Asset-backed securities and corporate bonds		—		—		—		—
States and political subdivisions		290,806		287,997		44,652		45,331
Other		252,822		240,038		227,329		219,753
Equity securities		170,120		170,031		194,318		194,298
Total	$	4,687,782	$	4,735,207	$	4,704,375	$	4,785,233

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     At December 31, 2006 approximately $1.6 billion of investment securities held to maturity and $1.8 billion of investment securities available for sale were pledged to secure public deposits and Federal Home Loan Bank advances and for other purposes as required or permitted by law. The table on the following page details unrealized gains and losses on investment securities held to maturity and investment securities available for sale as of December 31, 2006 and 2005.

	2006				2005
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses
	(In Thousands)
Investment securities held to maturity:
U.S. Government agencies and corporations	$	418	$	—	$	455	$	—
Mortgage-backed pass-through securities		2,048		19,630		3,351		15,060
Collateralized mortgage obligations		1,709		15,502		2,913		18,884
Asset-backed securities		—		7,898		—		7,527
States and political subdivisions		784		232		1,220		137
Other		—		—		—		—
Total	$	4,959	$	43,262	$	7,939	$	41,608
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. Government agencies and corporations	$	—	$	91	$	7	$	139
Mortgage-backed pass-through securities		4,256		11,530		2,945		12,448
Collateralized mortgage obligations		1,480		57,222		507		78,647
Asset-backed securities and corporate bonds		—		—		—		—
States and political subdivisions		3,411		602		79		758
Other		12,784		—		7,576		—
Equity securities		89		—		20		—
Total	$	22,020	$	69,445	$	11,134	$	91,992

     The following tables disclose the market value and the gross unrealized losses of the Company’s available for sale securities that are in a loss position at December 31, 2006 and 2005, respectively. This information is aggregated by investment category and length of time the individual securities have been in an unrealized loss position.

	December 31, 2006
	Securities in a loss position				Securities in a loss position
	for less than 12 months				for 12 months or longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. Government agencies and corporations	$	10,006	$	2	$	9,910	$	89	$	19,916	$	91
Mortgage-backed pass-through securities		203,198		908		364,104		10,622		567,302		11,530
Collateralized mortgage obligations		352,743		1,581		2,385,800		55,641		2,738,543		57,222
Asset-backed securities and corporate bonds		—		—		—		—		—		—
States and political subdivisions		12,214		75		28,892		527		41,106		602
Other		—		—		—		—		—		—
Equity securities		—		—		—		—		—		—
Total	$	578,161	$	2,566	$	2,788,706	$	66,879	$	3,366,867	$	69,445

-57-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

	December 31, 2005
	Securities in a loss position				Securities in a loss position
	for less than 12 months				for 12 months or longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(In Thousands)
Investment securities available for sale:
Debt securities:
U.S. Treasury and other U.S. Government agencies and corporations	$	44,845	$	138	$	55	$	1	$	44,900	$	139
Mortgage-backed pass-through securities		150,147		2,312		276,093		10,136		426,240		12,448
Collateralized mortgage obligations		902,859		13,080		2,644,937		65,567		3,547,796		78,647
Asset-backed securities and corporate bonds		—		—		—		—		—		—
States and political subdivisions		35,369		758		—		—		35,369		758
Other		—		—		—		—		—		—
Equity securities		—		—		—		—		—		—
Total	$	1,133,220	$	16,288	$	2,921,085	$	75,704	$	4,054,305	$	91,992

     At December 31, 2006, management does not believe that any individual unrealized loss in the Company’s investment securities available for sale portfolio, presented in the table above, or the unrealized loss in the Company’s investment securities held to maturity portfolio represents an other-than-temporary impairment. These unrealized losses reported for collateralized mortgage obligations and mortgage-backed securities relate primarily to securities issued by FNMA, FHLMC and GNMA. These unrealized losses are primarily attributable to changes in interest rates and were individually not significant relative to their respective amortized cost. Additionally, the Company has the ability and intent to hold these securities for a time necessary to recover the amortized cost or until maturity when full repayment would be received.

     The maturities of the securities portfolios are presented in the following tables.

	2006
	Carrying		Fair
	Amount		Value
	(In Thousands)
Investment securities held to maturity:
Maturing within one year	$	8,669	$	8,702
Maturing after one but within five years		216,321		209,039
Maturing after five but within ten years		49,572		49,711
Maturing after ten years		31,044		31,226
		305,606		298,678
Mortgage-backed securities and collateralized mortgage obligations		1,647,560		1,616,185
Total	$	1,953,166	$	1,914,863

	Fair		Amortized
	Value		Cost
	(In Thousands)
Investment securities available for sale:
Maturing within one year	$	376,253	$	376,242
Maturing after one but within five years		71,427		59,563
Maturing after five but within ten years		204,519		202,015
Maturing after ten years		81,588		80,376
		733,787		718,196
Mortgage-backed securities and collateralized mortgage obligations		3,953,995		4,017,011
Total	$	4,687,782	$	4,735,207

-58-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     There were gross losses of $14.9 million on sales of investment securities available for sale during 2006. There were gross gains of $79,000 and $27.3 million in 2005 and 2004.

(4) Loans and Allowance for Loan Losses

     The following table presents the composition of the loan portfolio at December 31, 2006 and 2005.

	2006		2005
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	4,376,572	$	3,896,207
Real estate — construction		6,365,283		4,233,148
Commercial real estate — mortgage		4,266,776		4,080,164
Total commercial loans		15,008,631		12,209,519
Consumer loans:
Residential real estate — mortgage		2,454,565		1,916,951
Equity lines of credit		1,786,211		1,614,608
Equity loans		1,382,779		1,160,481
Credit card		505,216		523,148
Consumer — direct		409,277		423,278
Consumer — indirect		3,118,594		3,524,230
Total consumer loans		9,656,642		9,162,696
Total	$	24,665,273	$	21,372,215

     At December 31, 2006 approximately $3.2 billion of loans were pledged to secure deposits and Federal Home Loan Bank advances and for other purposes as required or permitted by law.

     A summary of the activity in the allowance for loan losses for the years ended December 31, 2006, 2005 and 2004 follows:

	2006			2005			2004
	(In Thousands)
Balance at beginning of year	$	267,173		$	258,339		$	244,882
Provision charged to income		89,702			117,818			105,658
Allowance for loans securitized		—			—			(591	)
Allowance transferred to other liabilities		—			(12,189	)		—
Allowance acquired		11,179			—			—
Loans charged off		(106,485	)		(125,744	)		(117,597	)
Loan recoveries		29,481			28,949			25,987
Net charge-offs		(77,004	)		(96,795	)		(91,610	)
Balance at end of year	$	291,050		$	267,173		$	258,339

     In March 2006, the Company acquired $11.2 million of allowance for loan losses with the purchase of TexasBank. Additionally, on March 31, 2005, the Company transferred $12 million of allowance for loan losses related to unfunded commitments, letters of credit and fees to other liabilities.

     The recorded investment in impaired loans at December 31, 2006 and 2005 was $40 million and $39 million, respectively. The Company had specific allowance amounts related to those loans of $6 million and $8 million, respectively. There were no impaired loans without a specific allowance or discount at December 31, 2006 or 2005. The average investment in these loans for the years ended December 31, 2006 and 2005 amounted to $40 million and $37 million, respectively.

-59-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     Nonperforming assets at December 31, 2006, 2005 and 2004 are detailed in the following table.

	December 31
	2006		2005		2004
	(In Thousands)
Nonaccrual loans	$	53,014	$	47,578	$	49,947
Renegotiated loans		3,258		698		734
Total nonperforming loans		56,272		48,276		50,681
Other real estate		17,105		11,510		19,998
Total nonperforming assets	$	73,377	$	59,786	$	70,679

     Details of nonaccrual loans at December 31, 2006, 2005 and 2004 appear below:

	2006		2005		2004
	(In Thousands)
Principal balance	$	53,014	$	47,578	$	49,947
Interest that would have been recorded under original terms		5,105		4,789		4,819
Interest actually recorded		1,655		2,070		2,195

(5) Managed Loans

     In March of 2004 and May of 2003, the Company securitized $589 million of residential mortgage loans and $750 million of equity loans, respectively. In both securitizations, the Company retained 100 percent of the beneficial interests and retained interests. The beneficial interests of both securitizations are triple A rated securities by Standard & Poor’s and Moody’s, respectively, and the retained interests include interest-only strips (“I/O Strips”) and a servicing asset. The value of the Company’s retained interests, which are subordinate to investors’ interests, are subject to credit, prepayment, and interest rate risks on the transferred financial assets. The beneficial interests are reflected as Investment Securities Held to Maturity, the I/O Strips are reflected as Investment Securities Available for Sale and the servicing asset is reflected as Other Assets in the Company’s Consolidated Balance Sheets as of December 31, 2006 and 2005. No gain or loss was recorded on the Company’s Consolidated Statements of Income for either securitization. The Company retained servicing responsibilities in both securitizations and receives annual servicing fees amounting to 37.5 basis points and 25 basis points of the outstanding balance of adjustable rate loans and fixed rate loans, respectively, for the residential mortgage securitization and 50 basis points of the outstanding balance of the equity loan securitization. The securitization trusts have no recourse to the Company’s other assets for failure of debtors to pay when due.

-60-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     At December 31, 2006, key economic assumptions used in measuring the I/O Strips and the sensitivity of the current fair value of residual cash flows to immediate 10 percent and 20 percent adverse changes in those assumptions are as follows (dollars in thousands):

				Residential
	Equity Loan			Mortgage
	I/O Strip			I/O Strip
Carrying amount/fair value of retained interests	$	9,674		$	25,168
Weighted-average life (in years)		0.65			4.71
Prepayment speed assumption (annual rate)	25 CPR			25 CPR
Impact on fair value of 10% adverse change	$	(230	)	$	(734	)
Impact on fair value of 20% adverse change	$	(376	)	$	(1,415	)
Expected credit losses (annual rate)		1.00	%		0.25	%
Impact on fair value of 10% adverse change	$	(230	)	$	(40	)
Impact on fair value of 20% adverse change	$	(461	)	$	(80	)
Residual cash flows discount rate (annual)		10.0	%		10.0	%
Impact on fair value of 10% adverse change	$	(115	)	$	(475	)
Impact on fair value of 20% adverse change	$	(227	)	$	(934	)

     These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10 percent and 20 percent adverse variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption; in reality, changes in one factor will likely result in changes in another, which might magnify or counteract the sensitivities. For example, increases in market interest rates may result in lower prepayments and increased credit losses.

     The recorded value of the equity securitization servicing asset was $356,000 and $622,000 at December 31, 2006 and 2005, respectively. There was no valuation allowance on the originated servicing asset as of December 31, 2006 or 2005. Additionally, there were no unrecognized servicing assets or liabilities, or servicing assets or liabilities for which it is not practicable to estimate fair value.

     Following are the expected static pool credit losses for both the residential mortgage and the equity loan securitization.

	Inception						Projected
	to Date			2006			2007			2008			2009
Actual and Projected Credit Losses		0.56	%		0.11	%		0.12	%		0.08	%		0.00	%

     Static pool losses are calculated by summing the actual and projected future credit losses and dividing them by the original balance of each pool of assets.

Term Securitization Sold

     The Company occasionally sells participations in the guaranteed portion of its Small Business Administration (“SBA”) loans to third parties or securitizes the loans and sells the securities representing the guaranteed portion. The Company also retains the unguaranteed portion of the loan or security and classifies this retained portion in loans. The Company retains servicing responsibilities and receives annual servicing fees. At December 31, 2006, the Company had recorded $3 million of servicing assets and $5 million of interest only strips related to SBA loans sold in other assets in the Consolidated Balance Sheets. The Company recognized gains on the sale of SBA loans of $2.9 million and $3.0 million during 2006 and 2005, respectively.

-61-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Securitization Cash Flows

     The table below summarizes certain cash flows received from and paid to securitization trusts (in thousands):

	Year Ended December 31
	2006		2005		2004
Proceeds from collections	$	319,073	$	403,520	$	619,600
Servicing fees received		3,144		3,324		4,219

Managed Loan Portfolio

     The following table presents quantitative information about delinquencies, net credit losses and components of securitized financial assets and other assets managed (in thousands):

				Principal
				Amount of
	Total Principal			Nonaccrual and
	Amount			90 Days or More		Net Credit
	of Loans			Past Due Loans		Losses
December 31, 2006:
Loan category:
Commercial, financial and agricultural	$	4,404,634		$	9,982	$	13,886
Commercial real estate — mortgage		4,382,024			21,565		1,998
Real estate — construction		6,365,283			9,549		701
Residential real estate		6,477,724			21,015		5,365
Credit card		505,216			10,217		22,259
Consumer		3,527,871			7,138		33,655
Total managed loans		25,662,752		$	79,466	$	77,864
Loans securitized and sold to third parties		(143,641	)
Loans securitized and classified as investment securities held to maturity		(853,838	)
Loans held in portfolio	$	24,665,273
December 31, 2005:
Loan category:
Commercial, financial and agricultural	$	3,910,405		$	11,449	$	11,827
Commercial real estate — mortgage		4,202,966			15,527		1,576
Real estate — construction		4,233,148			2,239		647
Residential real estate		5,783,224			28,031		7,087
Credit card		523,148			7,278		36,087
Consumer		3,947,508			9,589		41,810
Total managed loans		22,600,399		$	74,113	$	99,034
Loans securitized and sold to third parties		(137,447	)
Loans securitized and classified as investment securities held to maturity		(1,090,737	)
Loans held in portfolio	$	21,372,215

     At December 31, 2006 and 2005 approximately $2 million and $3 million, respectively, of securitized loans have been foreclosed.

-62-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

(6) Premises and equipment

     A summary of the Company’s premises and equipment follows (in thousands):

	Year Ended December 31
	2006		2005
Land	$	141,916	$	123,323
Buildings		354,355		311,582
Furniture, fixtures and equipment		377,714		345,477
Software		144,427		121,318
Leasehold improvements		104,267		94,257
Construction / projects in progress		25,965		45,704
		1,148,644		1,041,661
Less: Accumulated depreciation and amortization		559,380		494,466
Total premises and equipment	$	589,264	$	547,195

     During the fourth quarter of 2006, the Company incurred a $10.5 million write-down on equipment subject to an operating lease due to a customer’s alleged accounting fraud. The write-down charge was recognized as a component of noninterest expense. The Company’s participation in the lease prior to the write-down represented $12.9 million. This lease represented the only financing type lease classified as an operating lease on the Company’s balance sheet at December 31, 2006.

(7) Goodwill and Other Acquired Intangible Assets

     At December 31, 2006, the Company had goodwill of $677 million. The balance of goodwill is allocated to the Company’s reporting units as follows: Corporate Banking with $404 million, Retail Banking with $184 million, Insurance with $70 million and Wealth Management with $19 million. During the year ended December 31, 2006, goodwill increased $267 million, $88 million, $4 million and $2 million within the Corporate Banking, Retail Banking, Wealth Management and Insurance reporting units, respectively, primarily due to the acquisition of TexasBank in the first quarter of 2006, as well as the payment of contingent consideration during 2006 related to prior acquisitions.

     In addition to Goodwill, the Company also has finite-lived intangible assets capitalized in other assets in the form of core deposit intangibles and other customer intangibles. These intangible assets continue to be amortized over their estimated useful lives, which approximated 6 years.

     Amortizing intangible assets as of December 31, 2006 and 2005 are detailed in the following table (in thousands).

	December 31, 2006
	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Value
Amortizing intangible assets:
Core deposit intangibles	$	67,832	$	(40,502	)	$	27,330
Other customer intangibles		44,827		(17,007	)		27,820
Total amortizing intangible assets	$	112,659	$	(57,509	)	$	55,150

	December 31, 2005
	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Value
Amortizing intangible assets:
Core deposit intangibles	$	63,890	$	(56,762	)	$	7,128
Other customer intangibles		43,334		(13,328	)		30,006
Total amortizing intangible assets	$	107,224	$	(70,090	)	$	37,134

-63-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     During the year ended December 31, 2006, the Company recognized $12.4 million in intangible amortization expense and recognized $6.2 million and $6.5 million of intangible amortization expense in the years ended December 31, 2005 and 2004, respectively. Aggregate amortization expense for the years ending December 31, 2007 through December 31, 2011, is estimated to be $11.2 million, $8.9 million, $7.5 million, $6.3 million and $5.6 million, respectively.

(8) Deposits

     Certificates of deposit of less than $100,000 totaled $3.3 billion at December 31, 2006, while certificates of deposit of $100,000 or more totaled $3.9 billion. At December 31, 2006, the scheduled maturities of certificates of deposit were as follows (in thousands):

2007	$	5,654,302
2008		764,395
2009		234,920
2010		367,170
2011		153,033
Thereafter		63,843
Total	$	7,237,663

     In addition to the securities and loans the Company has pledged as collateral to secure public deposits and Federal Home Loan Bank advances, the Company also had $300 million of unsecured standby letters of credit issued by the Federal Home Loan Bank to secure public deposits.

(9) Short-Term Borrowings

     The short-term borrowings table below shows the distribution of the Company’s short-term borrowed funds and average interest rates at year-end.

	December 31
	2006					2005
			Average					Average
			Interest					Interest
	Ending		Rate At			Ending		Rate At
	Balance		Year-End			Balance		Year-End
	(In Thousands)
Federal funds purchased	$	2,948,855		5.23	%	$	2,802,536		4.04	%
Securities sold under agreements to repurchase		230,496		4.58			300,036		3.82
Total		3,179,351					3,102,572
Short sales		4,992		4.56			4,861		3.33
Commercial paper		67,770		4.31			76,764		3.39
Other short-term borrowings		1,170,201		5.24			571,125		3.98
Total		1,242,963					652,750
Total short-term borrowings	$	4,422,314				$	3,755,322

     Federal funds purchased represent unsecured borrowings from other banks and generally mature within one business day. Securities sold under agreements to repurchase are borrowings with maturities ranging from one to ninety days and are collateralized by securities of the United States Government or its agencies.

-64-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

(10) Federal Home Loan Bank (“FHLB”) and Other Borrowings

     The following table details the Company’s FHLB advances and other long-term borrowings at December 31, 2006 and 2005, including maturities and interest rates as of December 31, 2006.

	Maturity		December 31
	Dates		2006			2005
	(In Thousands)
FHLB Advances:
LIBOR-based floating rate (weighted average rate of 5.54%)		2006-2012	$	1,900,000		$	1,625,000
CMS-based floating rate (weighted average rate of 5.43%)		2006-2009		100,000			800,000
Fixed rate, callable quarterly (weighted average rate of 4.88%)		2006-2016		222,237			688,178
Unamortized discount				(8,917	)		(12,142	)
Total FHLB Advances				2,213,320			3,101,036
Subordinated Debentures:
8.10% subordinated debentures		2009		165,000			165,000
6.45% subordinated debentures		2009		96,700			96,700
5.50% subordinated debentures		2020		300,000			300,000
5.90% subordinated debentures		2026		275,000			—
Fair value of hedged subordinated debentures				10,843			23,517
Unamortized discount				(6,829	)		(3,700	)
Total Subordinated Debentures				840,714			581,517
Capital Securities and Preferred Stock :
8.23% debentures payable to Compass Trust I *		2027		103,093			103,093
7.35% debentures payable to Compass Trust III *		2032		309,279			309,279
LIBOR plus 2.60% floating rate debentures payable to TexasBanc Capital Trust I *		2034		25,774			—
Fair value of and unamortized fees on hedged capital securities				1,030			(1,969	)
Class B Preferred Stock				18,149			18,077
Total Capital Securities and Preferred Stock				457,325			428,480
8.25% mortgage payable		2008		242			429
			$	3,511,601		$	4,111,462

* Majority of amounts qualify for Tier I Capital

     At December 31, 2006, the FHLB advances were secured by first and second real estate mortgage loans and investment securities totaling $4.3 billion.

     The following table presents maturity information for the Company’s FHLB and other borrowings as of December 31, 2006.

					Capital
	FHLB		Subordinated		Securities and		Mortgage
	Advances		Debentures		Preferred Stock		Payable
	(In Thousands)
Maturing:
2007	$	105,730	$	—	$	—	$	202
2008		10,230		—		—		40
2009 *		616,083		273,638		—		—
2010		200,000		—		—		—
2011		975,100		—		—		—
Thereafter *		306,177		567,076		457,325		—
Total	$	2,213,320	$	840,714	$	457,325	$	242

* Includes the fair value of hedged subordinated debentures and the unamortized discounts.

-65-

Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

(11) Capital Securities and Preferred Stock

Capital Securities

     The Company currently has three subsidiary business trusts (Compass Trust I, Compass Trust III and TexasBanc Capital Trust I) which have issued mandatorily redeemable preferred capital securities (“Trust Preferred Securities”). As guarantor, the Company unconditionally guarantees payment of: accrued and unpaid distributions required to be paid on the Trust Preferred Securities; the redemption price when the Trust Preferred Securities are called for redemption; and amounts due if a trust is liquidated or terminated.

     The Company owns all of the outstanding common stock of each of the three trusts. The trusts used the proceeds from the issuance of their Trust Preferred Securities and common securities to buy debentures issued by the Parent Company (“Capital Securities”). These Capital Securities are the trusts’ only assets and the interest payments the subsidiary business trusts receive from the Capital Securities are used to finance the distributions paid on the Trust Preferred Securities. In 2003, the Company adopted the provisions of the Financial Accounting Standards Board (“FASB”) Interpretation 46R (“FIN 46R”), Consolidation of Variable Interest Entities, an interpretation of ARB 51. The adoption of FIN 46R required the Company to deconsolidate the subsidiary business trusts’ Trust Preferred Securities. The Capital Securities are included as FHLB and other borrowings in the Consolidated Balance Sheets as of December 31, 2006 and 2005.

     The Trust Preferred Securities must be redeemed when the related Capital Securities mature, or earlier, if provided in the governing indenture. Each issue of Trust Preferred Securities carries an interest rate identical to that of the related Capital Securities. The Trust Preferred Securities qualify as Tier I Capital, subject to regulatory limitations, under guidelines established by the Board of Governors of the Federal Reserve System (“Federal Reserve”).

     The subsidiary business trusts have the right to redeem their Trust Preferred Securities: (i) in whole or in part, on or after January 15, 2007 (for debentures owned by Compass Trust I), March 22, 2007 (for debentures owned by Compass Trust III) and July 23, 2009 (for debentures owned by TexasBanc Capital Trust I); and (ii) in whole at any time within 90 days following the occurrence and during the continuation of a tax event, a capital treatment event or certain other events (as defined in the offering circulars). If the Trust Preferred Securities issued by Compass Trust I, Compass Trust III or TexasBanc Capital Trust I are redeemed before they mature, the redemption price will be the principal amount, plus any premium, plus any accrued but unpaid interest. Any such redemption is subject to the prior approval of the Board of Governors of the Federal Reserve.

Class B Preferred Stock

     In December 2000, a subsidiary of the Parent Company issued $21 million of Class B Preferred Stock (“Preferred Stock”). The Preferred Stock, net of discount, was approximately $18 million at December 31, 2006. The Preferred Stock qualifies as Tier I Capital under Federal Reserve Board guidelines. The Preferred Stock dividends are preferential, non-cumulative and payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2001, at a rate per annum equal to 9.875 percent of the liquidation preference of $1,000 per share when, and if declared by the board of directors of the subsidiary, in its sole discretion, out of funds legally available for such payment.

     The Preferred Stock is redeemable for cash, at the option of the subsidiary, in whole or in part, at any time on or after June 15, 2021. Prior to June 15, 2021, the Preferred Stock is not redeemable, except that prior to such date, the Preferred Stock may be redeemed for cash, at the option of the subsidiary, in whole but not in part, only upon the occurrence of certain tax or regulatory events. Any such redemption is subject to the prior approval of the Board of Governors of the Federal Reserve. The Preferred Stock is not redeemable at the option of the holders thereof at any time.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

(12) Off-Balance Sheet Activities, Derivatives and Hedging

Accounting for Derivative Instruments and Hedging Activities

     The Company is a party to derivative instruments in the normal course of business for trading purposes and for purposes other than trading to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. The following table summarizes the contract or notional amount of the Company’s derivative instruments as of December 31, 2006 and 2005 (in thousands).

	2006					2005
			Other					Other
			Than					Than
	Trading		Trading			Trading		Trading
Forward and futures contracts	$	354,064	$	19,538		$	304,233	$	25,948
Interest rate swap agreements:
Pay fixed versus receive float		1,892,968		—			1,723,291		200,000
Receive fixed versus pay float		1,892,968		2,160,382			1,703,799		1,258,108
Pay float versus receive float		22,000		—			22,000		—
Written options		601,314		23,274	(1)		401,950		32,044	(1)
Purchased options		581,314		1,500,000			381,941		—

(1) Written options classified as other than trading represent interest rate loan commitments related to the Company’s mortgage banking activities.

     Forward and futures contracts are contracts for delayed delivery of securities or money market instruments in which the seller agrees to make delivery of a specified instrument, at a designated future date and at a specific price or yield. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in securities’ values and interest rates.

     The Company enters into a variety of interest rate contracts, including interest rate caps and floors, interest rate options and interest rate swap agreements, in its trading activities. The primary purpose for using interest rate swaps in the trading account is to facilitate customer transactions. Previously, the Company has entered into certain interest rate swaps for economic hedging purposes.

     The interest rate swaps held as economic hedges either do not qualify for hedge accounting treatment or have not currently been qualified by the Company for hedge accounting treatment. These economic hedge swaps convert the fixed interest rate payments on certain of its debt obligations to a floating rate. Interest is exchanged periodically on the notional value, with the Company receiving the fixed rate and paying various LIBOR-based floating rates. Changes in the fair value of these derivatives and the interest exchanged are recognized in earnings in the line item trading gains (losses) and settlements on economic hedge swaps. The fair value of these derivatives is included in either trading account assets or accrued expenses and other liabilities. However, at December 31, 2006, there were no swaps held as economic hedges that were classified as trading securities.

     The trading interest rate contract portfolio is actively managed and hedged with similar products to limit market value risk of the portfolio. Changes in the estimated fair value of contracts in the trading account along with the related interest settlements on the contracts are recorded in other noninterest income as corporate and correspondent investment sales.

     Entering into interest rate swap agreements involves not only the risk of dealing with counterparties and their ability to meet the terms of the contracts but also the interest rate risk associated with unmatched positions. At December 31, 2006, interest rate swap agreements classified as trading were substantially matched. The Company has credit risk of $52 million related to derivative instruments in the trading account portfolio. The credit risk does not consider the value of any collateral but takes into consideration the effects of legally enforceable master netting agreements. There were no credit losses associated with derivative instruments classified as trading for the years

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

ended December 31, 2006, 2005 or 2004. At both December 31, 2006 and 2005, there were no nonperforming derivative positions classified as trading.

     The following table presents the notional value and carrying value amounts at December 31, 2006 and 2005 of the Company’s derivative positions held for hedging purposes (in thousands). These derivative positions are primarily executed in the over-the-counter market. At December 31, 2006, these positions have credit risk of $49 million after consideration of legally enforceable master netting agreements. The credit risk does not take into consideration the value of collateral. The maximum unsecured credit line to any counterparty is $5 million.

	December 31, 2006					December 31, 2005
	Notional		Carrying			Notional		Carrying
	Value		Value			Value		Value
Cash-Flow Hedges:
Interest rate swap agreements	$	850,000	$	(348	)	$	400,000	$	(1,110	)
Purchased options		1,500,000		29,213			—		—
Fair-Value Hedges:
Interest rate swap agreements		1,310,382		9,777			1,058,108		22,535
Forward contracts (1)		19,538		37			25,948		(99	)

(1) Derivatives relate to the Company’s mortgage banking activities

     There were no credit losses associated with derivative instruments classified as nontrading for the years ended December 31, 2006, 2005 or 2004. At both December 31, 2006 and 2005, there were no nonperforming derivative positions classified as nontrading.

     The Company recorded as liabilities certain short-sale transactions amounting to $5 million at both December 31, 2006 and 2005, which could result in losses to the extent the ultimate obligation exceeds the amount of the recorded liability. The amount of the ultimate obligation under such transactions will be affected by movements in the financial markets, which are not determinable until the point at which securities are purchased to cover the short sales. The short-sale transactions relate principally to United States Government securities for which there is an active, liquid market. The Company does not expect the amount of losses, if any, on such transactions to be material because the short-sale transactions are used as a hedge against offsetting long positions in the trading account.

Interest-Rate Risk

     The Company uses derivative instruments to manage the risk of earnings fluctuations caused by interest rate volatility. The effect of interest rate movements on hedged assets or liabilities will generally be offset by the derivative instrument.

     Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps and options contracts with indices that relate to the pricing of specific balance sheet assets and liabilities. The Company does not use highly leveraged derivative instruments for interest rate risk management. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. Interest rate options represent contracts that allow the holder of the option to (1) receive cash or (2) purchase, sell or enter into a financial instrument at a specified price within a specified period of time. Certain of these contracts also provide the Company with the right to enter into interest rate swap, cap and floor agreements with the writer of the option.

     By using derivative instruments, the Company is exposed to credit and market risk. If the counterparty fails to perform, credit risk is equal to the extent of the Company’s fair value gain in a derivative. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty owes the Company and, therefore, creates a credit risk for the Company. When the fair value of a derivative instrument contract is negative, the Company owes the counterparty and, therefore, it has no credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically by the Company’s credit committee. The Company also maintains a policy of requiring that all derivative instrument

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

contracts be governed by an International Swaps and Derivatives Association Master Agreement, which includes a provision for netting; most of the Company’s agreements with derivative counterparties include bilateral collateral arrangements.

     Market risk is the adverse effect that a change in interest rates or implied volatility rates has on the value of a financial instrument. The Company manages the market risk associated with interest rate contracts by establishing and monitoring limits as to the types and degree of risk that may be undertaken.

     The Company’s derivatives activities are monitored by its Asset/Liability Committee as part of its risk-management oversight of the Company’s treasury functions. The Company’s Asset/Liability Committee is responsible for mandating various hedging strategies that are developed through its analysis of data from financial simulation models and other internal and industry sources. The resulting hedging strategies are then incorporated into the Company’s overall interest rate risk management and trading strategies.

Fair-Value Hedges

     The Company enters into interest rate swaps to convert its fixed rate long-term debt to floating rate debt. The critical terms of the interest rate swaps match the terms of the corresponding fixed rate long-term debt. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness, unless otherwise noted. The Company recognized approximately $243,000 of fair value hedging losses as a result of hedge ineffectiveness for the year ended December 31, 2006. There were no fair-value hedging gains and losses, as a result of hedge ineffectiveness, recognized for the years ended December 31, 2005 or 2004. For the year ended December 31, 2006, the Company recognized a decrease to interest expense of $8.6 million related to interest rate swaps accounted for as fair-value hedges. For the years ended December 31, 2005 and 2004, the Company recognized decreases to interest expense of $13.9 million and $16.8 million, respectively. At December 31, 2006, the fair-value hedges had a carrying value of $10 million and a weighted average expected remaining term of 12.9 years.

     The Company also enters into interest rate lock commitments, which are commitments to originate loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Accordingly, such commitments are recorded at fair value, excluding value related to servicing, with changes in fair value recorded in noninterest income. The Company also has corresponding forward sales commitments related to these interest rate lock commitments. The change in the value of the forward sales commitment is recognized through current period earnings. The recognition of the change in value of the closed mortgage loans depends on the effectiveness of the hedge. When hedge effectiveness is met, the change in value of the loans is recognized through current period earnings. When hedge effectiveness is not met, the change in the value of the loans is not recognized, but instead is based on the lower of cost or market guidelines. Therefore, any potential gain will not be recognized until the sale of the loan. Fair value hedged gains or losses related to ineffectiveness were immaterial for the years ended December 31, 2006 and 2005.

Cash-Flow Hedges

     The Company uses interest rate swaps and options, such as caps and floors, to hedge the repricing characteristics of floating rate assets and liabilities. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness, unless otherwise noted. The initial assessment of expected hedge effectiveness was based on regression analysis. The ongoing periodic measures of hedge ineffectiveness are based on the expected change in cash flows of the hedged item caused by changes in the benchmark interest rate. There were no cash flow hedging gains or losses, as a result of hedge ineffectiveness, recognized for the years ended December 31, 2006, 2005 or 2004. As of December 31, 2006, there were no gains or losses which were reclassified from accumulated other comprehensive income to other income as a result of the discontinuance of cash-flow hedges related to certain forecasted transactions that are probable of not occurring. For the year ended December 31, 2006, the Company recognized a decrease to interest income of $5.2 million related to interest rate swaps and floors accounted for as cash-flow hedges. For the year ended December 31,

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

2005 the Company recognized a decrease to interest income of $6.6 million. For the year ended December 31, 2004, the Company recognized interest income of $12.1 million. At December 31, 2006, cash-flow hedges not terminated had a market value of $7 million and a weighted average life of 1.7 years. Based on the current interest rate environment, none of these gains are expected to be reclassified to interest income over the next 12 months as net settlements occur.

Off-Balance Sheet Activities

     During 2000, the Company sponsored the establishment of Sunbelt Funding Corporation (“Sunbelt”), an asset-backed commercial paper conduit, created as a wholly-owned subsidiary of an independent third party. The purpose of the conduit is to diversify the Company’s funding sources. Sunbelt was structured as a QSPE, as defined by SFAS 140, with a limited business purpose of purchasing highly rated investment grade debt securities from the Company’s trading account portfolio and financing its purchases through the issuance of P-1/F1 rated commercial paper. As of December 31, 2006, all assets sold to the conduit were performing and no significant gains or losses were recognized on the sales.

     At December 31, 2006, all securities held by Sunbelt were either triple A rated by at least two nationally recognized statistical ratings organizations or were backed by the full faith and credit of the U.S. Government. Approximately 99 percent of the securities held by Sunbelt at December 31, 2006 were variable rate. Sunbelt’s total assets, which approximated market value, were $1.2 billion and $1.7 billion at December 31, 2006 and 2005, respectively. The Company realized fee income of $3.1 million, $5.5 million and $6.0 million for the years ended December 31, 2006, 2005 and 2004, respectively, from Sunbelt for various services including serving as investment advisor, liquidity provider, administrative agent and for providing a letter of credit. At December 31, 2006 and 2005, receivables from Sunbelt were $492,000 and $2 million, respectively. There were no outstanding payables to Sunbelt at either December 31, 2006 or 2005. The Company, under agreements with Sunbelt, may be required to purchase assets or provide alternative funding to the conduit in certain limited circumstances, including the conduit’s inability to place commercial paper or a downgrade in the Company’s short-term debt rating. Management believes if an event occurs, the Company has the ability to provide funding without any material adverse effect. The underlying assets are eligible investments for Compass Bank. The commitments, which are renewable annually at the Company’s option, are for amounts up to $2 billion. No funding or purchase of assets has occurred as of December 31, 2006.

     There is currently a proposed amendment to SFAS 140, which could result in Sunbelt no longer qualifying as a QSPE. If the amendment is finalized as currently proposed, and Sunbelt does not change its structure, Sunbelt would be consolidated into the Company. Consolidation of Sunbelt’s assets into the Company would not have a significant impact on regulatory capital ratios, as the Company would continue to exceed the minimum ratios required for well-capitalized banks as defined by federal banking regulators. See Note 1, Nature of Operations and Summary of Significant Accounting Policies.

(13) Commitments, Contingencies and Guarantees

     The Company leases certain facilities and equipment for use in its businesses. The leases for facilities generally run for periods of 10 to 20 years with various renewal options, while leases for equipment generally have terms not in excess of 5 years. The majority of the leases for facilities contain rental escalation clauses tied to changes in price indices. Certain real property leases contain purchase options. Management expects that most leases will be renewed or replaced with new leases in the normal course of business. At December 31, 2006, the Company had $5.7 million of assets recorded as amortizing capital leases.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The following is a schedule of future minimum rentals required under operating leases that have initial or remaining noncancellable lease terms in excess of one year and capital leases as of December 31, 2006, for leased facilities (in thousands):

	Operating Lease		Capital Lease
	Obligations		Obligations
2007	$	22,228	$	396
2008		21,813		408
2009		19,340		420
2010		15,990		433
2011		13,244		446
Thereafter		72,295		7,424
Total	$	164,910	$	9,527

     Minimum rentals for all leases charged to earnings totaled $31.2 million, $28.7 million and $27.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.

     The following represents the Company’s commitments to extend credit, standby letters of credit and commercial letters of credit as of December 31, 2006 and 2005 (in thousands):

	2006		2005
Commitments to extend credit	$	12,661,226	$	11,498,497
Standby and commercial letters of credit		1,136,441		942,176

     Commitments to extend credit are agreements to lend to customers as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

     Standby and commercial letters of credit are commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions, and expire in decreasing amounts with terms ranging from one to four years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The fair value of the commitment typically approximates the fee received from the customer for issuing such commitments. These fees are deferred and are recognized over the commitment period. At both December 31, 2006 and 2005, the recorded amount of these deferred fees was $5 million. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. At December 31, 2006, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding standby letters of credit was $1 billion.

     The Company has potential recourse related to FNMA securitizations. At December 31, 2006, the amount of potential recourse was $22 million.

     Certain acquisition agreements, related to the insurance agencies and the investment advisory firm, include contingent consideration provisions. These provisions are generally based upon future revenue or earnings goals for a period of typically three years. At December 31, 2006, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding contingent payment provisions is approximately $10 million, primarily in the form of stock.

     The Company was informed on June 7, 2006 that the U.S. Department of Justice (the “DOJ”) might institute a civil suit in the U.S. District Court for the Northern District of Alabama against Compass Bank regarding its indirect auto lending practices as part of the DOJ’s investigation of possible discrimination under the Equal Credit Opportunity Act. The investigation focused on Compass Bank’s indirect auto lending activity to non-married co-applicants between May 2001 and May 2003. The Company believes Compass Bank’s indirect auto lending operations have complied at all times with the fair lending laws and is cooperating fully with the DOJ to resolve this

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

matter. On January 12, 2007, the DOJ filed the civil suit and an agreed upon consent order resolving this investigation in the U.S. District Court for the Northern District of Alabama. On February 21, 2007, the Court entered the final consent order. The terms of the consent order do not have a material adverse impact on the Company’s results of operations or financial condition.

     Additionally, in the ordinary course of business, the Company is subject to legal proceedings, which involve claims for substantial monetary relief. Based upon the advice of legal counsel, management is of the opinion that any legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial condition or results of operations.

     The Company is subject to review and examination from various tax authorities. The Company is currently under examination by the Internal Revenue Service and a number of states, and it has received notices of proposed adjustments related to federal and state income taxes due for prior years, including a final assessment for the calendar years 2000 and 2001 from the State of Alabama. In December 2006, the Company and the State of Alabama settled all issues related to the final assessment for calendar years 2000 and 2001, as well as additional assessments for calendar years 2002 through 2004, resulting in no material impact to the Company’s results of operations or financial condition. Management believes that adequate provisions for income taxes have been recorded.

     The Parent Company and its Subsidiary Banks are subject to regulation by the Board of Governors of the Federal Reserve System. The Subsidiary Banks are also subject to regulation by the Alabama State Banking Department. Various federal and state laws and regulations affect the manner in which the Company operates including minimum capital requirements, limitations on loans and transactions with affiliates and management, and prohibitions on certain tie-in arrangements in connection with an extension of credit. The Company is also regularly reviewed with respect to its compliance with various consumer protection laws and regulations.

     The USA Patriot Act, which is designed to address potential terrorist threats, requires the Company to establish an anti-money laundering program, including customer identification programs and establish due diligence requirements with respect to its private banking operations. The Bank Secrecy Act requires the filing of currency transaction reports and suspicious activity reports with appropriate governmental authorities identifying possible criminal activity conducted through depository institutions.

     If the Company fails to comply with these or other applicable laws and regulations, it may be subject to civil monetary penalties, imposition of cease and desist orders or other written directives, removal of management and in certain circumstances criminal penalties.

(14) Regulatory Matters and Dividends from Subsidiaries

     The Parent Company and the Subsidiary Banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s Consolidated Financial Statements. Under capital adequacy guidelines, the regulatory framework for prompt corrective action and the Gramm-Leach-Bliley Act, the Parent Company and the Subsidiary Banks must meet specific capital guidelines that involve quantitative measures of each bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification of the Parent Company and the Subsidiary Banks are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

     Quantitative measures established by the regulators to ensure capital adequacy require the Parent Company and the Subsidiary Banks to maintain minimum core capital (“Tier I Capital”) of at least four percent of risk-weighted assets, minimum total capital (“Total Qualifying Capital”) of at least eight percent of risk-weighted assets and a minimum leverage ratio of four percent of adjusted quarterly assets.

     At December 31, 2006, the regulatory capital ratios of the Subsidiary Banks exceeded the minimum ratios required for “well-capitalized” banks as defined by federal banking regulators. To be categorized as “well-

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

capitalized”, the Subsidiary Banks must maintain minimum Total Qualifying Capital, Tier I Capital and leverage ratios of at least 10 percent, 6 percent and 5 percent, respectively. Further, in order to continue its status as a financial holding company as defined by the Gramm-Leach-Bliley Act with the enhanced ability afforded thereby to offer products and services and engage in expanded financial activities, the Subsidiary Banks must each comply with such “well-capitalized” standards. There are no conditions or events that management believes have changed the Subsidiary Banks’ category.

     The following table presents the actual capital amounts (in thousands) and ratios of the Company and Compass Bank at December 31, 2006 and 2005.

	Total Qualifying Capital					Tier I Capital					Leverage
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2006:
Consolidated	$	3,513,448		11.73	%	$	2,543,189		8.49	%	$	2,543,189		7.61	%
Compass Bank		3,369,061		11.27			2,350,802		7.87			2,350,802		7.05
As of December 31, 2005:
Consolidated	$	3,038,507		11.48	%	$	2,313,682		8.74	%	$	2,313,682		7.70	%
Compass Bank		2,867,398		10.86			2,090,573		7.92			2,090,573		6.97

     Dividends paid by the Subsidiary Banks are the primary source of funds available to the Parent Company for payment of dividends to its shareholders and other needs. Applicable federal and state statutes and regulations impose restrictions on the amount of dividends that may be declared by the Subsidiary Banks. In addition to the formal statutes and regulations, regulatory authorities also consider the adequacy of each bank’s total capital in relation to its assets, deposits and other such items. Capital adequacy considerations could further limit the availability of dividends from the Subsidiary Banks. The Subsidiary Banks could have paid additional dividends to the Parent Company in the amount of $380 million while continuing to meet the capital requirements for “well-capitalized” banks at December 31, 2006.

     The Subsidiary Banks are required to maintain cash balances with the Federal Reserve. The average amounts of those balances for the years ended December 31, 2006 and 2005, were approximately $204 million and $205 million, respectively.

     In 2003, the Company announced that its Board of Directors authorized a share repurchase program allowing for the purchase of 3.3 percent or approximately 4.1 million shares of the Company’s outstanding common stock. Through December 31, 2006, 1.2 million total shares had been purchased under the program. At December 31, 2006, approximately 2.9 million shares remained available for repurchase under the program. The timing and amount of purchases is dependent upon the availability and alternative uses of capital, market conditions and other factors. Since December 31, 2005, approximately 5.1 million shares have been issued from treasury stock at a cost of $183.5 million. Of this amount, approximately 4.9 million shares were issued in connection with the acquisition of TexasBank, at a cost of $178.5 million. The remainder of the shares issued from treasury stock relate to employee benefit plans and other acquisitions.

(15) Stock Based Compensation

     At December 31, 2006, the Company had three long-term incentive compensation plans. Under the incentive compensation plans, employees may be granted options to purchase shares of the Company’s $2.00 par value common stock at the fair market value at the date of the grant. Pursuant to the 1999 Omnibus Incentive Compensation Plan, the 2002 Incentive Compensation Plan and the 2006 Incentive Compensation Plan, shares of the Company’s common stock have been reserved for issuance. At December 31, 2006, approximately 5.9 million shares of the Company’s common stock were available for issuance. Upon exercise, generally the Company issues shares from its unissued common stock. The options granted under the plans must be exercised within 10 years from the date of grant. The stock option agreements state that options may be exercised in whole or in part until the expiration date.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The long-term incentive compensation plans also provide for the granting of stock appreciation rights to certain holders of nonqualified stock options. A stock appreciation right allows the holder to surrender an exercisable stock option in exchange for common stock (at fair market value on the date of exercise), cash, or a combination thereof, in an amount equal to the excess of the fair market value of covered shares over the option price of such shares. There were no outstanding stock appreciation rights as of December 31, 2006 or December 31, 2005.

     Historically, the Company has accounted for its long-term incentive compensation plans in accordance with the requirements specified in SFAS 123, Accounting for Stock-Based Compensation. As permitted under SFAS 123, the Company elected to apply the Accounting Principles Board (“APB”) Opinion 25, Accounting for Stock Issued to Employees, intrinsic value method in accounting for share-based compensation plans. Accordingly, prior to January 1, 2006, no employee compensation cost related to share-based awards was recognized in net income of the Company for these plans, except for $840,000 related to the acceleration of stock options in the fourth quarter of 2005, discussed further in Note 1, Nature of Operations and Summary of Significant Accounting Policies. On January 1, 2006, the Company prospectively adopted the provisions of SFAS 123(R), Share-Based Payment, which requires all share-based awards to employees be recognized in the income statement based on their fair values. As a result, beginning on January 1, 2006, the expense associated with these share-based awards is included in the Company’s Consolidated Statements of Income. The Company recognized $3.7 million of compensation expense related to stock options for the year ended December 31, 2006. Additionally, as a result of the adoption of FAS 123(R), on January 1, 2006, the Company reclassified $11.8 million related to unvested restricted common stock from the unearned restricted stock caption to the surplus caption within the equity section of the Consolidated Balance Sheets.

     The fair value of each share-based award granted during the twelve months ended December 31, 2006 was estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Twelve Months
	Ended
	December 31, 2006
Dividend yield		3.54	%
Expected volatility		0.2168
Risk free interest rate		4.99	%
Expected life	5.0 years
Forfeiture rate		3.16	%

     The dividend yield assumption was based on the Company’s history and expectation of future dividend payouts. The expected volatility assumption was based on the Company’s historical stock price. The risk free interest rate assumption was based upon the U.S. Treasury yield at the time of grant for periods corresponding with the expected life of the option. The expected life assumption represents the weighted-average period the stock options are expected to remain outstanding and is based on historic exercise patterns. The forfeiture rate is based on the Company’s actual historical forfeiture experience. The Company’s stock option awards granted in 2006 either vest entirely at the end of the third year after grant or 50 percent at the end of the first year and 25 percent at the end of each of the next two years. Accordingly, the compensation expense related to these share-based awards will be recognized ratably over the respective vesting periods.

     The following summary sets forth stock option related activity under the plans for the twelve months ended December 31, 2006:

				Weighted				Aggregate
	Shares			Average		Contractual		Intrinsic
	Underlying			Exercise		Term		Value
	Options			Price		(Years)		(In Thousands)
Outstanding, beginning of the period		8,011,142		$	31.54
Granted		596,221			55.88
Exercised		(1,570,523	)		28.83
Cancelled		(24,664	)		42.65
Outstanding, end of the period		7,012,176		$	34.21		5.98	$	178,390
Exercisable, end of the period		5,941,840		$	31.41		5.48	$	167,798

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The weighted average grant date fair values of stock options granted and stock options vested during 2006 were $10.29 and $7.34, respectively. During 2006, approximately 574,000 stock options vested. At December 31, 2006, there was $5.3 million of total unrecognized compensation cost related to nonvested stock options granted under the plans, which will be amortized over the next three years. Intrinsic value represents the difference between the closing stock price of the Company’s common stock and the exercise price of the underlying stock options. Aggregate intrinsic value in the previous table represents the value that would have been received by option holders if they had exercised all stock options at December 31, 2006. The total intrinsic value of options exercised during the year ended December 31, 2006 was $41 million.

     In addition to stock options granted under the plans, the Company also awards restricted common stock to certain employees. The majority of restricted common stock issued either vests entirely at the end of the third year after grant or is performance based with a three-year performance period. Accordingly, the fair value of shares expected to vest is expensed over the three-year vesting or performance period. Because the restricted stock is legally issued and outstanding, the par value of the restricted stock is reflected in common stock with a corresponding offset in surplus. The Company recognized compensation expense in connection with restricted common stock awarded of $8.8 million, $5.5 million and $4.4 million for the years ended December 31, 2006, 2005 and 2004, respectively. A weighted-average forfeiture rate, based on the Company’s actual historical forfeiture experience, of 6.01 percent was used in calculating the share-based expense recognized in connection with restricted common stock for the year ended December 31, 2006.

     A summary of the activity related to the restricted common stock since January 1, 2006 is presented below:

	Restricted			Grant Date
	Stock			Fair Value
Nonvested, beginning of the period		456,744		$	45.53
Granted		246,152			55.02
Vested		(116,841	)		49.10
Forfeited		(83,230	)		50.08
Nonvested, end of the period		502,825			55.35

     As of December 31, 2006, there was $12.9 million of total unrecognized compensation cost related to nonvested restricted common stock granted and expected to vest, which will be amortized over the next three years.

(16) Benefit Plans

     On December 31, 2006, the Company adopted the recognition provision of SFAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements 87, 88, 106 and 132(R). SFAS 158 requires an employer to recognize the funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur in accumulated other comprehensive income. At December 31, 2006, the Company had a defined benefit postretirement plan, which is discussed further below, that met the recognition criteria of SFAS 158. Accordingly, at December 31, 2006, the Company recognized the funded status of this plan with a corresponding adjustment to accumulated other comprehensive income. The adjustment to accumulated other comprehensive income at adoption represents the net actuarial losses and net prior service costs. These amounts subsequently will be recognized as periodic net pension cost pursuant to the Company’s historical accounting policy for amortizing such amounts. Additionally, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension costs in the same periods will be subsequently recognized as a component of accumulated other comprehensive income in the same manner as prior amounts.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The impact of adopting SFAS 158 on the Company’s balance sheet at December 31, 2006, is presented in the following table (in thousands). The adoption of SFAS 158 had no impact on the Company’s Consolidated Statements of Income for the year ended December 31, 2006, or for any prior period presented, and it will not impact the Company’s operating results in the future.

	Prior to					As Reported
	Adopting		Impact of			December
	SFAS 158		Adoption			31, 2006
Defined benefit pension plan:
Prepaid pension cost	$	50,863	$	(50,863	)	$	—
Funded pension asset		—		21,548			21,548
Deferred tax asset		—		11,354			11,354
Impact to total assets	$	50,863	$	(17,961	)	$	32,902
Accumulated other comprehensive income, net of tax	$	—	$	(17,961	)	$	(17,961	)
Impact to shareholder’s equity	$	—	$	(17,961	)	$	(17,961	)

     The Company sponsors a defined benefit pension plan that is intended to meet the requirements of Section 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, and the requirements of the Employee Retirement Income Security Act of 1974. Under the plan, vested participants are entitled to a monthly benefit upon retirement equal to a percentage of their eligible compensation (generally defined as direct cash compensation exclusive of bonuses and commissions) earned in the five consecutive years of benefit service that produce the highest average. Prior to January 1, 2003, the percentage amount of the benefit was determined by multiplying the number of years, up to 30, of a participant’s service with the Company by 1.8 percent. Benefits were reduced by Social Security payments at the rate of 1.8 percent of the primary Social Security benefit multiplied by years of service up to 30 years. Effective January 1, 2003, the plan was modified to eliminate the Social Security offset feature of the monthly benefit calculation. Under the modified formula, benefits are generally based on years of service, age at retirement and the employee’s average compensation earned in the five consecutive years of service that produce the highest average. Employees of the Company who are over the age of 21 and have worked 1,000 hours or more in their first 12 months of employment or 1,000 hours or more in any calendar year thereafter are eligible to participate in the plan, except for project consultants, employees of certain insurance and investment management affiliates, and employees hired for the first time by the Company after January 1, 2002. Effective January 1, 2003, the defined benefit pension plan was closed to new participants. Participants are vested in benefits accruing under the plan after five years of qualifying service. Benefits are payable monthly commencing on the later of age 65 or the participant’s date of retirement. Eligible participants with at least five years of service may retire at reduced benefit levels after reaching age 55. The Company makes contributions to the pension fund in amounts at least sufficient to satisfy the funding requirements of the Employee Retirement Income Security Act.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Obligations and Funded Status

	For the Year Ended
	December 31
	2006			2005
	(In Thousands)
Change in benefit obligation
Benefit obligation, at beginning of year	$	188,825		$	168,861
Service cost		7,395			7,608
Interest cost		10,097			9,527
Actuarial (gain)/loss		(16,913	)		5,933
Benefits paid		(3,801	)		(3,104	)
Benefit obligation, at end of year		185,603			188,825
Change in plan assets
Fair value of plan assets, at the beginning of the year		178,903			164,258
Actual return on plan assets		19,864			9,749
Employer contribution		12,185			8,000
Benefits paid		(3,801	)		(3,104	)
Fair value of plan assets, at end of year		207,151			178,903
Funded status		21,548			(9,922	)
Net actuarial loss		29,118			55,177
Net prior service cost		197			231
Net amount recognized	$	50,863		$	45,486

     Amounts recognized in the Company’s Consolidated Balance Sheets consist of:

	December 31
	2006		2005
	(In Thousands)
Prepaid benefit cost	$	—	$	45,486
Funded pension asset		21,548		—
Deferred tax asset		11,354		—
Accumulated other comprehensive income		17,961		—
Net amount recognized	$	50,863	$	45,486

     The accumulated benefit obligation for the defined benefit pension plan was $160 million at both December 31, 2006 and 2005.

Components of Net Periodic Benefit Cost

	For the Year Ended
	December 31
	2006			2005
	(In Thousands)
Service cost	$	7,395		$	7,608
Interest cost		10,097			9,527
Expected return on plan assets		(13,773	)		(12,456	)
Amortization of prior service cost		34			34
Recognized net actuarial loss		3,055			3,190
Net periodic benefit cost	$	6,808		$	7,903

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Additional Information

	For the Year Ended
	December 31
	2006			2005
	(In Thousands)
Increase in minimum liability included in accumulated other comprehensive income	$	—		$	—
Weighted average assumptions used to determine benefit obligation at December 31
Discount rate		5.92	%		5.50	%
Rate of compensation increase		4.00			4.00
Weighted average assumptions used to determine net cost for year ended December 31
Discount rate		5.50	%		5.75	%
Expected return on plan assets		7.50			7.50
Rate of compensation increase		4.00			4.00

     To develop the assumed long-term rate of return on plan assets, the Company considers the current level of expected returns on risk free investments (primarily government bonds), the historical level of risk premium associated with other asset classes in which plan assets are invested, and the expectations for future returns of each asset class. The expected return for each asset class is then weighted based on the target asset allocation, and a range of expected long-term rates of return is developed. Based on this information, developed by a third-party actuary, the plan’s Retirement Committee sets the expected rate of return assumption. As part of the Retirement Committee’s periodic review of the plan’s investment policy in the current year, the assumed long-term rate of return was maintained at 7.50 percent in 2006.

Future Benefit Payments

     The following table summarizes the estimated benefits to be paid in the following periods (in thousands):

2007	$	4,403
2008		5,039
2009		5,672
2010		6,345
2011		7,250
2012-2016		53,275

     The expected benefits above were estimated based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2006, and include benefits attributable to estimated future employee service.

Plan Assets

     The Company’s plan asset allocations at December 31, 2006 and 2005, by asset category are as follows:

	Percentage of Plan
	Assets
	December 31
Asset Category	2006			2005
Cash Securities		1.1	%		1.2	%
Equity Securities		59.7			59.8
Debt Securities		39.2			39.0
Total		100.0	%		100.0	%

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     Plan assets consist primarily of various listed mutual funds, including money market, equity and fixed income mutual funds. The Company’s funding policy is to contribute cash to its pension plans in amounts at least sufficient to satisfy the minimum funding requirements under the Employee Retirement Income Security Act.

     The Company’s Retirement Committee sets the investment policy for the defined benefit pension plan and reviews investment performance and asset allocation on a quarterly basis. The long-term asset allocation policy for the plan is a target of 60 percent equities and 40 percent fixed income securities including, debt securities, cash equivalent securities and cash. The target asset allocations are subject to substantial adjustment depending on market circumstances and market outlook and may involve temporary deviations from historical ranges of the plan’s debt to equity ratios, if deemed necessary.

     Supplemental Retirement & Deferred Compensation Plans

     The Company maintains unfunded benefit plans for certain key executives that are intended to meet the requirements of Section 409A of the Internal Revenue Code and that provide additional retirement benefits not otherwise provided through the Company’s basic retirement benefit plans. Certain of these plans had unfunded projected benefit obligations of $21.7 million in 2006 and $19.7 million in 2005 and net plan liabilities of $19.1 million and $16.1 million, which are reflected in accrued expenses and other liabilities, as of December 31, 2006 and 2005, respectively. Net periodic expenses of the plans were $3.1 million, $1.4 million and $3.4 million in 2006, 2005 and 2004, respectively. At December 31, 2005, the Company had an additional minimum pension liability related to these plans of $2.1 million in other comprehensive income and during 2006 this amount was increased to $2.7 million.

     The Company also maintains an unfunded deferred compensation plan that is intended to meet the requirements of Section 409A of the Internal Revenue Code and that allows a select group of management and highly compensated employees to elect to defer a portion of their compensation for payment at a later time according to each participant’s distribution election.

     Defined Contribution Profit Sharing Plan

     Effective since January 1, 2003, the Company has sponsored a defined contribution profit sharing plan that is intended to meet the requirements of Section 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, and the requirements of the Employee Retirement Income Security Act of 1974. During 2002, employees participating in the defined benefit pension plan could choose to participate in the newly established defined contribution profit sharing plan in lieu of accumulating future benefit service in the defined benefit pension plan. The Company will make contributions on behalf of each participant in the plan based on eligible pay and years of service. The Company’s contribution ranges from two to three percent of the employee’s base pay based on the employee’s years of service. Participation in the plan is limited to employees hired for the first time after January 1, 2002, and those participants in the defined benefit pension plan who, in 2002, chose to forego future accumulation of benefit service. The Company recognized $2.3 million and $3.9 million of expense related to the Company’s defined contribution profit sharing plan for the years ended December 31, 2006 and 2005, respectively.

     Employee Stock Ownership Plan

     The Company sponsors an employee stock ownership plan that is intended to meet the requirements of Sections 401(a), 401(k), 409 and 501(a) of the Internal Revenue Code of 1986, as amended, and the requirements of the Employee Retirement Income Security Act of 1974. Under the plan, employees may contribute up to 25 percent of their base pay on a pretax basis subject to statutory limits. The Company, at its discretion and as specified by the Board of Directors, may match up to 100 percent of 4 percent of a participant’s compensation contributed to the plan by those employees participating in the defined contribution profit sharing plan. For those participants who elected not to forego future accumulation of benefit service in the defined benefit pension plan, the Company may match up to 100 percent of 3 percent of a participant’s compensation contributed to the plan. In addition to or in lieu of the matching contributions, the Company may make non-matching contributions in amounts determined by the Board of Directors. Effective January 1, 2006, for all participants in the plan, the Company may match an additional 50% of

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

the next 2 percent of compensation contributed to the plan by the participant. The Company’s matching contributions are invested in common stock of the Company that is purchased on the open market. The Company’s matching contributions are based on predetermined income levels and totaled $10.0 million in 2006, $7.6 million in 2005 and $6.9 million in 2004. The Company did not make non-matching contributions in 2006, 2005 or 2004. Company matching contributions are vested immediately for employees hired before January 1, 2001, and vest ratably over a three-year period for employees hired after January 1, 2001. Company non-matching contributions are allocated to participants’ accounts based on their base pay and are vested after five years of employment.

Director & Executive Stock Purchase Plan

     A stock purchase plan established by the Company in 2001 allows for investment in Compass’ common stock by non-employee members of Compass’ Board of Directors. Under the plan, directors can contribute directors’ compensation up to $50,000 per year and can make additional contributions of up to $5,000 per month. The Company matches 45 percent (after estimated income taxes) of director compensation contributions and 15 percent (after estimated taxes) of additional director cash contributions. The common stock is purchased in the open market and the Company absorbs brokerage fees and other incidental expenses. Costs incurred by the Company under the plan were $262,000 in 2006, $325,000 in 2005 and $336,000 in 2004 and are reflected in salaries, benefits and commissions expense and other expense.

(17) Business Combinations and Divestitures

Business Combinations

     On March 24, 2006, the Company completed the acquisition of TexasBanc Holding Co., the parent company of TexasBank. TexasBank, a Fort Worth-based bank with approximately $1.7 billion in assets and 22 banking centers, was the largest independent commercial bank headquartered in Fort Worth. The TexasBank acquisition further enhances the Company’s geographic position and expands the Company’s operations within its existing Texas footprint.

     TexasBank’s results of operations were included in the Company’s consolidated financial results beginning March 25, 2006. Total consideration for the transaction was $486 million, consisting of 4.9 million shares of the Company’s common stock and $232 million in cash. The value of the common stock exchanged was determined based on the average market price of the Company’s common stock over a 10-day period ended March 23, 2006.

     The purchase price was preliminarily allocated to the assets acquired and liabilities assumed. The following table summarizes the amount assigned to each major asset and liability caption at the acquisition date (in thousands). The final allocation of the purchase price will be adjusted as the integration process continues and additional information becomes available. As of December 31, 2006, no significant changes to the initial allocation of purchase price had occurred.

Assets:
Cash and due from banks	$	41,918
Federal funds sold and securities purchased under agreements to resell		24,888
Investment securities available for sale		77,526
Investment securities held to maturity		63,397
Net loans		1,387,248
Premises and equipment, net		38,002
Intangible assets		385,071
Other assets		36,500
Total assets	$	2,054,550

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Liabilities:
Deposits	$	1,475,862
Federal funds purchased and securities sold under agreements to repurchase		20,878
Other short-term borrowings		2,688
FHLB and other borrowings		51,722
Accrued expenses and other liabilities		17,419
Total liabilities		1,568,569
Net assets acquired	$	485,981

     The following unaudited pro forma condensed statements of income assume that the Company and TexasBank were combined at the beginning of the earliest period presented.

	Year Ended December 31
	2006		2005		2004
	(In Thousands, Except Per Share Data)
Interest income	$	2,071,975	$	1,645,915	$	1,350,157
Interest expense		937,842		598,914		402,394
Net interest income		1,134,133		1,047,001		947,763
Provision for loan losses		90,218		121,960		110,550
Net interest income after provision for loan losses		1,043,915		925,041		837,213
Noninterest income		716,300		681,322		649,801
Noninterest expense		1,088,689		964,081		923,414
Net income before income tax expense		671,526		642,282		563,600
Income tax expense		222,686		218,255		187,728
Net income	$	448,840	$	424,027	$	375,872
Basic earnings per share	$	3.48	$	3.30	$	2.96
Diluted earnings per share	$	3.41	$	3.23	$	2.88

Other Business Combinations

     On January 7, 2005, the Company completed the acquisition of Stavis, Margolis Advisory Services, Inc. (“SMA”), a Houston, Texas-based investment advisory firm with approximately $500 million in assets under management. SMA specializes in providing independent financial planning advisory services including investment, estate, retirement and business succession planning for high net worth individuals, corporate executives, business owners and professionals.

     On January 5, 2005, the Company completed the acquisition of Warren Benefits Group, LP (“Warren Benefits”), a Houston, Texas-based full-line general insurance brokerage firm, which specialized in providing broad-based group health and welfare plans as well as health and life insurance products.

     On October 4, 2004, the Company completed the acquisition of Sevier Insurance Agency (“Sevier”), a Birmingham, Alabama-based full-line general insurance brokerage firm, which services commercial and retail customers in the southeastern United States. Sevier specializes in providing property and casualty insurance, personal insurance, life insurance and surety products.

     Several of the Company’s acquisition agreements included contingent consideration provisions. These provisions are generally based upon future revenue or earnings goals for a period of typically three years. At December 31, 2006, the maximum potential amount of future undiscounted payments the Company could be required to make under outstanding contingent payment provisions is approximately $10 million, primarily in the form of stock.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Divestitures

     During the first quarter of 2005, the Company completed the sale of a non-core business unit that specialized in the brokerage of oil and gas properties and, in the fourth quarter of 2005, the sale of two non-strategic banking centers in Arizona. A gain of $4.8 million was realized on the sale of the non-core business unit and a gain of $1.6 million was realized on the non-strategic banking center sale. These gains are included in gain on sale of business and branches in noninterest income in the Consolidated Statements of Income for the year ended December 31, 2005.

(18) Income Taxes

     For the years ended December 31, 2006, 2005 and 2004, income tax expense consists of (in thousands):

	2006			2005			2004
Current income tax expense:
Federal	$	237,982		$	226,474		$	174,118
State		11,115			10,877			7,772
Total		249,097			237,351			181,890
Deferred income tax benefit:
Federal		(19,396	)		(29,857	)		(1,749	)
State		(2,647	)		(1,288	)		(494	)
Total		(22,043	)		(31,145	)		(2,243	)
Total income tax expense	$	227,054		$	206,206		$	179,647

     During 2006, the Company made income tax payments of approximately $245.8 million and received cash income tax refunds amounting to approximately $839,000. During 2005 and 2004, income tax payments were approximately $215.4 million and $152.9 million, respectively. Cash income tax refunds amounted to approximately $2.1 million in 2005 and $871,000 in 2004.

     Income tax expense differed from the amount computed by applying the federal statutory income tax rate to pretax earnings for the following reasons (in thousands):

	2006						2005						2004
				Percent						Percent						Percent
				of Pretax						of Pretax						of Pretax
	Amount			Earnings			Amount			Earnings			Amount			Earnings
Income tax expense at federal statutory rate	$	240,596			35.0	%	$	212,813			35.0	%	$	188,941			35.0	%
Increase (decrease) resulting from:
Tax-exempt income		(12,937	)		(1.9	)		(9,101	)		(1.5	)		(8,631	)		(1.6	)
State income tax expense net of federal income tax benefit		5,504			0.8			6,233			1.0			4,731			0.9
Other		(6,109	)		(0.9	)		(3,739	)		(0.6	)		(5,394	)		(1.0	)
Income tax expense	$	227,054			33.0	%	$	206,206			33.9	%	$	179,647			33.3	%

     In June 2006, the FASB issued FASB Interpretation 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with early adoption allowed. Accordingly, on January 1, 2007, the Company adopted the provisions of this interpretation. The adoption of this interpretation is expected to result in an immaterial decrease in the Company’s retained earnings.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2006 and 2005, are presented below:

	2006		2005
	(In Thousands)
Deferred tax assets:
Allowance for loan losses	$	109,904	$	103,455
Accrued expenses		16,849		12,925
Deferred compensation		15,115		11,805
Net unrealized losses on securities available for sale, hedging instruments and additional minimum pension liability		31,326		38,562
Other deferred tax assets		13,427		9,220
Total assets		186,621		175,967
Deferred tax liabilities:
Premises and equipment		24,940		34,415
Lease financing		2,590		11,441
Core deposit and other acquired intangibles		29,639		20,960
Prepaid pension benefit cost		19,002		17,292
Deferred credit card income		16,790		15,261
Loan costs		22,791		20,284
Other deferred tax liabilities		6,816		7,068
Total liabilities		122,568		126,721
Net deferred tax asset	$	64,053	$	49,246

(19) Parent Company

     The condensed financial information for Compass Bancshares, Inc. (Parent Company only) is presented as follows:

Balance Sheets

	December 31
	2006		2005
	(In Thousands)
Assets
Cash and due from banks *	$	206,557	$	232,514
Trading account assets		1,376		1,406
Investment securities available for sale		27,626		28,040
Investment in subsidiaries *		3,104,607		2,460,547
Other assets *		32,793		36,900
Total assets	$	3,372,959	$	2,759,407
Liabilities and Shareholders’ Equity
Commercial paper	$	67,770	$	76,764
Accrued expenses and other liabilities *		41,879		36,211
Junior subordinated debt payable to unconsolidated subsidiary trusts		439,176		410,403
Total liabilities		548,825		523,378
Shareholders’ equity		2,824,134		2,236,029
Total liabilities and shareholders’ equity	$	3,372,959	$	2,759,407

* Eliminates in consolidation

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Statements of Income

	Year Ended December 31
	2006			2005			2004
	(In Thousands)
Income:
Cash dividends from subsidiaries *	$	363,163		$	230,000		$	120,000
Interest on investments with affiliates *		15,718			11,482			7,466
Other		1,417			2,676			10,542
Total income		380,298			244,158			138,008
Expense:
Interest on commercial paper and other borrowings		3,476			2,456			1,586
Other		43,047			42,472			39,596
Total expense		46,523			44,928			41,182
Income before income tax benefit and equity in undistributed earnings of subsidiaries		333,775			199,230			96,826
Applicable income tax benefit		(9,910	)		(11,560	)		(8,765	)
		343,685			210,790			105,591
Equity in undistributed earnings of subsidiaries*		116,678			191,040			254,594
Net income	$	460,363		$	401,830		$	360,185

* Eliminates in consolidation

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

Statements of Cash Flows

	Year Ended December 31
	2006			2005			2004
	(In Thousands)
Operating Activities:
Net income	$	460,363		$	401,830		$	360,185
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		9,821			7,897			6,034
Accretion of discount		(1,575	)		(1,575	)		(1,575	)
Decrease in trading assets		30			17,826			11,678
Equity in undistributed earnings		(116,678	)		(191,040	)		(254,594	)
Increase in other assets		(104	)		(2,952	)		(4,858	)
Increase (decrease) in other liabilities		6,998			10,139			(5,833	)
Net cash provided by operating activities		358,855			242,125			111,037
Investing Activities:
Proceeds from call of investment securities available for sale		—			—			4,310
Capital receipts from (contributions to) subsidiaries		(229,716	)		(5,460	)		683
Net cash (used in) provided by investing activities		(229,716	)		(5,460	)		4,993
Financing Activities:
Net increase (decrease) in commercial paper		(8,994	)		(20,734	)		23,986
Repayment of other borrowings		—			—			(50,000	)
Repurchase of junior subordinated debt payable to subsidiary trusts		—			—			(23,000	)
Common dividends paid		(199,989	)		(208,756	)		(118,533	)
Purchase of treasury stock		(2,734	)		(63,247	)		(33,829	)
Issuance of treasury stock for benefit plans and stock options		3,099			9,274			9,998
Repayment of loans to finance stock purchases		982			679			616
Excess tax benefits from share-based payments		13,317			—			—
Proceeds from exercise of stock options		39,223			24,421			28,622
Net cash used in financing activities		(155,096	)		(258,363	)		(162,140	)
Net decrease in cash and due from banks		(25,957	)		(21,698	)		(46,110	)
Cash and due from banks at beginning of the year		232,514			254,212			300,322
Cash and due from banks at end of the year	$	206,557		$	232,514		$	254,212

(20) Fair Value of Financial Instruments

     The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather represent a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

     The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash and due from banks: Cash and due from banks have maturities of three months or less. Accordingly, the carrying amount is considered to be a reasonable estimate of fair value.

Investment securities held to maturity and investment securities available for sale: Fair values of investment securities held to maturity and investment securities available for sale are based primarily on quoted or other

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

independent market prices. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of instruments with similar characteristics or discounted cash flows.

Trading account assets: Fair values of trading account assets are based primarily on quoted or other independent market prices. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of instruments with similar characteristics or discounted cash flows.

Federal funds sold and securities purchased under agreements to resell: Due to the short-term nature of these assets, the carrying values of these assets approximate their fair value.

Loans: Loans were valued using discounted cash flows. The discount rate used to determine the present value of these loans was based on interest rates currently being charged by the Company on comparable loans as to credit risk and term.

Off-balance sheet instruments: The Company’s loan commitments are negotiated at current market rates and are relatively short-term in nature and, as a matter of policy, the Company generally makes commitments for fixed rate loans for relatively short periods of time. Therefore, the estimated value of the Company’s loan commitments approximates carrying amount.

Derivatives: Derivative instruments (forwards, swaps, caps, floors and options written) are recorded on the balance sheet at fair value. Fair value is calculated using pricing models designed to approximate dealer quoted prices.

Deposit liabilities: The fair values of demand deposits are equal to the carrying value of such deposits. Demand deposits include noninterest bearing demand deposits, savings accounts, NOW accounts and money market demand accounts. Discounted cash flows have been used to value fixed rate term deposits and variable rate term deposits having an interest rate floor that has been reached. The discount rate used is based on interest rates currently being offered by the Company on comparable deposits as to amount and term.

Short-term borrowings: The carrying value of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings approximates their carrying values.

FHLB and other borrowings: The fair value of the Company’s fixed rate borrowings, which includes the Company’s Capital Securities, are estimated using discounted cash flows, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount of the Company’s variable rate borrowings approximates their fair values.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

	At December 31, 2006				At December 31, 2005
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
	(In Thousands)
Financial Instruments:
Assets:
Cash and due from banks	$	738,168	$	738,168	$	805,556	$	805,556
Investment securities held to maturity		1,953,166		1,914,863		2,245,942		2,212,273
Investment securities available for sale		4,687,782		4,687,782		4,704,375		4,704,375
Trading account assets		86,706		86,706		76,559		76,559
Federal funds sold and securities purchased under agreements to resell		24,423		24,423		46,393		46,393
Loans		24,665,273		24,588,605		21,372,215		21,086,292
Liabilities:
Noninterest bearing deposits	$	6,459,669	$	6,459,669	$	6,097,881	$	6,097,881
Interest bearing deposits		16,585,860		16,555,371		14,286,234		14,226,374
Federal funds purchased and securities sold under agreements to repurchase		3,179,351		3,179,351		3,102,572		3,102,572
Other short-term borrowings		1,242,963		1,242,963		652,750		652,750
FHLB and other borrowings		3,511,601		3,590,746		4,111,462		4,068,321

(21) Segment Information

     The Company’s segment information is presented by line of business. Each line of business is a strategic unit that serves a particular group of customers that have certain common characteristics through various products and services. The segment results include certain overhead allocations and intercompany transactions. All intercompany transactions have been eliminated to determine the consolidated balances. The Company operates primarily in the United States, and, accordingly, the geographic distribution of revenue and assets is not significant. Revenues from no individual customer exceeded 10 percent of consolidated revenue. The Company’s reportable operating segments are Corporate Banking, Retail Banking, Wealth Management and Treasury and are not necessarily comparable with similar information provided by other financial institutions.

     The Corporate Banking segment is responsible for providing a full array of banking and investment services to business banking, commercial banking and other institutional clients in each of the Company’s major metropolitan markets. The Corporate Banking segment also includes Community Banking across the Company’s six-state footprint and a National Industries unit that is responsible for serving larger national accounts, principally in targeted industries. In addition to traditional credit and deposit products, the Corporate Banking segment also supports its customers with capabilities in treasury management, leasing, accounts receivable purchasing, asset-based lending, international services, insurance and interest rate protection and investment products.

     The Retail Banking segment serves the Company’s consumer customers through its 415 full-service banking centers and through the use of alternative delivery channels such as personal computer and telephone banking. The Retail Banking segment provides individuals with comprehensive products and services, including home mortgages, credit and debit cards, deposit accounts, insurance products, mutual funds, and brokerage services. In addition, Retail Banking serves the Company’s small business customers and the Company’s indirect automobile portfolio.

     The Wealth Management segment provides specialized investment portfolio management, traditional credit products, traditional trust and estate services, financial counseling and customized services to the Company’s private clients and foundations, as well as investment management and retirement services to companies and their employees.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The Treasury segment’s primary function is to manage the investment securities portfolio, public entity deposits, the interest rate sensitivity of the Company’s Consolidated Balance Sheets and the liquidity and funding positions of the Company.

     Activities that are not directly attributable to the reportable operating segments, for example, the activities of the Parent Company and support functions, including accounting, loan review and the elimination of intercompany transactions, are presented under Corporate Support and Other.

     The following table presents the segment information for the Company’s segments as of and for the year ended December 31, 2006, 2005 and 2004.

		For the Year ended December 31, 2006
		(In Thousands)
									Corporate
	Corporate		Retail		Wealth				Support and
	Banking		Banking		Management		Treasury		Other			Consolidated
Income Statement:
Net interest income	$	473,329	$	482,647	$	62,558	$	41,501	$	55,099		$	1,115,134
Noninterest income		146,384		484,568		44,570		35,539		199			711,260
Noninterest expense		238,164		503,321		53,862		20,361		233,567			1,049,275
Segment net income (loss)	$	381,549	$	463,894	$	53,266	$	56,679	$	(178,269	)		777,119
Provision for loan losses													89,702
Net income before income tax expense													687,417
Income tax expense													227,054
Net income												$	460,363
Balance Sheet:
Average assets	$	13,433,257	$	9,087,540	$	1,559,999	$	7,199,259	$	1,732,295		$	33,012,350
Average loans		13,381,082		8,904,934		1,559,537		—		(132,515	)		23,713,038
Average deposits		5,653,523		12,541,134		1,325,965		2,653,066		(47,101	)		22,126,587
Period-end assets	$	14,312,846	$	9,430,046	$	1,632,551	$	7,292,744	$	1,531,568		$	34,199,755
Period-end loans		14,069,062		9,144,519		1,619,105		—		(167,413	)		24,665,273
Period-end deposits		6,146,474		13,557,244		1,427,366		2,030,538		(116,093	)		23,045,529

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

For the Year ended December 31, 2005
(In Thousands)

									Corporate
	Corporate		Retail		Wealth				Support and
	Banking		Banking		Management		Treasury		Other			Consolidated
Income Statement:
Net interest income	$	384,253	$	437,599	$	55,158	$	27,279	$	64,690		$	968,979
Noninterest income		151,531		449,234		38,308		26,145		(6,540	)		658,678
Noninterest expense		204,391		435,656		47,706		20,936		193,114			901,803
Segment net income (loss)	$	331,393	$	451,177	$	45,760	$	32,488	$	(134,964	)		725,854
Provision for loan losses													117,818
Net income before income tax expense													608,036
Income tax expense													206,206
Net income												$	401,830
Balance Sheet:
Average assets	$	10,614,482	$	8,550,613	$	1,349,510	$	7,611,929	$	1,317,698		$	29,444,232
Average loans		10,594,888		8,362,871		1,350,630		—		(258,801	)		20,049,588
Average deposits		4,773,226		10,234,133		1,207,390		2,292,259		(39,333	)		18,467,675
Period-end assets	$	11,574,398	$	9,002,235	$	1,489,413	$	7,574,799	$	1,157,387		$	30,798,232
Period-end loans		11,377,470		8,722,274		1,476,937		—		(204,466	)		21,372,215
Period-end deposits		4,947,314		11,200,625		1,260,697		3,057,539		(82,060	)		20,384,115

For the Year ended December 31, 2004
(In Thousands)

									Corporate
	Corporate		Retail		Wealth				Support and
	Banking		Banking		Management		Treasury		Other			Consolidated
Income Statement:
Net interest income	$	363,969	$	396,995	$	53,564	$	42,312	$	28,485		$	885,325
Noninterest income		139,351		391,601		29,519		66,949		1,223			628,643
Noninterest expense		197,773		397,040		40,393		43,006		190,266			868,478
Segment net income (loss)	$	305,547	$	391,556	$	42,690	$	66,255	$	(160,558	)		645,490
Provision for loan losses													105,658
Net income before income tax expense													539,832
Income tax expense													179,647
Net income												$	360,185
Balance Sheet:
Average assets	$	9,804,164	$	7,571,312	$	1,202,721	$	7,659,417	$	1,423,014		$	27,660,628
Average loans		9,789,575		7,394,101		1,204,768		—		(389,089	)		17,999,355
Average deposits		4,609,496		9,295,751		1,243,356		1,285,578		(20,479	)		16,413,702
Period-end assets	$	10,238,188	$	8,041,224	$	1,294,636	$	7,673,267	$	934,601		$	28,181,916
Period-end loans		10,101,932		7,783,359		1,285,285		—		(313,654	)		18,856,922
Period-end deposits		4,826,556		9,611,292		1,211,464		1,424,072		(30,652	)		17,042,732

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

     The financial information presented was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting policies that have been developed to reflect the underlying economics of the businesses. The policies address the methodologies applied and include policies related to funds transfer pricing. Funds transfer pricing was used in the determination of net interest income by assigning a standard cost (credit) for funds used (provided) to assets and liabilities based on their maturity, prepayment and/or repricing characteristics.

     The development and application of these methodologies is a dynamic process. Accordingly, prior period financial results have been revised to reflect management accounting enhancements and changes in the Company’s organizational structure. The 2005 and 2004 segment information has been revised to conform to the 2006 presentation. In addition, unlike financial accounting, there is no authoritative literature for management accounting similar to generally accepted accounting principles. Consequently, reported results are not necessarily comparable with those presented by other financial institutions.

(22) Earnings Per Share

     Presented below is a summary of the components used to calculate basic and diluted earnings per share for the years ended December 31, 2006, 2005 and 2004:

	Year Ended December 31
	2006		2005		2004
	(In Thousands, Except Per Share Data)
BASIC EARNINGS PER SHARE:
Net income	$	460,363	$	401,830	$	360,185
Net income available to common shareholders	$	460,363	$	401,830	$	360,185
Weighted average basic common shares outstanding		127,857		123,550		122,254
Basic earnings per share	$	3.60	$	3.25	$	2.95
DILUTED EARNINGS PER SHARE:
Net income	$	460,363	$	401,830	$	360,185
Net income available to common shareholders and assumed conversions	$	460,363	$	401,830	$	360,185
Weighted average common shares outstanding		127,857		123,550		122,254
Net effect of nonvested restricted stock and the assumed exercise of stock options—based on the treasury stock method using average market price for the year		2,601		2,873		3,162
Weighted average diluted common shares outstanding		130,458		126,423		125,416
Diluted earnings per share	$	3.53	$	3.18	$	2.87

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

(23) Comprehensive Income

     Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances arising from nonowner sources.

     The following is a summary of the components of other comprehensive income:

	Year Ended December 31
	2006			2005			2004
	(In Thousands)
Other comprehensive income (loss), before income taxes:
Unrealized holding gains (losses) on investment securities available for sale, net	$	18,543		$	(68,349	)	$	(41,152	)
Less reclassification adjustment for gains (losses) on investment securities available for sale		(14,889	)		79			27,336
Net change in additional minimum pension liability and funded pension asset		(29,873	)		1,353			(3,469	)
Amortization of unrealized net holding losses on investment securities available for sale transferred to investment securities held to maturity		(355	)		(3,109	)		(10,702	)
Net change in accumulated gains (losses) on cash-flow hedging instruments		13,257			5,921			(14,572	)
Other comprehensive income (loss), before income taxes		16,461			(64,263	)		(97,231	)
Income tax expense (benefit) related to other comprehensive income (loss):
Unrealized holding gains(losses) on investment securities available for sale		7,883			(26,027	)		(15,469	)
Less reclassification adjustment for gains (losses) on investment securities available for sale		(6,329	)		30			10,276
Net change in additional minimum pension liability and funded pension asset		(11,587	)		501			(1,304	)
Amortization of unrealized net holding losses on investment securities available for sale transferred to investment securities held to maturity		(151	)		(1,183	)		(4,023	)
Net change in accumulated gains (losses) on cash-flow hedging instruments		4,763			2,256			(5,477	)
Total income tax expense (benefit) related to other comprehensive income (loss)		7,237			(24,483	)		(36,549	)
Other comprehensive income (loss), after income taxes	$	9,224		$	(39,780	)	$	(60,682	)

     At December 31, 2006, other comprehensive income was comprised of $41.3 million of unrealized losses on securities available for sale, $6.9 million of accumulated gains on cash-flow hedging instruments and $19.6 million of additional minimum pension liability and pension asset funding. At December 31, 2005, other comprehensive income was comprised of $60.3 million of unrealized losses on securities available for sale, $1.6 million of accumulated losses on cash-flow hedging instruments and $1.3 million of additional minimum pension liability.

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Compass Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)
December 31, 2006, 2005 and 2004

(24) Supplemental Disclosure for Statement of Cash Flows

     The Company paid approximately $874 million, $538 million and $351 million in interest on deposits and other liabilities during 2006, 2005 and 2004, respectively. The following table presents the Company’s noncash investing and financing activities for the years ended December 31, 2006, 2005 and 2004.

	December 31
	2006		2005			2004
	(In Thousands)
Schedule of noncash investing and financing activities:
Transfers of loans to other real estate owned	$	16,601	$	12,236		$	21,982
Loans to facilitate the sale of other real estate owned		424		1,048			1,006
Assets retained in loan securitizations		—		—			589,912
Loans to finance stock purchases		1,897		885			863
Change in unrealized gain (loss) on available for sale securities		33,433		(68,428	)		(68,488	)
Issuance of restricted stock, net of cancellations		12,101		6,671			8,571
Treasury stock exchanged for acquisition earnout		6,269		5,840			4,741
Treasury stock purchased for deferred compensation plan		7,943		—			—
Allowance transferred to other liabilities		—		12,189			—
Business combinations and divestitures:
Common stock issued		253,992		7,869			3,658
Assets acquired		2,012,632		8,092			5,771
Liabilities assumed		1,568,569		21			2,381
Assets sold		—		2,156			—
Liabilities sold		—		25,290			—

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ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     PricewaterhouseCoopers LLP was dismissed as the Company’s independent registered public accounting firm effective as of the close of business March 16, 2006.

     The reports of PricewaterhouseCoopers LLP on the Consolidated Financial Statements of the Company at December 31, 2005 and 2004 and for the three years ended December 31, 2005, did not contain any adverse opinion or any disclaimer of opinion, nor were such reports of PricewaterhouseCoopers LLP qualified or modified as to uncertainty, audit scope, or accounting principles.

     The decision to change independent registered public accounting firm was approved by the Audit Committee of the Board of Directors of the Company.

     In connection with its audits for the fiscal years ended December 31, 2005 and 2004 and through the date of dismissal, there were no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference to the subject matter of the disagreements in connection with its reports on the Consolidated Financial Statements of the Company for such fiscal years.

     As previously reported and as discussed under Management’s Report on Internal Control Over Financial Reporting under Item 9A of the Company’s 2004 Form 10-K/A, management and the Audit Committee of the Board of Directors of the Company determined that the Company’s audited financial statements for 2004, 2003 and 2002 and the unaudited interim financial statements for each of the quarters ended March 31, June 30, and September 30, 2005 and 2004 could not be relied upon. Based upon their evaluation, management concluded that as of the end date for each of these periods, a material weakness in the Company’s internal control regarding the appropriate classification of certain interest rate swaps and the related valuation of the hedged brokered certificates of deposit and trust preferred debt existed. As a result of this material weakness, the 2004 Form 10-K/A, filed on January 11, 2006 with the Securities and Exchange Commission, included restated Consolidated Financial Statements for 2004, 2003 and 2002. Also, the Form 10-Q/A for each of the quarters ended March 31, June 30, and September 30, 2005 and 2004, respectively, filed on January 11, 2006 with the SEC, included restated interim Consolidated Financial Statements. As of January 11, 2006, management believes it has fully remediated this material weakness in internal control over financial reporting. As previously reported and as discussed under Management’s Report on Internal Control Over Financial Reporting under Item 9A of the Company’s 2005 Form 10-K, the Company maintained effective internal control over financial reporting as of December 31, 2005.

     Except for the material weakness described above, there are no reportable events under Item 304(a)(1)(v) of Regulation S-K that occurred during the years ended December 31, 2005 and 2004 and through March 16, 2006.

     The Company engaged Ernst & Young LLP as its new independent registered public accounting firm as of March 17, 2006, to audit the Company’s Consolidated Financial Statements. During the two (2) most recent fiscal years ended December 31, 2005 and 2004 and through the date of engagement, the Company has not consulted with Ernst & Young LLP on items regarding either: (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s Consolidated Financial Statements or (2) the subject matter of a disagreement or reportable event (as defined in Item 304(a)(1)(iv) and (v) of Regulation S-K) with the Company’s former independent registered public accounting firm.

     The Company provided a copy of this disclosure to PricewaterhouseCoopers LLP and requested that PricewaterhouseCoopers LLP provide it with a letter to the SEC stating whether or not it agrees with the statements set forth above. A copy of that letter, dated March 20, 2006, was attached as Exhibit 16 to the Company’s current report on Form 8-K that was filed with the SEC on March 20, 2006.

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ITEM 9A — CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

     The Company has established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

     Based on their evaluation as of December 31, 2006, the Chief Executive Officer and the Chief Financial Officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control Over Financial Reporting

     The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and its Chief Financial Officer, the Company’s management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, as of December 31, 2006. Based on this evaluation under the framework in Internal Control – Integrated Framework, the Company’s management concluded that its internal control over financial reporting was effective as of December 31, 2006.

     Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which is set forth on page 42 and is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

     There have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B — OTHER INFORMATION

     None

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PART III

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The information required by this item is incorporated by reference to the sections entitled “Election of Directors,” “Additional Information Concerning the Board of Directors,” “Code of Conduct and Ethics,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Executive Compensation and Other Information” of the Company’s Proxy Statement to be filed for the 2007 Annual Meeting of Stockholders.

ITEM 11 — EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference to the sections entitled “Executive Compensation and Other Information” of the Company’s Proxy Statement to be filed for the 2007 Annual Meeting of Stockholders. See Item 12 of this Annual Report on Form 10-K for additional information concerning the Company’s equity compensation plans.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information required by this item is incorporated by reference to the sections entitled “Common Stock Ownership of Directors and Executive Officers” of the Company’s Proxy Statement to be filed for the 2006 Annual Meeting of Stockholders.

Equity Compensation Plan Information

     The following table presents information regarding the Company’s equity compensation plans at December 31, 2006:

	Number of
	securities to be					Number of securities remaining
	issued upon exercise			Weighted-average		available for future issuance under
	of outstanding			exercise price of		equity compensation plans
	options, warrants			outstanding options,		(excluding securities reflected in
	and rights			warrants and rights		column (a))
Plan category	(a)			(b)		(c)
Equity compensation plans approved by security holders		7,012,176	(1)	$	34.21		5,888,302	(2)
Equity compensation plans not approved by security holders		—			—		—
Total		7,012,176		$	34.21		5,888,302

(1)	Consists of 7,012,176 shares of common stock issuable upon exercise of outstanding stock option awards subject to vesting requirements granted under the 1996 Long-Term Incentive Plan, the 1999 Omnibus Incentive Compensation Plan and the 2002 Incentive Compensation Plan. Additionally, amount excludes 502,825 of restricted stock awards, subject to vesting requirements under the same plans.
(2)	Consists of 308,724 shares, 1,079,578 shares and 4,500,000 shares available for future issuance pursuant to stock option, restricted stock and other awards that may be granted under the 1999 Omnibus Incentive Compensation Plan, the 2002 Incentive Compensation Plan, and the 2006 Incentive Compensation Plan, respectively.

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

     The information required by this item is incorporated by reference to the sections entitled “Certain Relationships and Related Transactions” and “Additional Information Concerning the Board of Directors” of the Company’s Proxy Statement to be filed for the 2007 Annual Meeting of Stockholders.

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ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information required by this item is incorporated by reference to the section entitled “Independent Accountants” of the Company’s Proxy Statement to be filed for the 2007 Annual Meeting of Stockholders.

PART IV

ITEM 15 — EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	Compass Bancshares, Inc. and Subsidiaries
	Financial Statements

	Page
Reports of Independent Registered Public Accounting Firms		41
Consolidated Balance Sheets as of December 31, 2006 and 2005		44
Consolidated Statements of Income for the years ended December 31, 2006, 2005 and 2004		45
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2006, 2005 and 2004		46
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004		47
Notes to Consolidated Financial Statements – December 31, 2006, 2005 and 2004		48

(b) Exhibits

(3) Articles of Incorporation and By-Laws of Compass Bancshares, Inc.

(a)	Restated Certificate of Incorporation of Compass Bancshares, Inc., as amended, dated May 17, 1982 (incorporated by reference to Exhibit 3.1 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(b)	Certificate of Amendment, dated May 20, 1986, to Restated Certificate of Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(c)	Certificate of Amendment, dated May 15, 1987, to Restated Certificate of Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.3 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(d)	Certificate of Amendment, dated November 3, 1993, to Restated Certificate of Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.4 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(e)	Certificate of Amendment, dated September 16, 1994, to Restated Certificate of Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.5 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(f)	Certificate of Amendment, dated May 15, 1998, to Restated Certificate of Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.6 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(g)	Certificate of Amendment, dated May 1, 2002, to Restated Certificate of Incorporation of Compass Bancshares, Inc. (incorporated by reference to Exhibit 3.7 to Compass Bancshares, Inc.’s Registration Statement on Form S-4, Registration No. 333-129940, filed November 23, 2005 with the Commission)
(h)	Bylaws of Compass Bancshares, Inc. as amended and restated as of March 15, 1982 and amended on February 17, 1986 and February 15, 1988 (incorporated by reference to Exhibit 3(h) to Compass Bancshares, Inc.’s June 30, 2006 Form 10-Q, file number 001-31272, filed August 8, 2006 with the Commission)

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Exhibits — continued

(4) Instruments Defining the Rights of Security Holders, Including Indentures

Instruments defining the rights of the holders of long-term debt of Compass Bancshares, Inc. and its subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K. Compass Bancshares, Inc. hereby agrees to furnish copies of such instruments to the Commission upon request.

(10) Material Contracts

(a)	Compass Bancshares, Inc., 1996 Long Term Incentive Plan (incorporated by reference to Exhibit 4(g) to Compass Bancshares, Inc.’s Registration Statement on Form S-8, Registration No. 333-15117, filed October 30, 1996 with the Commission) *
(b)	Compass Bancshares, Inc., 1999 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10(a) to Compass Bancshares, Inc.’s Registration Statement on Form S-8, Registration No. 333-86455, filed September 2, 1999 with the Commission) *
(c)	Form of Amended and Restated Employment Agreement, effective as of January 23, 2007, between Compass Bancshares, Inc. and each executive officer of Compass Bancshares, Inc. (incorporated by reference to Exhibit 10.8 to Compass Bancshares, Inc.’s Form 8-K, filed number 001-31272, filed January 29, 2007 with the Commission) *
(d)	Compass Bancshares, Inc. Supplemental Retirement Plan, as amended and restated as of January 1, 2005 *
(e)	Compass Bancshares, Inc. Special Supplemental Retirement Plan, as amended and restated as of January 1, 2005 *
(f)	Compass Bancshares, Inc. Employee Stock Ownership Benefit Restoration Plan, as amended and restated as of January 1, 2005 *
(g)	Compass Bancshares, Inc. Smartinvestor Retirement Benefit Restoration Plan, as amended and restated as of January 1, 2005 *
(h)	Deferred Compensation Plan for Compass Bancshares, Inc., as amended and restated as of January 1, 2005 (incorporated by reference to Exhibit 10(r) to Compass Bancshares, Inc.’s June 30, 2006 Form 10-Q, file number 001-31272, filed August 8, 2006 with the Commission) *
(i)	Compass Bancshares, Inc. Director & Executive Stock Purchase Plan (formerly known as Monthly Investment Plan), as Amended and Restated, effective as of September 1, 2001 (incorporated by reference to Exhibit 4.8 to Compass Bancshares, Inc.’s Registration Statement on Form S-8, Registration No. 333-26884, filed July 31, 2001 with the Commission) *
(j)	Compass Bancshares, Inc. 2002 Incentive Compensation Plan (incorporated by reference to Exhibit 4.9 to Compass Bancshares, Inc.’s Registration Statement on Form S-8, Registration No. 333-90806, filed June 19, 2002 with the Commission) *
(k)	2005 Form of Performance Contingent Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed February 22, 2005 with the Commission) *
(l)	Form of Amendment Number One to the 2005 Performance Contingent Restricted Stock Award Agreement (incorporated by reference Exhibit 10.1 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed October 21, 2005 with the Commission) *

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Exhibits — continued

(m) 2005 Form of Incentive Stock Option Agreement (D. Paul Jones, Jr.) (incorporated by reference to Exhibit 10.2 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed February 22, 2005 with the Commission) *

(n)	2005 Form of Incentive Stock Option Agreement (Garrett R. Hegel, James D. Barri, George M. Boltwood and William C. Helms) (incorporated by reference to Exhibit 10.4 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed February 22, 2005 with the Commission) *
(o)	Compass Bancshares, Inc. 2006 Incentive Compensation Plan (incorporated by reference to Exhibit 4.9 to Compass Bancshares, Inc.’s Registration Statement on Form S-8, Registration No. 333-135154, filed June 20, 2006 with the Commission) *
(p)	2006 Form of Performance Contingent Restricted Stock Agreement (D. Paul Jones, Jr.) (incorporated by reference to Exhibit 10.1 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed May 31, 2006 with the Commission) *
(q)	2006 Form of Performance Contingent Restricted Stock Agreement (Garrett R. Hegel, James D. Barri, George M. Boltwood and William C. Helms) (incorporated by reference to Exhibit 10.3 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed May 31, 2006 with the Commission) *
(r)	2006 Form of Incentive Stock Option Agreement (D. Paul Jones, Jr.) (incorporated by reference to Exhibit 10.4 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed May 31, 2006 with the Commission) *
(s)	2006 Form of Incentive Stock Option Agreement (Garrett R. Hegel, James D. Barri, George M. Boltwood and William C. Helms) (incorporated by reference to Exhibit 10.6 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed May 31, 2006 with the Commission) *
(t)	Form of Stock Option Agreement for Non-Employee Directors (incorporated by reference to Exhibit 10(cc) to Compass Bancshares, Inc.’s March 31, 2005 Form 10-Q, file number 001-31272, filed May 6, 2005 with the Commission) *
(u)	Form of Restricted Stock Award Agreement for Non-Employee Directors *
(v)	Form of Performance Unit Award Agreement (incorporated by reference to Exhibit 10.1 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *
(w)	Form of Performance Contingent Restricted Stock Award Agreement (Jones) (incorporated by reference Exhibit 10.2 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *
(x)	Form of Performance Contingent Restricted Stock Award Agreement (Stone) (incorporated by reference to Exhibit 10.3 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *
(y)	Form of Performance Contingent Restricted Stock Award Agreement (executive officer) (incorporated by reference to Exhibit 10.4 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *
(z)	Form of Stock Option Agreement (Jones) (incorporated by reference to Exhibit 10.5 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *
(aa)	Form of Stock Option Agreement (Stone) (incorporated by reference to Exhibit 10.6 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *

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Exhibits — continued

(bb)	Form of Stock Option Agreement (executive officer) (incorporated by reference to Exhibit 10.7 to Compass Bancshares, Inc.’s Form 8-K, file number 001-31272, filed January 29, 2007 with the Commission) *
(cc)	Summary of Compensation Arrangements for Named Executive Officers and Directors *

(dd)

Distribution Agreement, dated March 13, 2006, among Compass Bank and Compass Bancshares, Inc., and Citigroup Global Markets Inc., Keefe, Bruyette & Woods, Inc. Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Sandler O’Neill & Partners, L.P. as agents (incorporated by reference to Exhibit 10(ae) to Compass Bancshares, Inc.’s March 31, 2006 Form 10-Q, file number 001-31272, filed May 8, 2006 with the Commission)

(ee)

Issuing and Paying Agency Agreement, dated March 13, 2006, between Compass Bank, as issuer, and Compass Bank, as issuing and paying agent (incorporated by reference to Exhibit 10(af) to Compass Bancshares, Inc.’s March 31, 2006 Form 10-Q, file number 001-31272, filed May 8, 2006 with the Commission)

(16)	Letter dated March 20, 2006 from PricewaterhouseCoopers LLP to the Securities and Exchange Commission regarding change in certifying accountant (incorporated by reference to Exhibit 16 to Compass Bancshares, Inc.’s Form 8-K, filed number 001-31272, filed March 20, 2006 with the Commission)
(21)	Subsidiaries of the registrant
(23)(a)	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
(23)(b)	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
(31)(a)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by D. Paul Jones, Jr., Chief Executive Officer
(31)(b)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Garrett. R. Hegel, Chief Financial Officer
(32)(a)	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by D. Paul Jones, Jr., Chief Executive Officer
(32)(b)	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Garrett R. Hegel, Chief Financial Officer

Certain financial statement schedules and exhibits have been omitted because they are either not required or the information is otherwise included in the Notes to Consolidated Financial Statements.

* Management contract or compensatory plan or arrangement

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		COMPASS BANCSHARES, INC.
Date: February 19, 2007	By	/s/ D. Paul Jones, Jr.
		D. Paul Jones, Jr.
		Chairman and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ D. Paul Jones, Jr. D. Paul Jones, Jr.	Chairman and Chief Executive Officer	February 19, 2007
/s/ Garrett R. Hegel Garrett R. Hegel	Chief Financial Officer	February 19, 2007
/s/ Kirk P. Pressley	Chief Accounting Officer	February 19, 2007
Kirk P. Pressley
/s/ James H. Click, Jr.	Director	February 19, 2007
James H. Click Jr.
/s/ Charles W. Daniel	Director	February 19, 2007
Charles W. Daniel
/s/ W. Eugene Davenport	Director	February 19, 2007
W. Eugene Davenport
/s/ Tranum Fitzpatrick	Director	February 19, 2007
Tranum Fitzpatrick
/s/ Carl J. Gessler, Jr.	Director	February 19, 2007
Carl J. Gessler, Jr.
/s/ Charles E. McMahen	Director	February 19, 2007
Charles E. McMahen
/s/ John S. Stein	Director	February 19, 2007
John S. Stein
/s/ J. Terry Strange	Director	February 19, 2007
J. Terry Strange

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EX-10.(D)

Exhibit (10)(d)

COMPASS BANCSHARES, INC.
SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED AS OF JANUARY 1, 2005

ARTICLE I
Purpose and Adoption of Plan

     1.1 Adoption: Compass Bancshares, Inc. (the “Company”) adopted and established the Compass Bancshares, Inc. Supplemental Retirement Plan (the “Plan”) effective as of May 1, 1997. The Plan is an unfunded top hat deferred compensation arrangement with benefits payable solely from the general assets of the Company.

     1.2 Purpose: The general purposes of this Plan are to provide for a select group of management an amount equal to the benefit which would otherwise be paid under the Compass Bancshares, Inc. Retirement Plan (“Retirement Plan”) but for limitations imposed by the Internal Revenue Code of 1986, as amended. The Company intends to limit participation in the Plan to a select group of management or highly compensated employees so that the Plan is an unfunded top hat plan exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA.

     1.3 Purpose of 2005 Amendment and Restatement: The purpose of the amendment and restatement of the Plan is to fully comply with Section 409A of the Code and the Treasury regulations and other guidance issued with respect thereto.

ARTICLE II
Definitions

     For purposes of the Plan the following terms shall have the following meanings unless a different meaning is plainly required by the context:

     2.1 “Administrative Committee” shall mean the Compensation Committee of the Board of Directors.

     2.2 “Board of Directors” shall mean the Board of Directors of the Company or the Compensation Committee thereof.

     2.3 “Code” shall mean the Internal Revenue Code of 1986, as amended, including any successor statute.

     2.4 “Company” shall mean Compass Bancshares, Inc.

     2.5 “Employee” shall mean any person who is currently employed by an Employing Company.

     2.6 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     2.7 “Employing Company” shall mean the Company or any affiliate or subsidiary (direct or indirect) of the Company.

     2.8 “Key Employee” shall mean, for purposes of this Plan and in accordance with Section 409A of the Code, a key employee as defined in Section 416(i) of the Code without regard to paragraph (5) thereof.

     2.9 “Participant” shall mean an Employee or former Employee of the Company who is eligible to receive benefits under the Plan.

     2.10 “Plan” shall mean Compass Bancshares, Inc. Supplemental Retirement Plan as amended from time to time.

     2.11 “Plan Year” shall mean the twelve (12) month period commencing January 1st and ending on the last day of December next following, except the first Plan Year shall be May 1, 1997 through December 31, 1997.

     2.12 “Retirement Plan” shall mean the Compass Bancshares, Inc. Retirement Plan, as amended from time to time.

     2.13 “Separation from Service” shall mean a Participant’s separation from service as an employee with any Employing Company for purposes of Section 409A of the Code. A transfer of employment within or among the Employing Companies and any member of a controlled group, as provided in Section 409A(d)(6) of the Code, shall not be deemed a Separation from Service.

     The words in the masculine gender shall include the feminine and neuter genders and words in the singular shall include the plural and words in the plural shall include the singular. Other terms used in this Plan shall have the same meaning as they have in the Retirement Plan.

ARTICLE II.I
Administration of Plan

     3.1 The Administrative Committee shall be responsible for the general administration of the Plan. The Administrative Committee may select a chairman and may select a secretary (who may, but need not, be a member of the Administrative Committee) to keep its records or to assist it in the discharge of its duties. A majority of the members of the Administrative Committee shall constitute a quorum for the transaction of business at any meeting. Any determination or action of the Administrative Committee may be made or taken by a majority of the members present at any meeting thereof, or without a meeting by resolution or written memorandum concurred in by a majority of the members.

     3.2 No member of the Administrative Committee shall receive any compensation from the Plan for his service.

     3.3 The Administrative Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan more particularly set forth herein. It shall interpret the Plan and determine all questions arising in the administration, interpretation and application of the Plan. Any such determination by it shall be conclusive and binding on all persons. It may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists and other persons as it deems necessary or desirable in connection with the administration of this Plan, and shall be the agent for the service of process.

     3.4 The Administrative Committee shall be reimbursed by the Company for all reasonable expenses incurred by it in the fulfillment of its duties. Such expenses shall include any expenses incident

to its functioning, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.

     3.5 (a) The Administrative Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary and/or administrative functions. The Administrative Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including its fiduciary duties. The Administrative Committee shall have the right to review the work and performance of each such appointee as it deems necessary or appropriate, and shall have the right to remove any such appointee from his position. Any person, group of persons or entity may serve in more than one fiduciary capacity.

          (b) The Administrative Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers and other transactions concerning the Plan. Such accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by the Board of Directors and by persons designated thereby.

          (c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants’ records; withholding of applicable taxes and filing of all required tax forms and returns; recording and transmission of all notices required to be given to Participants and their Beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Employing Company; and doing such other acts necessary for the proper administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records and other data as may be necessary for proper administration of the Plan. The Administrative Committee shall notify the Company upon its request of any action taken by it, and when required, shall notify any other interested person or persons.

     3.6 The procedures for filing claims for payments under the Plan are described below:

          (a) It is the intent of the Company to make payments under the Plan without the Participant having to complete or submit any claim forms. However, any Participant who believes he or she is entitled to a payment under the Plan may submit a claim for payment to the Administrative Committee. Any claim for payments under the Plan must be made by the Participant or a duly authorized representative thereof (“claimant”) in writing and state the claimant’s name and nature of benefits payable under the Plan. The claimant’s claim shall be deemed to be filed when delivered to a member of the Administrative Committee which shall make all determinations as to the right of any person or persons to benefits hereunder.

          (b) If the claim is wholly or partially denied, the Administrative Committee shall provide written or electronic notice thereof to the claimant within a reasonable period of time, but not later than ninety (90) days after receipt of the claim. An extension of time for processing the claim for benefits is allowable if special circumstances require an extension, but such an extension shall not extend beyond one hundred eighty (180) days from the date the claim for benefits is received by the Administrative Committee. Written notice of any extension of time shall be delivered or mailed within ninety (90) days after receipt of the claim and shall include an explanation of the special circumstances requiring the extension and the date by which the Administrative Committee expects to render the final decision.

     The notice of adverse benefit determination shall (i) specify the reason for the denial; (ii) reference the provisions of this Plan on which the denial is based; (iii) describe the additional material or

information, if any, necessary for the claimant to receive benefits and explain why such information is necessary; (iv) indicate the steps to be taken by the claimant if a review of the denial is desired, including the time limits applicable thereto; and (v) contain a statement of the claimant’s right to bring a civil action under ERISA in the event of an adverse determination on review. If notice of the adverse benefit determination is not furnished in accordance with the preceding provisions of this Section, the claim shall be deemed denied and the claimant shall be permitted to exercise his right to review as set forth below.

          (c) If a claim is denied and a review is desired, the claimant shall notify the Administrative Committee in writing within sixty (60) days after receipt of written notice of a denial of a claim. In requesting a review, the claimant may submit any written comments, documents, records, and other information relating to the claim, the claimant feels are appropriate. The claimant shall, upon request and free of charge, be provided reasonable access to, and copies of, all documents, records and other information “relevant” to the claimant’s claim for benefits. The Administrative Committee shall review the claim taking into account all comments, documents, records and other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial benefit determination.

          (d) The Administrative Committee shall provide the claimant with written notice of its decision on review within a reasonable period of time, but not later than sixty (60) days after receipt of a request for a review. An extension of time for making the decision on the request for review is allowable if special circumstances shall occur, but such an extension shall not extend beyond one hundred twenty (120) days from the date the request for review is received by the Administrative Committee. Written notice of the extension of time shall be delivered or mailed within sixty (60) days after receipt of the request for review, indicating the special circumstances requiring an extension and the date by which the Administrative Committee expects to render a determination.

          In the event of an adverse benefit determination on review, the notice thereof shall (i) specify the reason or reasons for the adverse determination; (ii) reference the specific provisions of this Plan on which the benefit determination is based; (iii) contain a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all do records and other information “relevant” to the claimant’s claim for benefits; and (iv) inform the claimant of the right to bring a civil action under the provisions of ERISA.

          For purposes hereof, documents, records and information shall be considered “relevant” to the claimant’s claim if they (i) were relied upon in making the benefit determination, (ii) were submitted, considered, or generated in the course of making the benefit determination, whether or not actually relied upon in making the determination; or (iii) demonstrate compliance with the administrative processes and safeguards of this claims procedure.

          (e) After exhaustion of the claims procedure as provided herein, nothing shall prevent the claimant from pursuing any other legal or equitable remedy otherwise available, including the right to bring a civil action under Section 502(a) of ERISA, if applicable. Notwithstanding the foregoing, no legal action may be commenced or maintained against the Company, Employing Company, or the Administrative Committee more than ninety (90) days after the claimant has exhausted the administrative remedies set forth in this Section 3.6.

ARTICLE IV
Arbitration

     4.1 Any controversy relating to a claim arising out of or relating to this Plan, including, but not limited to claims for benefits due under this Plan, claims for the enforcement of ERISA, claims based

on the federal common law of ERISA, claims alleging discriminatory discharge under ERISA, claims based on state law, and assigned claims relating to this Plan shall be settled by arbitration in accordance with the then current Employee Benefit Claims Arbitration Rules of the American Arbitration Association (AAA) or any successor rules which are hereby incorporated into the Plan by this reference; provided, however, both the Company and the Participant shall have the right at any time to seek equitable relief in court without submitting the issue to arbitration.

     4.2 Neither the Participant (or his beneficiary) nor the Plan may be required to submit any such claim or controversy to arbitration until the Participant (or his beneficiary) has first exhausted the Plan’s internal appeals procedures set forth in Section 3.6. However, if the Participant (or his beneficiary) and the Company agree to do so, they may submit the claim or controversy to arbitration at any point during the processing of the dispute.

     4.3 The Company will bear all costs of an arbitration, except that the Participant will pay the filing fee set by the AAA and the arbitrator shall have the power to apportion among the parties expenses such as pre-hearing discovery, travel, experts’ fees, accountants’ fees, and attorney’s fees and except as otherwise provided herein. The decision of the arbitrator shall be final and binding on all parties, and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.

     4.4 If there is a dispute as to whether a claim is subject to arbitration, the arbitrator shall decide that issue. The claim must be filed with the AAA within the applicable statute of limitations period. The arbitrator shall issue a written determination sufficient to ensure consistent application of the Plan in the future.

     4.5 Any arbitration will be conducted in accordance with the following provisions, not withstanding the Rules of the AAA. The arbitration will take place in a neutral location within the metropolitan area in which the Participant was or is employed by an Employing Company. The arbitrator will be selected from the attorney members of the Commercial Panel of the AAA who reside in the metropolitan area where the arbitration wi11 take place and have at least 5 years of ERISA experience. If an arbitrator meeting such qualifications is unavailable, the arbitrator will be selected from the attorney members of the National Panel of Employee Benefit Claims Arbitrators established by the AAA.

     4.6 In any such arbitration, each party shall be entitled to discovery of any other party as provided by the Federal Rules of Civil Procedure then in effect; provided, however, that discovery shall be limited to a period of 60 days. The arbitrator may make orders and issue subpoenas as necessary. The arbitrator shall apply ERISA, as construed in the federal Circuit in which the arbitration takes place, to the interpretation of the Plan and the Federal Arbitration Act to the interpretation of this arbitration provision. To the extent that state law is not preempted by ERISA, then the law of Alabama applies.

     4.7 Any party has the right to arrange for a stenographic record to be made of the proceedings, which stenographic record shall be the official record. Either party may make an offer of judgment at any time in accordance with the procedures of Rule 68 (or its successor) of the Federal Rules of Civil Procedure. The existence of such an offer is not admissible in any proceeding. If the monetary award of the arbitrator to a party is less than any monetary offer to that party plus 20 percent of such offer, then that party receiving such award shall pay the other party his reasonable attorneys’ fees, experts’ fees, accountants’ fees and other costs incurred with respect to the arbitration following the date of the offer of judgment. Such amount is to be deducted from the award prior to payment. Arbitration is the exclusive remedy for any dispute between the parties other than equitable relief which either party may seek through the court system.

ARTICLE V
Eligibility

     5.1 Any Employee who is a member of a select group of management or highly compensated Employees, is eligible to participate in the Retirement Plan, and is selected for participation in the Plan by the Administrative Committee in its sole discretion, shall be eligible to participate in the Plan. An Employee who is selected to participate shall be designated on Exhibit A attached hereto. An Employee shall become a Participant by agreeing to be bound by the terms of the Plan, including the non-competition provisions of Article VII.

     5.2 Notwithstanding the above, the Administrative Committee shall be authorized to modify the eligibility requirements and rescind the eligibility of any Participant if necessary to insure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees under ERISA.

ARTICLE VI
Benefits

     6.1 Subject to compliance with the provisions of Article VII, the benefits (hereinafter referred to as “Supplemental Benefits”) payable to or on behalf of a Participant under this Plan shall be determined based on the formula (A) minus (B) where:

          (A) is the amount of such Participant’s benefits payable pursuant to the Retirement Plan calculated in accordance with the terms and conditions thereof, but prior to application of (i) the limitations imposed by the Retirement Plan to meet the requirements of Section 415 of the Code, (ii) any maximum dollar limitation imposed by Section 417 of the Code on the amount of such Participant’s compensation that may be taken into account in determining the amount of the Participant’s benefits under the Retirement Plan, and (iii) the exclusion from compensation recognized for computing benefits under the Retirement Plan for amounts deferred under the non-qualified deferred compensation plans of the Company.

          (B) is the amount of such Participant’s benefits actually payable under the Retirement Plan calculated after application of (i) the limitations imposed by the Retirement Plan to meet the requirements of Section 415 of the Code, (ii) any maximum dollar limitation imposed by the Code on the amount of such Participant’s compensation that may be taken into account in determining the amount of the Participant’s benefits under the Retirement Plan, and (iii) the exclusion from compensation recognized for computing benefits under the Retirement Plan for amounts deferred at the election of the Participant under the non-qualified deferred compensation plans of the Company.

     6.2 (a) A Participant may elect to have his Supplemental Benefits paid under any of the annuity options under the Retirement Plan; provided that such election is made before any payment to the Participant under this Plan has been made. In the absence of any election otherwise prior to retirement, the Participant’s Supplemental Benefits shall be paid at the same time, in the same manner, and to the same person to whom the retirement benefit is payable to or on behalf of the Participant under the Retirement Plan; provided that such election to receive the retirement benefit under the Retirement Plan is made before any payment to the Participant under this Plan has been made. Notwithstanding the foregoing provisions of this Section 6.2(a), if the present value of the Participant’s vested Supplemental Benefits is not greater than $10,000 at the time distribution is to commence, the Participant shall be paid his Supplemental Benefits in a lump sum, notwithstanding the Participant’s election to have his Supplemental Benefits distributed in the form of an annuity, provided that the payment accomplishes the termination of the Participant’s entire interest in the Plan and is made on or before the later of (i) December 31 of the calendar year of the Participant’s Separation from Service or (ii) the date that is two and one-half calendar months after the Participant’s Separation from Service. The payment of the lump sum shall be in full discharge of the Company’s obligations under the Plan to the Participant, his spouse, or beneficiaries.

          (b) In the event a Participant is a Key Employee, payment of the Supplemental Benefits described in Section 6.1 shall not commence until the first day of the month immediately following the six (6) month anniversary of the Participant’s Separation from Service (the “Payment Commencement Date”); provided however, that on the Payment Commencement Date, the Company shall pay to any such Participant an amount equal to the Supplemental Benefits that would have otherwise been paid to such Participant but for the application of this Section 6.2(b), plus interest at the prime rate as reported in the Wall Street Journal per annum calculated from the date such payments would have otherwise been made but for the application of this Section 6.2(b). If there is more than one prime rate reported in the Wall Street Journal, the interest rate shall be based upon the highest of such prime rates.

          (c) Subject to compliance with the provisions of Article VII and Section 409A of the Code, benefits payable under this Plan shall commence on or about the same date that benefits commence under the Retirement Plan.

          (d) Notwithstanding any provision of this Plan to the contrary, pursuant to Code Section 409A(a)(2), a Participant’s Supplemental Benefits may not be distributed earlier than the Participant’s Separation from Service.

     6.3 Subject to compliance with the provisions of Article VII, a Participant shall become vested in the benefit payable under Section 6.1 at the same time that he becomes vested under the Retirement Plan.

     6.4 Subject to compliance with the provisions of Article VII, a death benefit shall be payable to a surviving spouse or other designated beneficiary of the Participant if a death benefit is payable under the terms of the Retirement Plan. Such death benefit shall be computed using the same factors and assumptions used to compute the applicable death benefit under the Retirement Plan and shall be paid in the same form and to the same beneficiary as such death benefit, except that the amount of the death benefit shall be computed with respect to the amount of the benefit the Participant accrues under this Plan.

ARTICLE VII
Covenant Not to Compete, Non-Solicitation,
Non-Disclosure and Forfeiture

     7.1 As a condition of participation in the Plan, Employee agrees with the Company and his Employing Company as follows:

          (a) While Employee is employed by any Employing Company, Employee will devote his or her entire time, energy and skills to the service of the Employing Company. Such employment shall be at the will and pleasure of the board of directors of each Employing Company.

          (b} Employee will not, during the term of his or her employment with an Employing Company, or for a period of two years after termination for any reason of his or her employment with an Employing Company, directly or indirectly, either individually or as a stockholder, director, officer, consultant, independent contractor, employee, agent, member or otherwise of or through any corporation, partnership, association, joint venture, firm, individual or otherwise (hereinafter “Firm”), or in any other capacity:

               (i) Carry on or engage in a business like or similar to any business engaged in by the Employing Company in any territory in which the Employing Company has been or is conducting business;

               (ii) Solicit or do business with any customer of the Employing Company; or

               (iii) Solicit, directly or indirectly, any employee of any Employing Company to leave their employment with the Employing Company for any reason. For purposes of this Agreement, the Employing Company and Employee agree that Employee shall be deemed to have solicited an employee in violation of this Agreement if such employee is hired by Employee or his or her Firm within six (6) months of Employee’s last employment date with any Employing Company.

          (c) During the term of his or her employment with an Employing Company and thereafter, Employee shall not divulge, or furnish or make accessible to any third party, company, corporation or other organization (including, but not limited to, customers, competitors or governmental agencies), without the Company’s prior written consent, any trade secrets, customer lists, information regarding customers, or other confidential information concerning any Employing Company or its business, including without limitation confidential methods of operation and organization, trade secrets, confidential matters related to pricing, markups, commissions and customer lists.

     7.2 In the event of a breach by Employee of all or any part of the provisions of subdivisions (b} or (c) of Section 7.1, the Employee shall immediately forfeit all rights to all benefits under this Plan and the Company shall be entitled to receive from the Employee an amount equal to all benefits previously paid to Employee.

     7.3 In the event of a breach or threatened breach by Employee of all or any part of the provisions of subdivisions (b) of Section 7.1 within the two-year period following his termination of employment or (c) of this Section 7.1 at any time, the Company shall in addition to any remedies that may be applicable under Section 7.2, be entitled to a preliminary and permanent injunction restraining Employee from such breach without limiting any other rights or remedies available to the Company for such breach or threatened breach. The two-year period during which the Company shall’ be entitled to an injunction for breach or threatened breach of subdivisions (b) of Section 7.1 shall be extended by any period of time during which Employee is in default of the covenants contained in this Article VII.

     7.4 Employee specifically recognizes and affirms that each of the covenants contained in subdivisions (b) and (c) of this Section 7.1 is a material and important term of this Plan which has induced the Company to permit Employee to participate in this Plan, and Employee further agrees that should all or any part or application of subdivisions (b) or (c) of Section 7.1 of this Plan be held or found invalid or unenforceable for any reasons whatsoever by a court of competent jurisdiction in an action between Employee and the Company, such invalidity or enforceability shall not affect any other provisions of the Plan, and the Company shall be entitled to rescind (but not obligated to do so) all benefits under Article VI granted to Employee under this Plan. If Employee has been paid benefits under this Plan, the Company shall be entitled to receive from Employee an amount equal to all benefits paid to Employee.

     7.5 Notwithstanding any provision to the contrary herein contained, Section 7.1(b) shall not apply:

          (a) Upon the involuntary termination of the Employee’s employment by an Employing Company other than for Cause within one (1) year following a Sale of the Company; or

          (b) Upon the voluntary termination of employment by the Employee for any reason within the thirty (30) day period immediately after the one (1) year period following a Sale of the Company.

For purposes of this Agreement, “Cause” shall mean (i) a willful and material violation of applicable banking laws and regulations, (ii) dishonesty, (iii) theft, (iv) fraud, (v) embezzlement, (vi) commission of a felony or a crime involving moral turpitude, (vii) substantial dependence or addiction to alcohol or any drug, (viii) conduct disloyal to an Employing Company or its affiliates, or (ix) willful dereliction of duties or disregard of lawful instructions or directions of the officers of directors of an Employing Company or its affiliates relating to a material matter.

For purposes of this Article, “Sale of the Company” shall mean, for this purpose, (i) the acquisition by any individual, entity or group (within the meaning of Section I3(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”), or (ii) consummation by the Company of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company, unless, following such acquisition of beneficial ownership or transaction, (a) more than 60% of the then outstanding shares of common stock of the Person resulting from such reorganization, merger or consolidation, or (b) more than 60% of the then outstanding shares of common stock of the Person acquiring such beneficial ownership or assets, and the combined voting power of the then Outstanding Voting Securities of such Person entitled to vote generally in the election of directors of such Person, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of Outstanding Common Stock and Outstanding Voting Securities immediately prior to such acquisition or transaction, in substantially the same proportions as their ownership of Outstanding Common Stock and Outstanding Voting Securities prior to such event.

ARTICLE VIII
Nature of Employer Obligation and Participant Interest

     8.1 A Participant, his beneficiary, and any other person or persons having or claiming a right to payments under this Plan shall rely solely on the unsecured promise of the Company set forth herein, and nothing in this Plan shall be construed to give a Participant, beneficiary, or any other person or persons any right, title, interest, or claim in or to any specific assets, fund, reserve, account, or property of any kind whatsoever owned by the Company or in which it may have any right, title, or interest now or in the future; but a Participant shall have the right to enforce his or her claim against the Company in the same manner as any unsecured creditor.

     8.2 All amounts paid under this Plan shall be paid in cash from the general assets of the Company. Benefits shall be reflected on the accounting records of the Company but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust or a fiduciary relationship of any kind between the Company and an employee or any other person. Neither the employee or a beneficiary of an employee shall acquire any interest greater than that of an unsecured creditor.

     8.3 Any Supplemental Benefits payable under this Plan shall be independent of, and in addition to, any other benefits or compensation of any sort, payable to or on behalf of the Participant under or pursuant to any other arrangement sponsored by the Company or any other agreement between the Company and the Participant.

ARTICLE IX
Miscellaneous Provisions

     9.1 Neither the Participant, his beneficiary, nor his legal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.

     9.2 This Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to benefits under the Plan prior to such amendment, modification, or termination. The Plan may also be amended or modified by the Administrative Committee if such amendment or modification does not involve a substantial increase in cost to the Company.

     9.3 It is expressly understood and agreed that the payments made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment by an Employing Company.

     9.4 The Company shall deduct from each payment under the Plan the amount of any tax (whether federal, state or local income taxes, Social Security taxes or Medicare taxes) required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of the person entitled to such distribution.

     9.5 No provision of this Plan shall be construed to affect in any manner the existing rights of an Employing Company to suspend, terminate, alter, or modify, whether or not for cause, the employment relationship of the Participant and an Employing Company.

     9.6 In making any distribution to or for the benefit of any minor or incompetent person, the Administrative Committee in its sole discretion, may, but need not, direct such distribution to be made to a legal or natural guardian or other relative of such minor or court appointed committee of such incompetent, or to any adult with whom such minor or incompetent temporarily or permanently resides, and any such guardian, committee, relative or other person shall have full authority and discretion to expend such distribution for the use and benefit of such minor or incompetent. The receipt of such guardian, committee, relative or other person shall be a complete discharge of the Company without any responsibility on its part or on the part of the Administrative Committee to see to the application thereof.

     9.7 In the event that any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions hereof, and this Plan shall be construed and enforced as if such illegal and invalid provisions had never been set forth herein.

     9.8 This Plan, and all its rights under it, shall be governed by and construed in accordance with the laws of the State of Alabama except to the extent preempted by federal law pursuant to ERISA.

     9.9 This Plan shall be binding upon the Company, its assigns, and any successor which shall succeed to substantially all of its assets and business through merger, consolidation or acquisition.

     9.10 (a) Section 409A of the Code, as added by the American Jobs Creation Act of 2004 (AJCA), substantially revised the requirements applicable to certain deferred compensation arrangements. This Plan is intended to comply, and to be operated in all respects in compliance, with the requirements of Section 409A of the Code and all Internal Revenue Service rulings, Treasury regulations or other pronouncements or guidance implementing or interpreting its provisions. All provisions of this Plan shall be interpreted or construed so as to meet the requirements of Section 409A of the Code and all Treasury regulations, rulings and other pronouncements or guidance thereunder and no action, amendment or termination of the Plan shall be effective to the extent it would cause the Plan to violate the requirements of Section 409A of the Code. In the event subsequent Treasury regulations, .Internal Revenue Service rulings or other pronouncements or guidance interpreting or implementing the provisions of Section 409A of the Code affect any provisions of this Plan, this Plan shall be amended, as necessary, to comply with such regulation, ruling or other pronouncement or guidance; and, until adoption of any such amendment, the provisions hereof shall be construed and interpreted to comply with the applicable provisions of such regulation, ruling or other pronouncement or guidance. No such amendment to the Plan shall be considered prejudicial to any interest of a Participant or beneficiary hereunder.

          (b) It is intended that all of the annuity options available under the Retirement Plan will be considered a “life annuity” within the meaning of Proposed Treasury regulation Section 1.409A-2(b)(2)(ii). Accordingly, any payment election relating to the form of payment and/or time of payment (including changes in such elections) made by a Participant pursuant to Section 6.2(a), including the default provision thereof, will be exempt from the requirements set forth in Code Section 409A(a)(4)(C) which restricts changes in the form of and time of payment. In the event it is determined that an annuity option available under the Retirement Plan does not satisfy the definition of a “life annuity” within the meaning of Proposed Treasury regulation Section 1.409A-2(b)(2)(ii) (“non-qualifying annuity option”), then the Administrative Committee is hereby authorized to amend the Plan such that any payment election made with respect to such non-qualifying annuity option (including changes to and from such non-qualifying annuity option) made by a Participant pursuant to Section 6.2(a), including the default provision thereof, wi11 be required to satisfy the requirements set forth in Code Section 409A(a)(4)(C). If it is determined that a Participant’s payment election relating to the time of payment (including changes in such elections) is not exempt from the requirements set forth in Code Section 409A(a)(4)(C), then the Administrative Committee is hereby authorized to amend the Plan such that any payment elections which relate to the time of payment (including changes in such elections) be required to satisfy the requirements set forth in Code Section 409A(a)(4)(C).

     IN WITNESS WHEREOF, the Plan, as amended and restated, has been executed as of this 18^th day of December, 2006.

ATTEST:		COMPASS BANCSHARES, INC.
By:	/s/ Joseph B. Cartee	By:	/s/ Garrett R. Hegel
	Its: Associate General Counsel		Its: Chief Financial Officer

EX-10.(E)

Exhibit (10(e)

COMPASS BANCSHARES, INC.
SPECIAL SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED AS OF JANUARY 1, 2005

ARTICLE I
Purpose and Adoption of Plan

     1.1 Adoption: Compass Bancshares, Inc. (the “Company”) adopted and established the Compass Bancshares, Inc. Special Supplemental Retirement Plan (the “Plan”) effective as of May 1, 1997. The Plan is an unfunded top hat deferred compensation arrangement with benefits payable solely from the general assets of the Company.

     1.2 Purpose: The general purpose of this Plan is to provide a supplemental retirement benefit in excess of the retirement benefit payable under the Compass Bancshares, Inc. Retirement Plan (“Retirement Plan”) to be calculated (a) without regard to the limitations imposed by the Code that are applicable to the Retirement Plan and (b) by including bonuses and other incentive compensation that would otherwise be excluded from the definition of “Compensation” used to determine such retirement benefits under the Retirement Plan. The Company intends to limit participation in the Plan to a select group of management or highly compensated employees so that the Plan is an unfunded top hat plan exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA.

     1.3 Purpose and Effect of 2005 Amendment and Restatement. The purpose of this amendment and restatement is to (a) incorporate changes made to the Plan by Amendments Number One and Two adopted effective as of February 27, 2000, and February 9, 2001, respectively, (b) comply fully with Section 409A of the Code and the Treasury regulations and other guidance issued pursuant thereto and (c) increase the Supplemental Benefits due D. Paul Jones, Jr. This amendment and restatement shall be effective as of January 1, 2005, except in the case of the increase in the Supplemental Benefit due D. Paul Jones, Jr., which provision is effective as of June 19, 2006. With respect to any former employee of the Company or any Employing Company who commenced the receipt of Supplement Benefits provided under this Plan on or before December 31, 2004, the provisions of this Plan prior to this amendment and restatement shall continue to govern such benefits.

ARTICLE II
Definitions

     For purposes of the Plan the following terms shall have the following meanings unless a different meaning is plainly required by the context:

     2.1 “Administrative Committee” shall mean the Compensation Committee of the Board of Directors

     2.2 “Board of Directors” shall mean the Board of Directors of the Company

     2.3 “Code” shall mean the Internal Revenue Code of 1986, as amended.

     2.4 “Company” shall mean Compass Bancshares, Inc.

     2.5 “Employee” shall mean any person who is currently employed by an Employing Company.

     2.6 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     2.7 “Employing Company” shall mean the Company or any affiliate or subsidiary (direct or indirect) of the Company.

     2.8 “Key Employee” shall mean, for purposes of this Plan and in accordance with Section 409A of the Code, a key employee as defined in Section 416(i) of the Code without regard to paragraph (5) thereof.

     2.9 “Participant” shall mean an Employee or former Employee of the Company who is eligible to receive benefits under the Plan.

     2.10 “Plan” shall mean Compass Bancshares, Inc. Special Supplemental Retirement Plan as amended from time to time.

     2.11 “Plan Year” shall mean the twelve (12) month period commencing January 1st and ending on the last day of December next following, except the first Plan Year shall be May 1, 1997 through December 31, 1997.

     2.12 “Retirement Plan” shall mean the Compass Bancshares, Inc. Retirement Plan, as amended from time to time.

     2.13 “Separation from Service” and “Separate from Service” shall mean a Participant’s separation from service as an employee with any Employing Company for purposes of Section 409A of the Code. A transfer of employment within or among the Employing Companies and any member of a controlled group, as provided in Section 409A(d)(6) of the Code, shall not be deemed a Separation from Service.

     The words in the masculine gender shall include the feminine and neuter genders and words in the singular shall include the plural and words in the plural shall include the singular. her terms used in this Plan shall have the same meaning as they have in the Retirement Plan.

ARTICLE III
Administration of Plan

     3.1 The Administrative Committee shall be responsible for the general administration of the Plan. The Administrative Committee may select a chairman and may select a secretary (who may, but need not, be a member of the Administrative Committee) to keep its records or to assist it in the discharge of its duties. A majority of the members of the Administrative Committee shall constitute a quorum for the transaction of business at any meeting. Any determination or action of the Administrative Committee may be made or taken by a majority of the members present at any meeting thereof, or without a meeting by resolution or written memorandum concurred in by a majority of the members.

     3.2 No member of the Administrative Committee shall receive any compensation from the Plan for his service.

     3.3 The Administrative Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan as more particularly set forth herein. It shall interpret the Plan and shall determine all questions arising in the administration, interpretation and application of the Plan. Any such determination by it shall be conclusive and binding on all persons. It may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists and other persons as it deems necessary or desirable in connection with the administration of this Plan, and shall be the agent for the service of process.

     3.4 The Administrative Committee shall be reimbursed by the Company for all reasonable expenses incurred by it in the fulfillment of its duties. Such expenses shall include any expenses incident to its functioning, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.

     3.5 (a) The Administrative Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary functions. The Administrative Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including its fiduciary duties. The Administrative Committee shall review the work and performance of each such appointee, and shall have the right to remove any such appointee from his position. Any person, group of persons or entity may serve in more than one fiduciary capacity.

          (b) The Administrative Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers and other transactions concerning the Plan. Such accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by the Board of Directors and by persons designated thereby.

          (c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants’ records; withholding of applicable taxes and filing of all required tax forms and returns; recording and transmission of all notices required to be given to Participants and their Beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Employing Company; and doing such other acts necessary for the proper administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records and other data as may be necessary for proper administration of the Plan. The Administrative Committee shall notify the Company upon its request of any action taken by it, and when required, shall notify any other interested person or persons.

     3.6 The procedures for filing claims for payments under the Plan are described below:

          (a) Submission of Claim. It is the intent of the Company to make payments under the Plan without the Participant or beneficiary thereof (“claimant”) having to complete or submit any claim forms. However, any claimant who believes he or she is entitled to a payment under the Plan may submit a claim for payment to the Administrative Committee. Any claim for

payments under the Plan must be made by the claimant in writing and state the claimant’s name and nature of benefits payable under the Plan. The claimant’s claim shall be deemed to be filed when delivered to a member of the Administrative Committee which shall make all determinations as to the right of any person persons to benefits hereunder.

          (b) Notice of Denial of Claim. If the claim is wholly or partially denied, the Administrative Committee shall provide written or electronic notice thereof to the claimant within a reasonable period of time, but not later than ninety (90) days after receipt of the claim. An extension of time for processing the claim for benefits is allowable if special circumstances require an extension, but such an extension shall not extend beyond one hundred eighty (180) days from the date the claim for benefits is received by the Administrative Committee. Written notice of any extension of time shall be delivered or mailed within ninety (90) days after receipt of the claim and shall include an explanation of the special circumstances requiring the extension and the date by which the Administrative Committee expects to render the final decision.

          The notice of adverse benefit determination shall (i) specify the reason for the denial; (ii) reference the provisions of this Plan on which the denial is based; (iii) describe the additional material or information, if any, necessary for the claimant to receive benefits and explain why such information ‘s necessary; (iv) indicate the steps to be taken by the claimant if a review of the denial is desired, including the time limits applicable thereto; and (v) contain a statement of the claimant’s right to bring a civil action under ERISA in the event of an adverse determination on review. If notice of the adverse benefit determination is not furnished in accordance with the preceding provisions of this Section, the claim shall be deemed denied and the claimant shall be permitted to exercise his right to review as set forth below.

          (c) Review of Denied Claim. If a claim is denied and a review is desired, the claimant shall notify the Administrative Committee in writing within sixty (60) days after receipt of written notice of a denial of a claim. In requesting a review, the claimant may submit any written comments, documents, records, and other information relating to the claim, the claimant feels are appropriate. The claimant shall, upon request and free of charge, be provided reasonable access to, and copies of, all documents, records and other information “relevant” to the claimant’s claim for benefits. The Administrative Committee shall review the claim taking into account all comments, documents, records and other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial benefit determination.

          (d) Decision on Review. The Administrative Committee shall provide the claimant with written notice of its decision on review within a reasonable period of time, but not later than sixty (60) days after receipt of a request for a review. An extension of time for making the decision on the request for review is allowable if special circumstances shall occur, but such an extension shall not extend beyond one hundred twenty (120) days from the date the request for review is received by the Administrative Committee. Written notice of the extension of time shall be delivered or mailed within sixty (60) days after receipt of the request for review, indicating the special circumstances requiring an extension and the date by which the Administrative Committee expects to render a determination.

          In the event of an adverse benefit determination on review, the notice thereof shall (i) specify the reason or reasons for the adverse determination; (ii) reference the specific provisions of this Plan on which the benefit determination is based; (iii) contain a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all

documents, records and other information “relevant” to the claimant’s claim for benefits; and (iv) inform the claimant of the right to bring a civil action under the provisions of ERISA.

          For purposes hereof, documents, records and information shall be considered “relevant” to the claimant’s claim if it (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, whether or not actually relied upon in making the determination; or (iii) demonstrates compliance with the administrative processes and safeguards of this claims procedure.

          (e) Preservation of Remedies. After exhaustion of the claims procedure as provided herein, nothing shall prevent the claimant from pursuing any other legal or equitable remedy otherwise available, including the right to bring a civil action under Section 502(a) of ERISA, if applicable.

ARTICLE IV
Arbitration

     4.1 Any controversy relating to a claim arising out of or relating to this Plan, including, but not limited to claims for benefits due under this Plan, claims for the enforcement of ERISA, claims based on the federal common law of ERISA, claims alleging discriminatory discharge under ERISA, claims based on state law, and assigned claims relating to this Plan shall be settled by arbitration in accordance with the then current Employee Benefit Claims Arbitration Rules of the American Arbitration Association (AAA) or any successor rules which are hereby incorporated into the Plan by this reference; provided, however, both the Company and the Participant shall have the right at any time to seek equitable relief in court without submitting the issue to arbitration.

     4.2 Neither the Participant (or his beneficiary) nor the Plan may be required to submit any such claim or controversy to arbitration until the Participant (or his beneficiary) has first exhausted the Plan’s internal appeals procedures set forth in Section 3.6. However, if the Participant (or his beneficiary) and the Company agree to do so, they may submit the claim or controversy to arbitration at any point during the processing of the dispute.

     4.3 The Company will bear all costs of an arbitration, except that the Participant will pay the filing fee set by the AAA and the arbitrator shall have the power to apportion among the parties expenses such as pre-hearing discovery, travel, experts’ fees, accountants’ fees, and attorney’s fees and except as otherwise provided herein. The decision of the arbitrator shall be final and binding on all parties, and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.

     4.4 If there is a dispute as to whether a claim is subject to arbitration, the arbitrator shall decide that issue. The claim must be filed with the AAA within the applicable statute of limitations period. The arbitrator shall issue a written determination sufficient to ensure consistent application of the Plan in the future.

     4.5 Any arbitration will be conducted in accordance with the following. provisions, not withstanding the Rules of the AAA. The arbitration will take place in a neutral location within the metropolitan area in which the Participant was or is employed by an Employing Company. The arbitrator will be selected from the attorney members of the Commercial Panel of the AAA who reside in the metropolitan area where the arbitration will take place and have at least 5 years of

ERISA experience. If an arbitrator meeting such qualifications is unavailable, the arbitrator will be selected from the attorney members of the National Panel of Employee Benefit Claims Arbitrators established by the AAA.

     4.6 In any such arbitration, each party shall be entitled to discovery of any other party as provided by the Federal Rules of Civil Procedure then in effect; provided, however, that discovery shall be limited to a period of 60 days. The arbitrator may make orders and issue subpoenas as necessary. The arbitrator shall apply ERISA, as construed in the federal Circuit in which the arbitration takes place, to the interpretation of the Plan and the Federal Arbitration Act to the interpretation of this arbitration provision. To the extent that state law is not preempted by ERISA, then the law of Alabama applies.

     4.7 Any party has the right to arrange for a stenographic record to be made of the proceedings, which stenographic record shall be the official record. Either party may make an offer of judgment at any time in accordance with the procedures of Rule 68 (or its successor) of the Federal Rules of Civil Procedure. The existence of such an offer is not admissible in any proceeding. If the monetary award of the arbitrator to a party is less than any monetary offer to that party plus 20 percent of such offer, then that party receiving such award shall pay the other party his reasonable attorneys’ fees, experts’ fees, accountants’ fees and other costs incurred with respect to the arbitration following the date of the offer of judgment. Such amount is to be deducted from the award prior to payment. Arbitration is the exclusive remedy for any dispute between the parties other than equitable relief which either party may seek through the court system.

ARTICLE V
Eligibility

     5.1 Any Employee who is a member of a select group of management or highly compensated Employees, who is eligible to participate in the Retirement Plan, and who is selected for participation in the Plan by the Administrative Committee in its sole discretion, shall be eligible to participate in the Plan. An Employee who is selected to participate shall be designated on Exhibit A attached hereto. An Employee shall become a Participant by agreeing to be bound by the terms of the Plan, including the non-competition provisions of Article VII.

     5.2 Notwithstanding the above, the Administrative Committee shall be authorized to modify the eligibility requirements and rescind the eligibility of any Participant if necessary to insure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees under ERISA.

ARTICLE VI
Benefits

     6.1 Subject to compliance with the provisions of Article VII, the benefits (hereinafter referred to as “Supplemental Benefits”) payable to or on behalf of a Participant under this Plan shall be determined based on the formula (A) minus (B) where:

          “(A)” is the amount of such Participant’s benefits payable pursuant to the Retirement Plan calculated in accordance with the terms and conditions thereof, but without the application of (i) the limitations imposed by the Retirement Plan to meet the requirements of Section 415 of the Code, (ii) any maximum dollar limitation imposed by Section 40l(a)(l7) of the Code on the amount of such

Participant’s compensation that may be taken into account in determining the amount of the Participant’s benefits under the Retirement Plan, (iii) the exclusion from compensation recognized for computing benefits under the Retirement Plan for amounts deferred under the non-qualified deferred compensation plans of the Company, and after including (iv) the amount of the average annual bonuses paid to the Participant for those five years (which need not be consecutive) prior to the Participant’s Separation from Service during which the Participant’s compensation that would be recognized under the Retirement Plan if there were no tax law limitations and no exclusion for deferred compensation amounts, plus his bonuses, produce the five highest years of compensation plus bonuses.

          “(B)” is the amount of such Participant’s benefits actually payable under the Retirement Plan calculated after application of (i) the limitations imposed by the Retirement Plan to meet the requirements of Section 415 of the Code, (ii) any maximum dollar limitation imposed by the Code on the amount of such Participant’s compensation that may be taken into account in determining the amount of the Participant’s benefits under the Retirement Plan, and (iii) the exclusion from compensation recognized for computing benefits under the Retirement Plan for amounts deferred under the non-qualified deferred compensation plans of the Company and for amounts received as bonuses and other incentive pay.

Notwithstanding the preceding provisions of this Section 6.1, in the event that D. Paul Jones, Jr. shall Separate from Service on or after the date on which he attains sixty (60) years of age, then in lieu of the amount of benefit determined using “(A)” above, he shall receive a monthly retirement benefit for the remainder of his life, beginning upon the first day of the month following his Separation from Service (whether before or after his Normal Retirement Age), calculated using the above formula but substituting for “(A)” thereof an amount equal to: sixty-five percent (65%) of his Average Monthly Compensation calculated without the application of the limitations and exclusions described in (i)-(iii) of “(A)” above, by including in such compensation his annual bonuses and based upon his monthly compensation averaged over the three (3) Plan Years that produce the highest Average Monthly Compensation. If D. Paul Jones, Jr. shall die after the commencement of retirement benefits calculated under this paragraph and is survived by a spouse, his spouse shall be entitled to a monthly survivor benefit for the remainder of her life calculated using the above formula but substituting for purposes of calculating the benefit fifty percent (50%) of D. Paul Jones, Jr.’s Average Monthly Compensation for sixty-five percent (65%).

     6.2 In the event a Participant is a Key Employee, payment of the Supplemental Benefits described in Section 6.1 shall not commence until the first day of the month immediately following the six (6) month anniversary of the Participant’s Separation from Service (the ^“Payment Commencement Date”); provided however, that on the Payment Commencement Date, the Company shall pay to any such Participant an amount equal to the Supplemental Benefits that would have otherwise been paid to such Participant but for the application of this Section 6.2, plus interest at the prime rate as reported in the Wall Street Journal per annum calculated from the date such payments would have otherwise been made but for the application of this Section 6.2. If there is more than one prime rate reported in the Wall & vet Journal, the interest rate shall be based upon the highest of such prime rates.

     6.3 Subject to compliance with the provisions of Article VII, a Participant shall become vested in the benefit payable under Section 6.1 at the same time that he becomes vested under the Retirement Plan.

     6.4 Subject to compliance with the provisions of Article VII, a death benefit shall be payable to a surviving spouse or other designated beneficiary of the Participant if a death benefit is payable under the terms of the Retirement Plan. Such death benefit shall be computed using the same factors and assumptions used to compute the applicable death benefit under the Retirement Plan and shall be paid in the same form as such death benefit, except that the amount of the death benefit shall be computed with respect to the amount of the benefit the Participant accrues under this Plan. Notwithstanding the preceding provisions of this Section 6.4, in the event that, regardless of his age, D. Paul Jones, Jr. shall die after February 1, 2001, but before he shall have commenced receiving retirement benefits under Section 6.1 hereof, and is survived by a spouse, his spouse shall be entitled to a death benefit payable monthly for the remainder of her life calculated as set forth in the last sentence of Section 6.1.

ARTICLE VII
Covenant Not to Compete. Non-Solicitation,
Non-Disclosure and Forfeiture

     7.1 As a condition of participation in the Plan, Employee agrees with the Company and his Employing Company as follows:

          (a) While Employee is employed by any Employing Company, Employee will devote his or her entire time, energy and skills to the service of the Employing Company. Such employment shall be at the will and the pleasure of the board of directors of each Employing Company.

          (b) Employee will not, during the term of his or her employment with an Employing Company, and after termination for any reason of his or her employment with an Employing Company, directly or indirectly, either individually or as a stockholder, director, officer, consultant, independent contractor, employee, agent, member or otherwise of or through any corporation, partnership, association, joint venture, firm, individual or otherwise (hereinafter “Firm”), or in any other capacity:

               (i) Carry on or engage in a business like or similar to any business engaged in by the Employing Company in any territory in which the Employing Company has been or is conducting business;

               (ii) Solicit or do business with any customer of the Employing Company; or

               (iii) Solicit, directly or indirectly, any employee of any Employing Company to leave their employment with the Employing Company for any reason. For purposes of this Agreement, the Employing Company and Employee agree that Employee shall be deemed to have solicited an employee in violation of this Agreement if such employee is hired by Employee or his or her Firm within six (6) months of Employee’s last employment date with any Employing Company.

          (c) During the term of his or her employment with an Employing Company and thereafter, Employee shall not divulge, or furnish or make accessible to any third party, company, corporation or other organization (including, but not limited to, customers, competitors or governmental agencies), without the Company’s prior written consent, any trade secrets, customer

lists, information regarding customers, or other confidential information concerning any Employing Company or its business, including without limitation confidential methods of operation and organization, trade secrets, confidential matters related to pricing, markups, commissions and customer lists.

     7.2 In the event of a breach by Employee of all or any part of the provisions of subdivisions (b) or (c) of Section 7.1, the Employee shall immediately forfeit all rights to all benefits under this Plan and the Company shall be entitled to receive from the Employee an amount equal to all benefits previously paid to Employee.

     7.3 In the event of a breach or threatened breach by Employee of all or any part of the provisions of subdivisions (b) of Section 7.1 within the two-year period following his termination of employment or (c) of this Section 7.1 at any time, the Company shall in addition to any remedies that may be applicable under Section 7.2, be entitled to a preliminary and permanent injunction restraining Employee from such breach without limiting any other rights or remedies available to the Company for such breach or threatened breach. The two-year period during which the Company shall be entitled to an injunction for breach or threatened breach of subdivisions (b) of Section 7.1 shall be extended by any period of time during which Employee is in default of the covenants contained in this Article VII.

     7.4 Employee specifically recognizes and affirms that each of the covenants contained in subdivisions (b) and (c) of this Section 7.1 is a material and important term of this Plan which has induced the Company to permit Employee to participate in this Plan, and Employee further agrees that should all or any part or application of subdivisions (b) or (c) of Section 7.1 of this Plan be held or found invalid or unenforceable for any reasons whatsoever by a court of competent jurisdiction in an action between Employee and the Company, such invalidity or unenforceability shall not affect any other provisions of the Plan, and the Company shall be entitled to rescind (but not obligated to do so) all benefits under Article VI granted to Employee under this Plan. If Employee has been paid benefits under this Plan, the Company shall be entitled to receive from Employee an amount equal to all benefits paid to Employee.

     7.5 Notwithstanding any provision to the contrary herein contained, Section 7.1(b) shall not apply:

          (a) Upon the involuntary termination of the Employee’s employment by an Employing Company other than for Cause within one (I) year following a Sale of the Company; or

          (b) Upon the voluntary termination of employment by the Employee for any reason within the thirty (30) day period immediately after the one (1) year period following a Sale of the Company.

For purposes of this Agreement, “Cause” shall mean (i) a willful and material violation of applicable banking laws and regulations, (ii) dishonesty, (iii) theft, (iv) fraud, (v) embezzlement, (vi) commission of a felony or a crime involving moral turpitude, (vii) substantial dependence or addiction to alcohol or any drug, (viii) conduct disloyal to an Employing Company or its affiliates, or (ix) willful dereliction of duties or disregard of lawful instructions or directions of the officers of directors of an Employing Company or its affiliates relating to a material matter.

For purposes of this Article, “Sale of the Company” shall mean, for this purpose, (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”), or (ii) consummation by the Company of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company, unless, following such acquisition of beneficial ownership or transaction, (a) more than 60% of the then outstanding shares of common stock of the Person resulting from such reorganization, merger or consolidation, or (b) more than 60% of the then outstanding shares of common stock of the Person acquiring such beneficial ownership or assets, and the combined voting power of the then Outstanding Voting Securities of such Person entitled to vote generally in the election of directors of such Person, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of Outstanding Common Stock and Outstanding Voting Securities immediately prior to such acquisition or transaction, in substantially the same proportions as their ownership of Outstanding Common Stock and Outstanding Voting Securities prior to such event.

ARTICLE VIII
Nature of Employer Obligation and Participant Interest

     8.1 A Participant, his beneficiary, and any other person or persons having or claiming a right to payments under this Plan shall rely solely on the unsecured promise of the Company set forth herein, and nothing in this Plan shall be construed to give a Participant, beneficiary, or any other person or persons any right, title, interest, or claim in or to any specific assets, fund, reserve, account, or property of any kind whatsoever owned by the Company or in which it may have any right, title, or interest now or in the future; but a Participant shall have the right to enforce his or her claim against the Company in the same manner as any unsecured creditor.

     8.2 All amounts paid under this Plan shall be paid in cash from the general assets of the Company. Benefits shall be reflected on. the accounting records of the Company but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust or a fiduciary relationship of any kind between the Company and an employee or any other person. Neither the employee or a beneficiary of an employee shall acquire any interest greater than that of an unsecured creditor.

     8.3 Any Supplemental Benefits payable under this Plan shall be independent of, and in addition to, any other benefits or compensation of any sort, payable to or on behalf of the Participant under or pursuant to any other arrangement sponsored by the Company or any other agreement between the Company and the Participant.

ARTICLE IX
Miscellaneous Provisions

     9.1 Neither the Participant, his beneficiary, nor his legal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and

nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.

     9.2 This Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to benefits under the Plan prior to such amendment, modification, or termination. The Plan may also be amended or modified by the Administrative Committee if such amendment or modification does not involve a substantial increase in cost to the Company.

     9.3 It is expressly understood and agreed that the payments made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment by an Employing Company.

     9.4 The Company shall deduct from each payment under the Plan the amount of any tax (whether federal, state or local income taxes, Social Security taxes or Medicare taxes) required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of the person entitled to such distribution.

     9.5 No provision of this Plan shall be construed to affect in any manner the existing rights of an Employing Company to suspend, terminate, alter, or modify, whether or not for cause, the employment relationship of the Participant and an Employing Company.

     9.6 In making any distribution to or for the benefit of any minor or incompetent person, the Administrative Committee in its sole discretion, may, but need not, direct such distribution to be made to a legal or natural guardian or other relative of such minor or court appointed committee of such incompetent, or to any adult with whom such minor or incompetent temporarily or permanently resides, and any such guardian, committee, relative or other person shall have full authority and discretion to expend such distribution for the use and benefit of such minor or incompetent. The receipt of such guardian, committee, relative or other person shall be a complete discharge of the Company without any responsibility on its part or on the part of the Administrative Committee to see to the application thereof.

     9.7 In the event that any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions hereof, and this Plan shall be construed and enforced as if such illegal and invalid provisions had never been set forth herein.

     9.8 This Plan, and all its rights under it, shall be governed by and construed in accordance with the laws of the State of Alabama except to the extent preempted by federal law pursuant to ERISA.

     9.9 This Plan shall be binding upon the Company, its assigns, and any successor which shall succeed to substantially all of its assets and business through merger, consolidation or acquisition.

     9.10 Section 409A of the Code, as added by the American Jobs Creation Act of 2004 (AJCA), substantially revised the requirements applicable to certain deferred compensation

arrangements. This Plan is intended to comply, and to be operated in all respects in compliance, with the requirements of Section 409A of the Code and all Internal Revenue Service rulings, Treasury regulations or other pronouncements or guidance implementing or interpreting its provisions. All provisions of this Plan shall be interpreted or construed so as to meet the requirements of -Section 409A of the Code and all Treasury regulations, rulings and other pronouncements or guidance thereunder and no action, amendment or termination of the Plan shall be effective to the extent it would cause the Plan to violate the requirements of Section 409A of the Code. In the event subsequent Treasury regulations, Internal Revenue Service rulings or other pronouncements or guidance interpreting or implementing the provisions of Section 409A of the Code affect any provisions of this Plan, this Plan shall be amended, as necessary, to comply with such regulation, ruling or other pronouncement or guidance; and, until adoption of any such amendment, the provisions hereof shall be construed and interpreted, to the extent possible, to comply with the applicable provisions of such regulation, ruling or other pronouncement or guidance: No such amendment to the Plan shall be considered prejudicial to any interest of a Participant or beneficiary hereunder.

(Signature Page Follows)

     IN WITNESS WHEREOF, the Plan has been executed as of this & day of 10^th day of November, 2006.

ATTEST:		COMPASS BANCSHARES, INC.
By:	/s/ Jerry W. Powell	By:	/s/ Garrett R. Hegel
	Its: Secretary		Its: Chief Financial Officer

Exhibit — A
Compass Bancshares, Inc.
Special Supplemental Retirement Plan

Name

1. D. Paul Jones, Jr.

2. Charles E. McMahen (Mr. McMahen commenced receiving Supplemental Benefits under the Plan on December 31, 2003, and therefore, the provisions of the Plan in existence before the effective date of this amendment and restatement shall continue to apply to the distribution of Mr. McMahen’s Supplemental Benefits).

EX-10.(F)

Exhibit (10)(f)

COMPASS BANCSHARES, INC.
EMPLOYEE STOCK OWNERSHIP BENEFIT RESTORATION PLAN
AS AMENDED AND RESTATED AS OF JANUARY 1, 2005

ARTICLE I
Purpose and Adoption of Plan

     1.1 Adoption: Compass Bancshares, Inc. (the “Company”) adopted and established the Compass Bancshares, Inc. Employee Stock Ownership Benefit Restoration Plan (the “Plan”) effective as of May 1, 1997. The Plan is an unfunded deferred compensation arrangement whose benefits shall be paid solely from the general assets of the Employing Companies. The Plan as amended and restated is adopted as of January 1, 2005.

     1.2 Purpose: The Plan is designed to permit a select group of management or highly compensated employees to elect to defer a portion of their Compensation until their death or termination of employment from their Employing Company and to provide benefits equal to the employer matching contributions that would have been made for such employees under the Compass Bancshares, Inc. Employee Stock Ownership Plan (the “Compass Bancshares ESOP”), but for limitations imposed by the federal income tax laws.

     1.3 Purpose of the 2005 Amendment and Restatement: The purpose of the amendment and restatement of the Plan is to comply fully with Section 409A of the Code and the Treasury regulations and other guidance with respect to Post-2004 Deferrals and to preserve the terms of the Plan prior to this amendment and restatement with respect to the Pre-2005 Deferrals.

ARTICLE II
Definitions

     For purposes of the Plan the following terms shall have the following meanings unless a different meaning is plainly required by the context:

     2.1 “Account” shall mean the account or accounts established and maintained by the Company for bookkeeping purposes to reflect the interest of a Participant in the Plan resulting from a Participant’s deferred Compensation, Employer Contributions made on behalf of a Participant, and adjustments thereto to reflect deemed income, gains, losses, and other credits or charges less any distributions. This Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant under the Plan. The Account shall be maintained so that a Participant’s Pre-2005 Deferrals and Post-2004 Deferrals are separately accounted for including deemed investment earnings and losses attributable thereto.

     2.2 “Administrative Committee” shall mean the Compensation Committee of the Board of Directors.

     2.3 “Beneficiary” shall mean any person, estate, trust, or organization entitled to receive any payment under the Plan upon the death of a Participant. The Participant shall designate his Beneficiary on a form provided by the Administrative Committee.

     2.4 “Board of Directors” shall mean the Board of Directors of the Company or the Compensation Committee thereof.

     2.5 “Change in Control for Pre-2005 Deferrals” shall mean, for this purpose, (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”), or (ii) consummation by the Company of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company, unless, following such acquisition of beneficial ownership or transaction, (a) more than 60% of the then outstanding shares of common stock of the Person resulting from such reorganization, merger or consolidation, or (b) more than 60% of the then outstanding shares of common stock of the Person acquiring such beneficial ownership or assets, and the combined voting power of the then Outstanding Voting Securities of such Person entitled to vote generally in the election of directors of such Person, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of Outstanding Common Stock and Outstanding Voting Securities immediately prior to such acquisition or transaction, in substantially the same proportions as their ownership of Outstanding Common Stock and Outstanding Voting Securities prior to such event.

     “Change in Control for Post-2004 Deferrals” shall mean a change in the ownership of the Company, a change in effective control of the Company or a change in the ownership of a . substantial portion of the assets of the Company as provided under Code Section 409A and any Internal Revenue Service guidance, including any Treasury regulations issued in connection with Code Section 409A.

     2.6 “Closing Price” shall mean the closing price on any trading day of a share of the Common Stock based on consolidated trading as defined by the Consolidated Tape Association and reported as part of the consolidated trading prices of stock exchange on which the Common Stock is traded.

     2.7 “Code” shall mean the Internal Revenue Code of 1986, as amended, including any successor statute.

     2.8 “Common Stock” shall mean the common stock of the Company.

     2.9 “Company” shall mean Compass Bancshares, Inc.

     2.10 “Compensation” shall mean an Employee’s base wages or salary paid by any Employing Company to an Employee, including amounts contributed by an Employing Company to the Compass Bancshares ESOP as salary deferral contributions pursuant to the Employee’s exercise of his deferral option made in accordance with Section 401(k) of the Code, amounts contributed by an Employing Company to the Compass Bancshares, Inc. Flexible Benefits Plan (“Superflex”) on behalf of the Employee pursuant to his salary reduction election

under such plan and in accordance with Section 125 of the Code, amounts contributed to a qualified parking plan under Section 132(f) of the Code, and any amounts contributed by the Employee on a pre-tax basis to any other qualified or non-qualified deferred compensation plans of the Company; but disregarding overtime, bonuses, other forms of incentive pay paid in cash and such amounts which are reimbursements to an Employee paid by any Employing Company including, but not limited to, reimbursement for such items as moving expenses, automobile expenses, tax preparation expenses, travel and entertainment expenses, and health and life insurance premiums. Notwithstanding the foregoing and solely in the case of Participants specified on Exhibit “A” hereto the term “Compensation” shall also include bonuses and other forms of incentive pay paid in cash.

     2.11 “Deferral Election” shall mean the Participant’s written election to defer a portion of his Compensation pursuant to Article VI.

     2.12 “Effective Date” shall mean the first day of the first payroll period the Administrative Committee shall permit a Participant to defer Compensation under the Plan but in no event later than thirty (30) days following the date the Employee is notified by the Administrative Committee, or its designee, that the Employee is eligible to participate in the Plan for Compensation earned after the date a Deferral Election form is filed with the Company.

     2.13 “Employee” shall mean any person who is currently employed by an Employing Company.

     2.14 “Employer Contributions” shall mean the amounts credited a Participant’s Account under Article VII of the Plan.

     2.15 “Employer Matching Contributions” shall have the meaning ascribed to that term in the Compass Bancshares ESOP.

     2.16 “Employing Company” shall mean the Company or any affiliate or subsidiary (direct or indirect) of the Company.

     2.17 “Enrollment Date” shall mean the Effective Date, January 1 of each Plan Year and such other dates as may be determined from time to time by the Administrative Committee.

     2.18 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     2.19 “Investment Request” shall mean the Participant’s written request to have his Account invested pursuant to Sections 8.1 or 8.2 and which is accepted by the Administrative Committee.

     2.20 “Key Employee” shall mean, for purposes of this Plan and in accordance with Section 409A of the Code, a key employee as defined in Section 416(i) of the Code, without regard to paragraph (5) thereof.

     2.21 “Participant” shall mean an Employee or former Employee of an Employing Company who is eligible to receive benefits under the Plan.

     2.22 “Performance-Based Compensation” shall mean Compensation that meets the requirements of performance-based compensation specified in Section 409A(a)(4)(B)(iii) of the Code and regulations and other guidance promulgated thereunder. Performance-Based Compensation shall be designated as such by the Company and must relate to services performed by the Participant during a designated incentive period of at least twelve (12) months and must be variable and contingent on the satisfaction of pre-established organizational or individual performance criteria and not readily ascertainable at the time.

     2.23 “Plan” shall mean Compass Bancshares, Inc. Employee Stock Ownership Benefit Restoration Plan, as amended from time to time.

     2.24 “Plan Year” shall mean the twelve (12) month period commencing January 1st and ending on the last day of December.

     2.25 “Post-2004 Deferrals” shall mean the portion of the Participant’s Account other than Pre-2005 Deferrals.

     2.26 “Pre-2005 Deferrals” shall mean the portion of the Participant’s Account determined as of the end of December 31, 2004, the right to which was earned and vested as of the end of December 31, 2004, plus deemed investment earnings and losses attributable to such amounts.

     2.27 “Separation from Service” shall mean a Participant’s separation from service as an Employee with the Company for purposes of Section 409A of the Code other than for death or leave of absence. A transfer of employment within or among the Company and any member of a controlled group, as provided in Code Section 409A(d)(6) shall not be deemed a Separation from Service.

     2.28 “Unforeseeable Emergency” for Pre-2005 Deferrals shall mean an event beyond the control of the Participant and that would result in severe financial hardship if early withdrawal was not permitted.

     “Unforeseeable Emergency” for Post-2004 Deferrals shall mean (a) a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse or a dependent (as defined in Code Section 152(a)) of the Participant, (b) loss of the Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, each as determined to exist by the Administrative Committee, in its sole and absolute discretion as defined by Section 409A of the Code and the Treasury regulations and other guidance thereunder.

     The words in the masculine gender shall include the feminine and neuter genders and words in the singular shall include the plural and words in the plural shall include the singular.

ARTICLE III
Administration of Plan

     3.1 The Administrative Committee shall be responsible for the general administration of the Plan. The Administrative Committee may select a chairman and may select a secretary (who may, but need not, be a member of the Administrative Committee) to keep its records or to assist it in the discharge of its duties. A majority of the members of the Administrative Committee shall constitute a quorum for the transaction of business at any meeting. Any determination or action of the Administrative Committee may be made or taken by a majority of the members present at any meeting thereof, or without a meeting by resolution or written memorandum concurred in by a majority of the members.

     3.2 No member of the Administrative Committee shall receive any compensation from the Plan for his service.

     3.3 The Administrative Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan more particularly set forth herein. It shall have the full discretion to interpret the Plan and determine all questions arising in the administration, interpretation and application of the Plan. Any such determination by it shall be conclusive and binding on all persons. It may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists and other persons as it deems necessary or desirable in connection with the administration of this Plan, and shall be the agent for the service of process.

     3.4 The Administrative Committee shall be reimbursed by the Company for all reasonable expenses incurred by it in the fulfillment of its duties. Such expenses shall include any expenses incident to its functioning, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.

     3.5 (a) The Administrative Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary and/or administrative functions. The Administrative Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including its fiduciary duties. The Administrative Committee shall have the right to review the work and performance of each such appointee as it deems necessary or appropriate, and shall have the right to remove any such appointee from his position. Any person, group of persons or entity may serve in more than one fiduciary capacity.

          (b) The Administrative Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers and other transactions concerning the Plan. Such accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by the Board of Directors and by persons designated thereby.

          (c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency;

maintaining of adequate Participants’ records; withholding of applicable taxes and filing of all required tax forms and returns; recording and transmission of all notices required to be given to Participants and their Beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Employing Company; and doing such other acts necessary for the proper administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records and other data as may be necessary for proper administration of the Plan. The Administrative Committee shall notify the Company upon its request of any action taken by it, and when required, shall notify any other interested person or persons.

     3.6 The procedures for filing claims for payments under the Plan are described below:

          (a) Submission of Claim. It is the intent of the Company to make payments under the Plan without the Participant having to complete or submit any claim forms. However, any Participant or Beneficiary or a duly authorized representative thereof (“claimant”) who believes he or she is entitled to a payment under the Plan may submit a claim for payment to the Administrative Committee. Any claim for payments under the Plan must be made by the claimant in writing and state the claimant’s name and nature of benefits payable under the Plan. The claimant’s claim shall be deemed to be filed when delivered to a member of the Administrative Committee which shall make all determinations as to the right of any person to benefits hereunder.

          (b) Notice of Denial of Claim. If the claim is wholly or partially denied, the Administrative Committee shall provide written or electronic notice thereof to the claimant within a reasonable period of time, but not later than ninety (90) days after receipt of the claim. An extension of time for processing the claim for benefits is allowable if special circumstances require an extension, but such an extension shall not extend beyond one hundred eighty (180) days from the date the claim for benefits is received by the Administrative Committee. Written notice of any extension of time shall be delivered or mailed within ninety (90) days after receipt of the claim and shall include an explanation of the special circumstances requiring the extension and the date by which the Administrative Committee expects to render the final decision.

          The notice of adverse benefit determination shall (i) specify the reason for the denial; (ii) reference the provisions of this Plan on which the denial is based; (iii) describe the additional material or information, if any, necessary for the claimant to receive benefits and explain why such information is necessary; (iv) indicate the steps to be taken by the claimant if a review of the denial is desired, including the time limits applicable thereto; and (v) contain a statement of the claimant’s right to bring a civil action under ERISA in the event of an adverse benefit determination on review. If notice of the adverse benefit determination is not furnished in accordance with the preceding provisions of this Section, the claim shall be deemed denied and the claimant shall be permitted to exercise his right to review as set forth below.

          (c) Review of Denied Claim. If a claim is denied and a review is desired, the claimant shall notify the Administrative Committee in writing within sixty (60) days after receipt of written notice of a denial of a claim. In requesting a review, the claimant may submit any written comments, documents, records, and other information relating to the claim, the claimant feels are appropriate. The claimant shall, upon request and free of charge, be provided

reasonable access to, and copies of, all documents, records and other information “relevant” to the claimant’s claim for benefits. The Administrative Committee shall review the claim taking into account all comments, documents, records and other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial benefit determination.

          (d) Decision on Review. The Administrative Committee shall provide the claimant with written notice of its decision on review within a reasonable period of time, but not later than sixty (60) days after receipt of a request for review. An extension of time for making the decision on the request for review is allowable if special circumstances shall occur, but such an extension shall not extend beyond one hundred twenty (120) days from the date the request for a review is received by the Administrative Committee. Written notice of the extension of time shall be delivered or mailed within sixty (60) days after receipt of the request for review, indicating the special circumstances requiring an extension and the date by which the Administrative Committee expects to render a determination.

          In the event of an adverse benefit determination on review, the notice thereof shall (i) specify the reason or reasons for the adverse benefit determination; (ii) reference the specific provisions of this Plan on which the benefit determination is based; (iii) contain a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all documents, records and other information “relevant” to the claimant’s claim for benefits; and (iv) inform the claimant of the right to bring a civil action under the provisions of ERISA.

          For purposes hereof, any document, record and item of information shall be considered “relevant” to the claimant’s claim if it (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, whether or not actually relied upon in making the determination; or (iii) demonstrates compliance with the administrative processes and safeguards of this claims procedure.

          (e) Preservation of Remedies. After exhaustion of the claims procedure as provided herein, nothing shall prevent the claimant from pursuing any other legal or equitable remedy otherwise available, including the right to bring a civil action under Section 502(a) of ERISA, if applicable. Notwithstanding the foregoing, no legal action may be commenced or maintained against the Company, any Employing Company or the Administrative Committee more than ninety (90) days after the claimant has exhausted the administrative remedies set forth in this Section 3.6.

ARTICLE IV
Arbitration

     4.1 Any controversy relating to a claim arising out of or relating to this Plan, including, but not limited to claims for benefits due under this Plan, claims for the enforcement of ERISA, claims based on the federal common law of ERISA, claims alleging discriminatory discharge under ERISA, claims based on state law, and assigned claims relating to this Plan shall be settled by arbitration in accordance with the then current Employee Benefit Claims

Arbitration Rules of the American Arbitration Association (AAA) or any successor rules which are hereby incorporated into the Plan by this reference; provided, however, both the Company and the Participant shall have the right at any time to seek equitable relief in court without submitting the issue to arbitration.

     4.2 Neither the Participant (or his beneficiary) nor the Plan may be required to submit any such claim or controversy to arbitration until the Participant (or his beneficiary) has first exhausted the Plan’s internal appeals procedures set forth in Section 3.6. However, if the Participant (or his beneficiary) and the Company agree to do so, they may submit the claim or controversy to arbitration at any point during the processing of the dispute.

     4.3 The Company will bear all costs of arbitration, except that the Participant will pay the filing fee set by the AAA and the arbitrator shall have the power to apportion among the parties expenses such as pre-hearing discovery, travel, experts’ fees, accountants’ fees, and attorney’s fees and except as otherwise provided herein. The decision of the arbitrator shall be final and binding on all parties, and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.

     4.4 If there is a dispute as to whether a claim is subject to arbitration, the arbitrator shall decide that issue. The claim must be filed with the AAA within the applicable statute of limitations period. The arbitrator shall issue a written determination sufficient to ensure consistent application of the Plan in the future.

     4.5 Any arbitration will be conducted in accordance with the following provisions, not withstanding the Rules of the AAA. The arbitration will take place in a neutral location within the metropolitan area in which the Participant was or is employed by an Employing Company. The arbitrator will be selected from the attorney members of the Commercial Panel of the AAA who reside in the metropolitan area where the arbitration will take place and have at least 5 years of ERISA experience. If an arbitrator meeting such qualifications is unavailable, the arbitrator will be selected from the attorney members of the National Panel of Employee Benefit Claims Arbitrators established by the AAA.

     4.6 In any such arbitration, each party shall be entitled to discovery of any other party as provided by the Federal Rules of Civil Procedure then in effect; provided, however, that discovery shall be limited to a period of 60 days. The arbitrator may make orders and issue subpoenas as necessary. The arbitrator shall apply ERISA, as construed in the federal Circuit in which the arbitration takes place, to the interpretation of the Plan and the Federal Arbitration Act to the interpretation of this arbitration provision. To the extent that state law is not preempted by ERISA, then the law of Alabama applies.

     4.7 Any party has the right to arrange for a stenographic record to be made of the proceedings, which stenographic record shall be the official record. Either party may make an offer of judgment at any time in accordance with the procedures of Rule 68 (or its successor) of the Federal Rules of Civil Procedure. The existence of such an offer is not admissible in any proceeding. If the monetary award of the arbitrator to a party is less than any monetary offer to that party plus 20 percent of such offer, then that party receiving such award shall pay the other party his reasonable attorneys’ fees, experts’ fees, accountants’ fees and other costs incurred with

respect to the arbitration following the date of the offer of judgment. Such amount is to be deducted from the award prior to payment. Arbitration is the exclusive remedy for any dispute between the parties other than equitable relief which either party may seek through the court system.

ARTICLE V
Eligibility

     5.1 Any Employee who is a member of a select group of management or highly compensated Employees, is eligible to participate in the Compass Bancshares ESOP, and is selected for participation in the Plan by the Administrative Committee in its sole discretion, shall be eligible to participate in the Plan. An Employee who is selected to participate shall be designated on Exhibit B hereto. An Employee shall become a Participant by agreeing to be bound by the terms of this Plan, including the non-competition provisions of Article X.

     5.2 Notwithstanding the above, the Administrative Committee shall be authorized to modify the eligibility requirements and rescind the eligibility of any Participant if necessary to insure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees under ERISA.

     5.3 If the Administrative Committee determines that a Participant is no longer eligible to participate in the Plan, no additional Employer Contributions shall be made on such Participant’s behalf, the Participant’s Deferral Election shall terminate and he shall make no more contributions under the Plan until it is again determined he is eligible to participate. The Account of such a Participant shall continue to be adjusted by the provisions of Article VIII until the Account is distributed under Article IX.

ARTICLE VI
Election for Deferral of Payment

     6.1 A Participant may elect to defer payment of a portion of his Compensation, in excess of the limitation set forth in Section 401(a)(17) of the Code with respect to the Plan Year, otherwise payable to him during each payroll period after his Effective Date for services to be rendered after the Effective Date by any percentage (whole or fractional) of his Compensation, such amount to be credited to his Account under the Plan.

     6.2 An Account shall be established for each Participant by the Company as of the effective date of such Participant’s initial Deferral Election.

     6.3 The Deferral Election shall be made in writing on a form prescribed by the Company and said Deferral Election shall state:

          (a) That the Participant wishes to make an election to defer the receipt of a portion of his Compensation, and

          (b) The percentage of such Compensation to be deferred.

     6.4 The initial Deferral Election of a new Participant shall be made by written notice signed by the Participant and delivered to the Participant’s Employing Company not later than thirty (30) days after the Employee first becomes eligible to participate in the Plan; provided however, such initial Deferral Election shall not apply to Compensation earned prior to the date such election form is filed with the Participant’s Employing Company. Any subsequent Deferral Elections shall be made by written notice signed by the Participant and delivered to the Participant’s Employing Company not later than the last day of the month prior to the next succeeding Plan Year and shall be effective on the first day of such succeeding Plan Year with respect to Compensation to be earned in such subsequent Plan Year; provided however, in the case of Performance-Based Compensation and subject to the discretion of the Administrative Committee (which may vary for each Participant), an election form may be submitted to the Company no later than six (6) months before the end of the performance period if the Administrative Committee allows for a separate election with respect to Performance-Based Compensation with respect to that Participant. A Deferral Election with respect to the deferral of future Compensation shall be an irrevocable election for’ each Plan Year unless otherwise modified or revoked during the Plan Year as provided in Section 6.5 herein. The termination of participation in the Plan shall not affect amounts (and the deemed investment earnings and losses thereon) previously deferred by a Participant under the Plan.

     At the time of the initial Deferral Election, a Participant shall elect the form of payment to be received upon his death or termination from employment or whether to be paid upon a Change in Control as provided in Section 9.5, such form to be either (a) a lump sum, or (b) monthly, quarterly, or annual installments over a period not to exceed fifteen (15) years. The initial Deferral Election with respect to the form of payment shall govern the distribution of such Participant’s Pre-2005 Deferrals and Post-2004 Deferrals unless a Participant make a new election with respect to Pre-2005 Deferrals and/or Post-2004 Deferrals in accordance with the requirements set forth in Section 6.6. If a Participant fails to specify a form of payment, his Account shall be distributed in a lump sum.

     6.5 Notwithstanding the provisions of Section 6.4 of the Plan, the Administrative Committee, in its sole discretion upon written application by a Participant, may authorize the suspension of a Participant’s Deferral Election in the event of an Unforeseeable Emergency upon receiving a written request to the Administrative Committee accompanied by evidence to demonstrate that the circumstances qualify as an Unforeseeable Emergency. Any suspension authorized by the Administrative Committee shall become effective as of the first payroll period beginning thirty (30) days after receipt by the Company of the suspension application, or as soon as practicable after the receipt of such application. Such suspension shall be effective for the remainder of the Plan Year.

     6.6 With the approval of the Administrative Committee, a Participant may amend a prior Deferral Election on a form provided by the Administrative Committee in order to change the form of the distribution of his Account attributable to Pre-2005 Deferrals. Any such amendment to a prior Deferral Election pertaining to such Pre-2005 Deferrals shall be contingent upon the Participant’s completion of a one-year term of employment after the date the Participant executes a new payment election form, except in the event of the Participant’s death or total and permanent disability as determined by the Social Security Administration or by the Company’s insurance carrier under its group long term disability benefit plan.

     With respect to Post-2004 Deferrals, a change in the form of payment shall be given effect by the Administrative Committee only if the election to change the form of payment (i) does not take effect until at least twelve (12) months after the date on which the Deferral Election form is filed with the Administrative Committee and (ii) the first payment with respect to such change in election is made is deferred for a period of not less than five (5) years after the date such payment would otherwise have been made except in the event of death or Unforeseeable Emergency.

     Notwithstanding the foregoing, with respect to Post-2004 Deferrals, a Participant may elect to make a new election with respect to such previously deferred amounts by filing a new election form with the Administrative Committee on or before December 31, 2007; provided that any such election applies only to amounts that would not otherwise be payable in the year such new election is made and does not cause an amount to be paid in the year such new election is made that would not otherwise be payable in such year.

ARTICLE VII
Employer Contributions

     7.1 Subject to compliance with the provisions of Article X, the Account of each Participant shall be credited as follows:

          (a) At the time of each deferral of Compensation hereunder, the amount per Participant resulting from the application of the percentage of the Employer Matching Contribution made as of each payroll period (and at the time of a bonus or other incentive payment in the case of Participants listed on Exhibit “A”) to the ratable portion of the Participant’s Compensation, in excess of the limitation set forth in Section 401(a)(17) of the Code for the Plan Year.

          (b) At the time any additional Employer Matching Contribution is made by the Company for a Plan Year to the Compass Bancshares ESOP, an amount per Participant resulting from the application of the additional percentage of Compensation contributed as an additional Employer Matching Contribution to the portion of the Participant’s Compensation deferred hereunder for the Plan Year provided the Participant qualifies for an additional Employer Matching Contribution for the Plan Year as a participant in the Compass Bancshares ESOP.

     7.2 The amount determined under Section 7.1 above shall be calculated without regard to any limitations under Section 415 of the Code, Section 402(g) of the Code, Section 401(a)(17) of the Code, or other federal tax law provisions that would limit salary deferral contributions, employee compensation amounts, and/or employer matching and discretionary contributions under the Compass Bancshares ESOP.

     7.3 The amount credited under Section 7.1 shall be subject to vesting under the same vesting schedule and subject to the same terms and conditions applicable to the vesting of Employer Matching Contributions under the ESOP.

ARTICLE VIII
Investment of Accounts

     8.1 The Account of each Participant attributable to the Participant’s Deferral Election shall be credited as of the last day of each calendar quarter with investment earnings and losses based upon the assets in the Account or on such more frequent basis as shall be authorized by the Administrative Committee. Upon becoming eligible to participate and before the beginning of each Plan Year, Participants may request how their Account balances are deemed to be invested. The investment preference shall be made in writing on a form prescribed by the Company and shall be delivered to the Company prior to such Enrollment Date and shall be effective as of such Enrollment Date. The Investment Request made in accordance with this Article VIII shall continue from Plan Year to Plan Year unless the Participant changes the Investment Request by submitting a written request to the Company on a form prescribed by the Company prior to the next succeeding Plan Year. Any such change shall become effective as of the first day of the Plan Year next following the Plan Year in which such request is submitted to the Company. The Administrative Committee shall be authorized to permit more frequent changes in investment preferences to be effective on such dates as it shall specify. The Administrative Committee shall consider the Investment Request but is not obligated to follow such requests.

     8.2 Participants shall be permitted to request from among such investment options as the Administrative Committee may permit and can allocate their deferred Compensation among such options for the Plan Year. Dividends, interest and other distributions received with respect to any Investment Request shall be deemed to be reinvested in the same investment option.

     8.3 The Account of each Participant attributable to Employer Contributions pursuant to Article VII shall be deemed to be invested in Common Stock and shall be credited with dividends, and such dividends shall be deemed to be reinvested in such Common Stock in the same manner and with the same frequency as employer matching contributions are so invested in the Compass Bancshares ESOP. No Participant shall be entitled to any voting rights with respect to any shares of Common Stock credited to his Account.

     8.4 At the end of each Plan Year (or on a more frequent basis as determined by the Administrative Committee), a report shall be issued to each Participant who has an Account and said report will set forth the value in such Account.

     8.5 The Accounts under the Plan shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor any Account shall be required to hold any actual fund or asset.

ARTICLE IX
Distribution of Accounts

     9.1 Subject to compliance with the provisions of Article X and the provisions of Article VI, when a Participant terminates his employment with an Employing Company, said Participant shall be entitled to receive the vested balance of his Pre-2005 Deferrals and Post-2004 Deferrals in cash in a lump sum or in equal monthly, quarterly or annual installments not to exceed a fifteen (15) year period as specified on the Participant’s Deferral Election form applicable to such amounts. The portion of a Participant’s Account which is not fully vested on the date of his termination of employment with an Employing Company shall be forfeited and the Participant shall have no further rights with respect thereto.

     In the event the value of a Participant’s Account at the time distribution is to commence is $10,000 or less, the Account shall be distributed in a lump sum notwithstanding a Participant’s election to have his Account distributed in installments under the Plan. All payments due under this Section 9.1 shall be made or commence as soon as reasonably feasible following a Participant’s termination of employment. Any amounts deemed to be invested in a Common Stock fund shall be equal to the market value of any shares of Common Stock reported in a Participant’s Account, based on the Closing Price of such Common Stock during the day on which the distribution is processed immediately preceding the date of any lump sum or installment distribution. No portion of a Participant’s Account shall be distributed in Common Stock. The portion of an Account attributable to investments other than Common Stock shall be valued on the date a distribution is processed. The transfer by a Participant between Employing Companies shall not be deemed to be a termination of employment with an Employing Company.

     Notwithstanding the foregoing, distributions of Post-2004 Deferrals to a Key Employee as a result of Separation from Service, whether the distribution is made in the form of a Imp sum or installments, shall not be made or the payments may not begin before the date which is six (6) months following the date of the Separation from Service, or, if earlier, the date of death of the Key Employee.

     9.2 Subject to compliance with the provisions of Article X and Article VI, upon the death of a Participant prior to the payment of his Account, the balance of his Account shall be paid to the Participant’s Beneficiary in a Imp sum or in equal monthly, quarterly or annual installments not to exceed a fifteen (15) year period as specified on the Participant’s Deferral Election form with such payment to be made or payments to commence in the case of installment distributions within sixty (60) days following the close of the calendar quarter in which the Administrative Committee is provided evidence of the Participant’s death (or as soon as reasonably practicable thereafter); provided, however, if the value of a Participant’s Account at the time an installment distribution is to commence is $10,000 or less, the Account shall be distributed in a lump sum. In the event a Beneficiary designation is not on file or the designated Beneficiary is deceased or cannot be located, payment will be made to the estate of the Participant. If the Participant fails to specify a form of payment, his vested Account balance shall be distributed in a Imp sum. The market value of any shares of Common Stock credited to a Participant’s Account shall be based on the Closing Price of such Common Stock during the day on which the distribution is processed immediately preceding the date of any lump sum or installment distribution. No portion of a Participant’s Account shall be distributed in Common Stock. The portion of an Account attributable to investments other than Common Stock shall be valued on the date a distribution is processed. In the event of the death of a Participant subsequent to the commencement of installment payments but prior to the completion of the payments, the installments shall continue and shall be paid to the Beneficiary as if the Participant had not died.

     9.3 The Beneficiary designation may be changed by the Participant or former Participant at any time without the consent of the prior Beneficiary.

     9.4 A Participant may request a distribution due to an Unforeseeable Emergency by submitting a written request to the Administrative Committee accompanied by evidence to

demonstrate that the circumstances being experienced qualify as an Unforeseeable Emergency. The Administrative Committee shall have the authority to require such evidence as it deems necessary to determine if a distribution is warranted. If an application for a hardship distribution due to an Unforeseeable Emergency is approved, the distribution is limited to an amount sufficient to meet the emergency. The allowed distribution shall be payable in a method determined by the - -Administrative Committee as soon as possible after approval of such distribution.

     9.5 Upon a Change in Control, and subject to compliance with the provisions of Article X, a Participant shall be entitled to receive the balance of his Account in a lump sum within sixty (60) days following the close of the calendar quarter in which such event occurs if the Participant shall have previously elected on his election form to be paid in a lump sum in the event of a Change in Control.

     9.6 Notwithstanding any provision of this Plan to the contrary, pursuant to Code Section 409A(a)(2), Post-2004 Deferrals may not be distributed earlier than: (a) a Participant’s Separation from Service, (b) the Participant’s death, (c) a Change in Control or (d) the occurrence of an Unforeseeable Emergency.

ARTICLE X
Covenant Not to Compete, Non-Solicitation,
Non-Disclosure and Forfeiture

     10.1 As a condition of participation in the Plan, Employee agrees with the Company and his Employing Company as follows:

          (a) While Employee is employed by any Employing Company, Employee will devote his or her entire time, energy and skills to the service of the Employing Company. Such employment shall be at the will and at the pleasure of the board of directors of each Employing Company.

          (b) Employee will not, during the term of his or her employment with an Employing Company, and after termination for any reason of his or her employment with an Employing Company, directly or indirectly, either individually or as a stockholder, director, officer, consultant, independent contractor, employee, agent, member or otherwise of or through any corporation, partnership, association, joint venture, firm, individual or otherwise (hereinafter “Firm”), or in any other capacity:

               (i) Carry on or engage in a business like or similar to any business engaged in by the Employing Company in any territory in which the Employing Company has been or is conducting business;

               (ii) Solicit or do business with any customer of the Employing Company; or

               (iii) Solicit, directly or indirectly, any employee of any Employing Company to leave their employment with the Employing Company for any reason. For purposes of this Agreement, the Employing Company and Employee agree that Employee shall be deemed

to have solicited an employee in violation of this Agreement if such employee is hired by Employee or his or her Firm within six (6) months of Employee’s last employment date with any Employing Company.

          (c) During the term of his or her employment with an Employing Company and thereafter, Employee shall not divulge, or furnish or make accessible to any third party, company, corporation or other organization (including, but not limited to, customers, competitors or governmental agencies), without the Company’s prior written consent, any trade secrets, customer lists, information regarding customers, or other confidential information concerning any Employing Company or its business, including without limitation confidential methods of operation and organization, trade secrets, confidential matters related to pricing, markups, commissions and customer lists.

     10.2 In the event of a breach by Employee of all or any part of the provisions of subdivisions (b) or (c) of Section 10.1, the Employee shall immediately forfeit all rights to any benefits under this Plan attributable to Employer Contributions and the Company shall be entitled to receive from the Employee an amount equal to all benefits previously paid to Employee attributable to Employer Contributions.

     10.3 In the event of a breach or threatened breach by Employee of all or any part of the provisions of subdivisions (b) of Section 10.1 within the two-year period following his termination of employment or (c) of this Section 10.1 at any time, the Company shall in addition to any remedies that may be applicable under Section 10.2, be entitled to a preliminary and permanent injunction restraining Employee from such breach without limiting any other rights or remedies available to the Company for such breach or threatened breach. The two-year period during which the Company shall be entitled to an injunction for a breach or threatened breach of subdivision (b) of Section 10.1 shall be extended by any period of time during which Employee is in default of the covenants contained in this Article X.

     10.4 Employee specifically recognizes and affirms that each of the covenants contained in subdivisions (b) and (c) of this Section 10.1 is a material and important term of this Plan which has induced the Company to permit Employee to participate in this Plan, and Employee further agrees that should all or any part or application of subdivisions {b) or (c) of Section 10.1 of this Plan be held or found invalid or unenforceable for any reason whatsoever by a court of competent jurisdiction in an action between Employee and the Company, such invalidity or unenforceability shall not affect any other provisions of the Plan, and the Company shall be entitled to rescind (but not obligated to do so) all benefits attributable to Employer Contributions under Article VII granted to Employee under this Plan. If Employee has been paid benefits under this Plan, the Company shall be entitled to receive from Employee an amount equal to all benefits paid to Employee attributable to Employer Contributions.

     10.5 Notwithstanding any provision to the contrary herein contained, Section 10.1(b) shall not apply:

          (a) Upon the involuntary termination of the Employee’s employment by an Employing Company other than for Cause within one (1) year following a Change in Control; or

          (b) Upon the voluntary termination of employment by the Employee for any reason within the thirty (30) day period immediately after the one (1) year period following a Change in Control.

For purposes of this Article X, the term Change in Control shall mean a Change in Control as defined with respect to Pre-2005 Deferrals.

For purposes of this Agreement, “Cause” shall mean (i) a willful and material violation of applicable banking laws and regulations, (ii) dishonesty, (iii) theft, (iv) fraud, (v) embezzlement, (vi) commission of a felony or a crime involving moral turpitude, (vii) substantial dependence or addiction to alcohol or any drug, (viii) conduct disloyal to an Employing Company or its affiliates, or (ix) willful dereliction of duties or disregard of lawful instructions or directions of the officers of directors of an Employing company or its affiliates relating to a material matter.

ARTICLE XI
Nature of Employer Obligation and Participant interest

     11.1 A Participant, his Beneficiary, and any other person or persons having or claiming a right to payments under this Plan shall rely solely on the unsecured promise of the Company set forth herein, and nothing in this Plan shall be construed to give a Participant, Beneficiary, or any other person or persons any right, title, interest, or claim in or to any specific assets, fund, reserve, account, or property of any kind whatsoever owned by the Company or in which it may have any right, title, or interest now or in the future; but a Participant shall have the right to enforce his or her claim against the Company in the same manner as any unsecured creditor.

     11.2 All amounts paid under this Plan shall be paid in cash from the general assets of the Company. Benefits shall be reflected on the accounting records of the Company but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust or a fiduciary relationship of any kind between the Company and an employee or any other person. Neither the employee nor a Beneficiary of an employee shall acquire any interest greater than that of an unsecured creditor.

     11.3 Any Benefits payable under this Plan shall be independent of, and in addition to, any other benefits or compensation of any sort, payable to or on behalf of the Participant under or pursuant to any other arrangement sponsored by the Company or any other agreement between the Company and the Participant.

ARTICLE XII
Miscellaneous Provisions

     12.1 Neither the Participant, his Beneficiary, nor his legal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.

     12.2 The assets from which Participant’s benefits shall be paid shall at all times be subject to the claims of the creditors of the Employing Companies and a Participant shall have no right, claim or interest in any assets as to which account is deemed to be invested or credited under the Plan.

     12.3 The Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to benefits under the Plan prior to such amendment, modification, or termination. The Plan may also be amended or modified by the Administrative Committee if such amendment or modification does not involve a substantial increase in cost to the Employing Companies.

     12.4 It is expressly understood and agreed that the payments made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment by an Employing Company.

     12.5 The Company shall deduct from each payment under the Plan the amount of any tax (whether federal, state or local income taxes, Social Security taxes or Medicare taxes) required by any governmental authority to be withheld and paid over by the Employing Company to such governmental authority for the account of the person entitled to such distribution.

     12.6 Any Compensation deferred by a Participant while employed by an Employing Company shall not be considered compensation earned currently for purposes of any tax-qualified retirement plan sponsored by the Company. Distributions from a Participant’s Account shall not be considered wages, salaries or compensation under any other employee benefit plan.

     12.7 No provision of this Plan shall be construed to affect in any manner the existing rights of an Employing Company to suspend, terminate, alter, modify, whether or not for cause, the employment relationship of the Participant and an Employing Company.

     12.8 Except to the extent pre-empted by federal law, this Plan, and all its rights under it, shall be governed by and construed in accordance with the laws of the State of Alabama.

     12.9 This Plan shall be binding upon the Company, its assigns, and any successor which shall succeed to substantially all of its assets and business through merger, consolidation or acquisition.

     12.10 Compliance with the AJCA. Code Section 409A, as added by the American Jobs Creation Act of 2004 (AJCA), substantially revised the requirements applicable to certain deferred compensation arrangements. With respect to Post-2004 Deferrals, this Plan is intended to comply, and to be operated in all respects in compliance, with the requirements of Code Section 409A and all Internal Revenue Service rulings, Treasury regulations or other pronouncements or guidance implementing or interpreting its provisions. With respect to Post-2004 Deferrals, all provisions of this Plan shall be interpreted or construed so as to meet the requirements of Code Section 409A and all regulations, rulings and other pronouncements or

guidance thereunder and no action, amendment or termination of the Plan shall be effective to the extent it would cause the Plan to violate the requirements of Code Section 409A.

     The Pre-2005 Deferrals are intended to qualify for grandfathered status pursuant to Internal Revenue Service guidance, including any Treasury regulations so no provision hereof shall have the effect of enhancing, adding or materially modifying a right or benefit of any Participant with respect to such Pre-2005 Deferrals. To the extent that any provision hereof may be interpreted or construed as so enhancing, adding or modifying a right or benefit, such provision shall be void and of no effect.

     With respect to the Post-2004 Deferrals, in the event subsequent Treasury regulations, Internal Revenue Service rulings or other pronouncements or guidance interpreting or implementing the provisions of Code Section 409A affect any provisions of this Plan or any election or other administrative form used for the Plan, this Plan and any election or other administrative form used for the Plan shall be amended, as necessary, to comply with such regulation, ruling or other pronouncement or guidance; and, until adoption of any such amendment, the provisions hereof shall be construed and interpreted to comply with the applicable provisions of such regulation, ruling or other pronouncement or guidance. No such amendment to the Plan or to any administrative form shall be considered prejudicial to any interest of a Participant or Beneficiary hereunder.

     12.11 It is intended that Plan transactions and elections made by Participants who are subject to Section 16 of the Exchange Act meet applicable requirements for exemption pursuant to Rule 16b-3 under the Exchange Act and that this Plan be operated and interpreted in all respects in compliance therewith. Accordingly, notwithstanding anything in this Plan to the contrary, all transactions, elections, amendments, applications or other actions or determinations in connection with the Plan (including without limitation elections and amendments under Article VI, hardship distribution applications under Section 9.4, and amendments to the Plan) with respect to or affecting any Participant subject to Section 16 of the Exchange Act shall be subject to the prior approval of the Board of Directors (or the Compensation Committee thereof). Notwithstanding anything in this Plan to the contrary, the Administrative Committee may restrict, rescind or deem void any Plan transaction or election, or impose other restrictions, rules or procedures with respect to the Plan or participation therein, to the extent deemed necessary or appropriate by the Administrative Committee in furtherance of this Section 12.11.

(Signature Page Follows)

     IN WITNESS WHEREOF, the Plan as amended and restated as of January 1. 2005, has been executed pursuant to approval of the Board of Directors, this 18^th day of December, 2006.

ATTEST:		COMPASS BANCSHARES, INC.
By:	/s/ Joseph B. Cartee	By:	/s/ Garrett R. Hegel
	Its:   Associate General Counsel		Its:  Chief Financial Officer

EXHIBIT A

D. Paul Jones, Jr.
Charles E. McMahen

EXHIBIT B

James D. Barri
George M. Boltwood
E. Lee Harris, Jr.
Garrett R. Hegel
D. Paul Jones, Jr.
William Helms
Charles E. McMahen
Clayton D. Pledger
Gilbert R. Stone

EX-10.(G)

Exhibit (10)(g)

COMPASS BANCSHARES, INC.
SMARTINVESTOR RETIREMENT BENEFIT RESTORATION PLAN
AS AMENDED AND RESTATED AS OF JANUARY 1, 2005

ARTICLE I
Purpose and Adoption of Plan

     1.1 Adoption: Compass Bancshares, Inc. (the “Company”) adopted and established the Compass Bancshares, Inc. Smartlnvestor Retirement Restoration Plan (the “Plan”) effective as of January 1, 2003. The Plan is an unfunded deferred compensation arrangement whose benefits shall be paid solely from the general assets of the Employing Companies. This Plan as amended and restated is adopted as of January 1, 2005.

     1.2 Purpose: The Plan is designed to permit a select group of management or highly compensated employees to receive benefits equal to the employer contributions that would have been made for such employees under the Compass Bancshares, Inc. SmartInvestor Retirement Plan (the “SmartInvestor Retirement Plan”), but for limitations imposed by the federal income tax laws.

     1.3 Purpose of the 2005 Amendment and Restatement: The purpose of the amendment and restatement of the Plan is to comply fully with Section 409A of the Code and the Treasury regulations and other guidance issued with respect thereto.

ARTICLE II
Definitions

     For purposes of the Plan the following terms shall have the following meanings unless a different meaning is plainly required by the context:

     2.1 “Account” shall mean the hypothetical account or accounts established and maintained by the Company for bookkeeping purposes to reflect the interest of a Participant in the Plan resulting from Employer Contributions made on behalf of a Participant and adjustments thereto to reflect deemed income, gains, losses, and other credits or charges less any distributions. This Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant under the Plan.

     2.2 “Administrative Committee” shall mean the Compensation Committee of the Board of Directors.

     2.3 “Beneficiary” shall mean any person, estate, trust, or organization entitled to receive any payment under the Plan upon the death of a Participant. The Participant shall designate his Beneficiary on a form provided by the Administrative Committee.

     2.4 “Board of Directors” shall mean the Board of Directors of the Company or the Compensation Committee thereof.

     2.5 “Change in Control” shall mean a change in the ownership of the Company, a change in effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company as provided under Code Section 409A and any Internal Revenue Service guidance, including any Treasury regulations issued in connection with Code Section 409A.

     2.6 “Closing Price” shall mean the closing price on any trading day of a share of the Common Stock based on consolidated trading as defined by the Consolidated Tape Association and reported as part of the consolidated trading prices of stock exchange on which the Common Stock is traded.

     2.7 “Code” shall mean the Internal Revenue Code of 1986, as amended, including any successor statute.

     2.8 “Common Stock” shall mean the common stock of the Company.

     2.9 “Company” shall mean Compass Bancshares, Inc.

     2.10 “Compensation” shall mean the Employee’s base wages or salary paid by any Employing Company to an Employee, including amounts contributed by an Employing Company to the Compass Bancshares, Inc. Employee Stock Ownership Plan as salary deferral contributions pursuant to the Employee’s exercise of his deferral option made in accordance with Section 401(k) of the Code, amounts contributed by an Employing Company to the Compass Bancshares, Inc. Flexible Benefits Plan (“Superflex”) on behalf of the Employee pursuant to his salary reduction election under such plan and in accordance with Section 125 of the Code, amounts contributed to a qualified parking plan under Section 132(1) of the Code, and any amounts contributed by the Employee on a pre-tax basis to any other qualified or non-qualified deferred compensation plans of the Company; but disregarding overtime, bonuses, other forms of incentive pay paid in cash and such amounts which are reimbursements to an Employee paid by any Employing Company including, but not limited to, reimbursement for such items as moving expenses, automobile expenses, tax preparation expenses, travel and entertainment expenses, and health and life insurance premiums. Notwithstanding the foregoing and solely in the case of Participants specified on Exhibit “A” hereto the term “Compensation” shall also include bonuses and other forms of incentive pay paid in cash.

     2.11 “Effective Date” shall mean the first day of the first payroll period the Administrative Committee shall select an Employee for participation under the Plan and the Employee has agreed to the terms for participation in the Plan.

     2.12 “Employee” shall mean any person who is currently employed by an Employing Company.

     2.13 “Employer Contributions” shall mean the amounts credited a Participant’s Account under Article VI of the Plan.

     2.14 “Employing Company” shall mean the Company or any affiliate or subsidiary (direct or indirect) of the Company.

     2.15 “Enrollment Date” shall mean the Effective Date, January 1, of each Plan Year and such other dates as may be determined from time to time by the Administrative Committee.

     2.16 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     2.17 “Investment Request” shall mean the Participant’s written request to have his Account invested pursuant to Section 7.1 or Section 7.2 and which is accepted by the Administrative Committee.

     2.18 “Key Employee” shall mean, for purposes of this Plan and in accordance with Section 409A of the Code, a key employee as defined in Section 416(i) of the Code, without regard to paragraph (5) thereof.

     2.19 “Participant” shall mean an Employee or former Employee of an Employing Company who is eligible to receive benefits under the Plan.

     2.20 “Plan” shall mean Compass Bancshares, Inc. Smartlnvestor Retirement Benefit Restoration Plan as amended from time to time.

     2.21 “Plan Year” shall mean the twelve (12) month period commencing January 1^st and ending on the last day of December.

     2.22 “Separation from Service” shall mean a Participant’s separation from service as an Employee with the Company for purposes of Section 409A of the Code other than for death or leave of absence. A transfer of employment within or among the Company and any member of a controlled group, as provided in Code Section 409A(d)(6) shall not be deemed a Separation from Service.

     2.23 “Unforeseeable Emergency” shall mean (a) a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse or a dependent (as defined in Code Section 152(a)) of the Participant, (b) loss of the Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, each as determined to exist by the Administrative Committee, in its sole and absolute discretion as defined by Section 409A of the Code and the Treasury regulations and other guidance thereunder.

     The words in the masculine gender shall include the feminine and neuter genders and words in the singular shall include the plural and words in the plural shall include the singular.

ARTICLE III
Administration of Plan

     3.1 The Administrative Committee shall be responsible for the general administration of the Plan. The Administrative Committee may select a chairman and may select a secretary (who may, but need not, be a member of the Administrative Committee) to keep its records or to assist it in the discharge of its duties. A majority of the members of the Administrative Committee shall constitute a quorum for the transaction of business at any meeting. Any

determination or action of the Administrative Committee may be made or taken by a majority of the members present at my meeting thereof, or without a meeting by resolution or written memorandum concurred in by a majority of the members.

     3.2 No member of the Administrative Committee shall receive any compensation from the Plan for his service.

     3.3 The Administrative Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan more particularly set forth herein. It shall have the full discretion to interpret the Plan and determine all questions arising in the administration, interpretation and application of the Plan. Any such determination by it shall be conclusive and binding on all persons. It may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists and other persons as it deems necessary or desirable in connection with the administration of this Plan, and shall be the agent for the service of process.

     3.4 The Administrative Committee shall be reimbursed by the Company for all reasonable expenses incurred by it in the fulfillment of its duties. Such expenses shall include any expenses incident to its functioning, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.

     3.5 (a) The Administrative Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary and/or administrative functions. The Administrative Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including its fiduciary duties. The Administrative Committee shall have the right to review the work and performance of each such appointee as it deems necessary or appropriate, and shall have the right to remove any such appointee from his position. Any person, group of persons or entity may serve in more than one fiduciary capacity.

          (b) The Administrative Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers and other transactions concerning the Plan. Such accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by the Board of Directors and by persons designated thereby.

          (c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants’ records; withholding of applicable taxes and filing of all required tax forms and returns; recording and transmission of all notices required to be given to Participants and their Beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Employing Company; and doing such other acts necessary for the proper administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records and other data as may be necessary for proper administration of the Plan. The Administrative Committee shall notify the

Company upon its request of any action taken by it, and when required, shall notify any other interested person or persons.

     3.6 The procedures for filing claims for payments under the Plan are described below:

          (a) Submission of Claim. It is the intent of the Company to make payments under the Plan without the Participant having to complete or submit any claim forms. However, any Participant or Beneficiary or a duly authorized representative thereof (“claimant”) who believes he or she is entitled to a payment under the Plan may submit a claim for payment to the Administrative Committee. Any claim for payments under the Plan must be made by the claimant in writing and state the claimant’s name and nature of benefits payable under the Plan. The claimant’s claim shall be deemed to be filed when delivered to a member of the Administrative Committee which shall make all determinations as to the right of any person to benefits hereunder.

          (b) Notice of Denial of Claim. If the claim is wholly or partially denied, the Administrative Committee shall provide written or electronic notice thereof to the claimant within a reasonable period of time, but not later than ninety (90) days after receipt of the claim. An extension of time for processing the claim for benefits is allowable if special circumstances require an extension, but such an extension shall not extend beyond one hundred eighty (180) days from the date the claim for benefits is received by the Administrative Committee. Written notice of any extension of time shall be delivered or mailed within ninety (90) days after receipt of the claim and shall include an explanation of the special circumstances requiring the extension and the date by which the Administrative Committee expects to render the final decision.

          The notice of adverse benefit determination shall (i) specify the reason for the denial; (ii) reference the provisions of this Plan on which the denial is based; (iii) describe the additional material or information, if any, necessary for the claimant to receive benefits and explain why such information is necessary; (iv) indicate the steps to be taken by the claimant if a review of the denial is desired, including the time limits applicable thereto; and (v) contain a statement of the claimant’s right to bring a chit action under ERISA in the event of an adverse benefit determination on review. If notice of the adverse benefit determination is not furnished in accordance with the preceding provisions of this Section, the claim shall be deemed denied and the claimant shall be permitted to exercise his right to review as set forth below.

          (c) Review of Denied Claim. If a claim is denied and a review is desired, the claimant shall notify the Administrative Committee in writing within sixty (60) days after receipt of written notice of a denial of a claim. In requesting a review, the claimant may submit any written comments, documents, records, and other information relating to the claim, the claimant feels are appropriate. The claimant shall, upon request and free of charge, be provided reasonable access to, and copies of, all documents, records and other information “relevant” to the claimant’s claim for benefits. The Administrative Committee shall review the claim taking into account all comments, documents, records and other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial benefit determination.

          (d) Decision on Review. The Administrative Committee shall provide the claimant with written notice of its decision on review within a reasonable period of time, but not later than sixty (60) days after receipt of request upon review. An extension of time for making the decision on the request for review is allowable if special circumstances shall occur, but such an extension shall not extend beyond one hundred twenty (120) days from the date the request for review is received by the Administrative Committee. Written notice of the extension of time shall be delivered or mailed within sixty (60) days after receipt of the request for review, indicating the special circumstances requiring an extension and the date by which the Administrative Committee expects to render a determination.

          In the event of an adverse benefit determination on review, the notice thereof shall (i) specify the reason or reasons for the adverse benefit determination; (ii) reference the specific provisions of this Plan on which the benefit determination is based; (iii) contain a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all documents, records and other information “relevant” to the claimant’s claim for benefits; and (iv) inform the claimant of the right to bring a civil action under the provisions of ERISA.

          For purposes hereof, any document, record and item of information shall be considered “relevant” to the claimant’s claim if it (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, whether or not actually relied upon in making the determination; or (iii) demonstrates compliance with the administrative processes and safeguards of this claims procedure.

          (e) Preservation of Remedies. After exhaustion of the claims procedure as provided herein, nothing shall prevent the claimant from pursuing any other legal or equitable remedy otherwise available, including the right to bring a civil action under Section 502(a) of ERISA, if applicable. Notwithstanding the foregoing, no legal action may be commenced or maintained against the Company, any Employing Company or the Administrative Committee more than ninety (90) days after the claimant has exhausted the administrative remedies set forth in this Section 3.6.

ARTICLE IV
Arbitration

     4A Any controversy relating to a claim arising out of or relating to this Plan, including, but not limited to claims for benefits due under this Plan, claims for the enforcement of ERISA, claims based on the federal common law of ERISA, claims alleging discriminatory discharge under ERISA, claims based on state law, and assigned claims relating to this Plan shall be settled by arbitration in accordance with the then current Employee Benefit Claims Arbitration Rules of the American Arbitration Association (AAA) or any successor rules which are hereby incorporated into the Plan by this reference; provided, however, both the Company and the Participant shall have the right at any time to seek equitable relief in court without submitting the issue to arbitration.

     4.2 Neither the Participant (or his beneficiary) nor the Plan may be required to submit any such claim or controversy to arbitration until the Participant (or his beneficiary) has first exhausted the Plan’s internal appeals procedures set forth in Section 3.6. However, if the Participant (or his beneficiary) and the Company agree to do so, they may submit the claim or controversy to arbitration at any point during the processing of the dispute.

     4.3 The Company will bear all costs of arbitration, except that the Participant will pay the filing fee set by the AAA and the arbitrator shall have the power to apportion among the parties expenses such as pre-hearing discovery, travel, experts’ fees, accountants’ fees, and attorney’s fees and except as otherwise provided herein. The decision of the arbitrator shall be final and binding on all parties, and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.

     4.4 If there is a dispute as to whether a claim is subject to arbitration, the arbitrator shall decide that issue. The claim must be filed with the AAA within the applicable statute of limitations period. The arbitrator shall issue a written determination sufficient to ensure consistent application of the Plan in the future.

     4.5 Any arbitration will be conducted in accordance with the following provisions, not withstanding the Rules of the AAA. The arbitration will take place in a neutral location within the metropolitan area in which the Participant was or is employed by an Employing Company. The arbitrator will be selected from the attorney members of the Commercial Panel of the AAA who reside in the metropolitan area where the arbitration will take place and have at least 5 years of ERISA experience. If an arbitrator meeting such qualifications is unavailable, the arbitrator will be selected from the attorney members of the National Panel of Employee Benefit Claims Arbitrators established by the AAA.

     4.6 In any such arbitration, each party shall be entitled to discovery of any other party as provided by the Federal Rules of Civil Procedure then in effect; provided, however, that discovery shall be limited to a period of 60 days. The arbitrator may make orders and issue subpoenas as necessary. The arbitrator shall apply ERISA, as construed in the federal Circuit in which the arbitration takes place, to the interpretation of the Plan and the Federal Arbitration Act to the interpretation of this arbitration provision. To the extent that state law is not preempted by ERISA, then the law of Alabama applies.

     4.7 Any party has the right to arrange for a stenographic record to be made of the proceedings, which stenographic record shall be the official record. Either party may make an offer of judgment at any time in accordance with the procedures of Rule 68 (or its successor) of the Federal Rules of Civil Procedure. The existence of such an offer is not admissible in any proceeding. If the monetary award of the arbitrator to a party is less than any monetary offer to that party plus 20 percent of such offer, then that party receiving such award shall pay the other party his reasonable attorneys’ fees, experts’ fees, accountants’ fees and other costs incurred with respect to the arbitration following the date of the offer of judgment. Such amount is to be deducted from the award prior to payment. Arbitration is the exclusive remedy for any dispute between the parties other than equitable relief which either party may seek through the court system.

ARTICLE V
Eligibility

     5.1 Any Employee who is a member of a select group of management or highly compensated Employees, is eligible to participate in the SmartInvestor Retirement Plan, and is selected for participation in the Plan by the Administrative Committee in its sole discretion, shall be eligible to participate in the Plan. An Employee who is selected to participate shall be designated on Exhibit B hereto. An Employee shall become a Participant by agreeing to be bound by the terms of this Plan, including the non-competition provisions of Article IX.

     5.2 Notwithstanding the above, the Administrative Committee shall be authorized to modify the eligibility requirements and rescind the eligibility of any Participant if necessary to insure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees under ERISA.

     5.3 If the Administrative Committee determines that a Participant is no longer eligible to participate in the Plan no additional Employer Contributions shall be made on such Participant’s behalf until it is again determined he is eligible to participate. The Account of such a Participant shall continue to be adjusted by the provisions of Article VII until the Account is distributed under Article VIII.

ARTICLE VI
Employer Contributions

     6.1 Subject to compliance with the provisions of Article IX, the Account of each Participant shall be credited, as soon as administratively possible but no later than as of the close of the Plan Year, with an amount specified under 6.1(a) less the amount specified under 6.1(b) as follows:

          (a) An amount equal to the employer contribution the Company would have made to the Smartlnvestor Retirement Plan on behalf of the Participant if the Compensation of the Participant for the Plan Year were not subject to restrictions under Section 401(a)(17) of the Code and if employer contributions to the Smartlnvestor Retirement Plan were not subject to limitations under Section 415 of the Code.

          (b) The amount equal to the Company’s employer contribution on behalf of the Participant to the Smartlnvestor Retirement Plan for the Plan Year.

     6.2 The amount credited under Section 6.1 shall be subject to vesting under the same vesting schedule and subject to the same terms and conditions applicable to the vesting of employer contributions under the Smartinvestor Retirement Plan.

ARTICLE VII
Investment of Accounts

     7.1 The Account of each Participant shall be credited as of the last day of each calendar quarter with investment earnings and losses based upon the assets in the Account or on such more frequent basis as shall be authorized by the Administrative Committee. Upon

becoming eligible to participate and before the beginning of each Plan Year, Participants may request how the Employer Contributions are to be invested. The investment preference shall be made in writing on a form prescribed by the Company and shall be delivered to the Company at least ten (10) days prior to such Enrollment Date and shall be effective as of such Enrollment Date. The Investment Request made in accordance with this Article VII shall continue from Plan Year to Plan Year unless the Participant changes the Investment Request by submitting a written request to the Company on a form prescribed by the Company not later than the tenth (10th) day prior to the next succeeding Plan Year. Any such change shall become effective as of the first day of the Plan Year next following the Plan Year in which such request is submitted to the Company. The Administrative Committee shall be authorized to permit more frequent changes in investment preferences to be effective on such dates as it shall specify. The Administrative Committee shall consider the Investment Request but is not obligated to follow such requests.

     7.2 Participants shall be permitted to request from among such investment options as the Administrative Committee may permit and can allocate their Accounts among such options for the Plan Year. Dividends, interest and other distributions received with respect to any Investment Request shall be deemed to be reinvested in the same investment option on such valuation system as shall be approved by the Administrative Committee. No Participant shall be entitled to any voting rights with respect to any shares of Common Stock credited to his Account.

     7.3 At the end of each Plan Year (or on a more frequent basis as determined by the Administrative Committee), a report shall be issued to each Participant who has an Account and said report will set forth the value in such Account.

     7.4 The Accounts under the Plan shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor any Account shall be required to hold any actual fund or asset.

ARTICLE VIII
Distribution of Accounts

     8.1 Subject to compliance with the provisions of Article IX, when a Participant has a Separation from Service with an Employing Company, said Participant shall be entitled to receive the vested balance of his Account in cash in a lump sum or in equal monthly, quarterly or annual installments not to exceed a fifteen (15) year period as specified on the Participant’s election form. The portion of a Participant’s Account which is not fully vested on the date of his Separation from Service with an Employing Company shall be forfeited and the Participant shall have no further rights with respect thereto.

          In the event the value of a Participant’s vested Account balance at the time distribution is to commence is $10,000 or less, the Account shall be distributed in a lump sum notwithstanding a Participant’s election to have his Account distributed in installments under the Plan. All payments due under this Section 8.1 shall be made or commence as soon as reasonably feasible following a Participant’s Separation from Service. Any amounts deemed to be invested in a Common Stock fund shall be equal to the market value of any shares of Common Stock reported in a Participant’s Account, based on the Closing Price of such Common Stock during

the day on which the distribution is processed immediately preceding the date of any lump sum or installment distribution. No portion of a Participant’s Account shall be distributed in Common Stock. The portion of an Account attributable to investments other than Common Stock shall be valued on the date a distribution is processed. The transfer by a Participant between Employing Companies shall not be deemed to be a Separation from Service with an Employing Company.

     Notwithstanding the foregoing, distributions to a Key Employee as a result of Separation from Service, whether the distribution is made in the form of a lump sum or installments, shall not be made or the payments may not begin before the date which is six (6) months following the date of the Separation from Service, or, if earlier, the date of death of the Key Employee.

     8.2 On the Effective Date, a Participant shall elect the form of payment to be received upon his death, Separation from Service or upon a Change in Control, such form to be either (a) a lump sum, or (b) monthly, quarterly, or annual installments over a period not to exceed fifteen (15) years. The initial payment election with respect to the form of payment shall govern the distribution of such Participant’s Account, except as provided in Section 8.3. If a Participant fails to specify a form of payment, his Account shall be distributed in a lump sum.

     8.3 With the approval of the Administrative Committee, a Participant may amend a prior payment election on a form provided by the Administrative Committee in order to change the form of distribution of his Account. Any such amendment to a prior payment election shall be given effect by the Administrative Committee only if the election to change the form of payment (i) does not take effect until at least twelve (12) months after the date on which the payment election form is filed with the Administrative Committee and (ii) the first payment with respect to such change in election is made is deferred for a period of not less than five (5) years after the date such payment would otherwise have been made except in the event of death or Unforeseeable Emergency.

     Notwithstanding the foregoing, a Participant may elect to make a new payment election by filing a new election form with the Administrative Committee on or before December 31, 2007; provided that any such election applies only to amounts that would not otherwise be payable in the year such new election is made and does not cause an amount to be paid in the year such new election is made that would not otherwise be payable in such year.

     8.4 Subject to compliance with the provisions of Article IX, upon the death of a Participant prior to the payment of his Account, the vested balance of his Account shall be paid to the Participant’s Beneficiary in a lump sum or in equal monthly, quarterly or annual installments not to exceed a fifteen (15) year period as specified on the Participant’s payment election form with such payment to be made or payments to commence in the case of installment distributions within sixty (60) days following the close of the calendar quarter in which the Administrative Committee is provided evidence of the Participant’s death (or as soon as reasonably practicable thereafter); provided, however, if the value of a Participant’s Account at the time an installment distribution is to commence is $10,000 or less, the Account shall be distributed in a lump sum. In the event a Beneficiary designation is not on file or the designated Beneficiary is deceased or cannot be located, payment will be made to the estate of the Participant. The market value of any shares of Common Stock credited to a Participant’s

Account shall be based on the Closing Price of such Common Stock during the day on which the distribution is processed immediately preceding the date of any lump sum or installment distribution. No portion of a Participant’s Account shall be distributed in Common Stock. The portion of an Account attributable to investments other than Common Stock shall be valued on the date a distribution is processed. In the event of the death of a Participant subsequent to the commencement of installment payments but prior to the completion of the payments, the installments shall continue and shall be paid to the Beneficiary as if the Participant had not died.

     8.5 The Beneficiary designation may be changed by the Participant or former Participant at any time without the consent of the prior Beneficiary.

     8.6 A Participant may request a distribution due to an Unforeseeable Emergency by submitting a written request to the Administrative Committee accompanied by evidence to demonstrate that the circumstances being experienced qualify as an Unforeseeable Emergency. The Administrative Committee shall have the authority to require such evidence as it deems necessary to determine if a distribution is warranted. If an application for a hardship distribution due to an Unforeseeable Emergency is approved, the distribution is limited to an amount sufficient to meet the emergency. The allowed distribution shall be payable in a method determined by the Administrative Committee as soon as possible after approval of such distribution.

     8.7 Upon a Change in Control, and subject to compliance with the provisions of Article IX, a Participant shall be paid the vested balance of his Account in a lump sum within sixty (60) days following the close of the calendar quarter in which such event occurs

     8.8 Notwithstanding any provision of this Plan to the contrary, pursuant to Code Section 409A(a)(2), a Participant’s Account may not be distributed earlier than: (a) a Participant’s Separation from Service, (b) the Participant’s death, (c) a Change in Control or (d) the occurrence of an Unforeseeable Emergency.

ARTICLE IX
Covenant Not to Compete, Non-Solicitation,
Non-Disclosure and Forfeiture

     9.1 As a condition of participation in the Plan, Employee agrees with the Company and his Employing Company as follows:

          (a) While Employee is employed by any Employing Company, Employee will devote his or her entire time, energy and skills to the service of the Employing Company. Such employment shall be at the will and at the pleasure of the board of directors of each Employing Company.

          (b} Employee will not, during the term of his or her employment with an Employing Company, and after termination for any reason of his or her employment with an Employing Company, directly or indirectly, either individually or as a stockholder, director, officer, consultant, independent contractor, employee, agent, member or otherwise of or through any corporation, partnership, association, joint venture, firm, individual or otherwise (hereinafter “Finn”), or in any other capacity;

          (i) Carry on or engage in a business like or similar to any business engaged in by the Employing Company in any territory in which the Employing Company has been or is conducting business;

          (ii) Solicit or do business with any customer of the Employing Company; or

          (iii) Solicit, directly or indirectly, any employee of any Employing Company to leave their employment with the Employing Company for any reason. For purposes of this Agreement, the Employing Company and Employee agree that Employee shall be deemed to have solicited an employee in violation of this Agreement if such employee is hired by Employee or his or her Firm within six (6) months of Employee’s last employment date with any Employing Company.

          (c) During the term of his or her employment with an Employing Company and thereafter, Employee shall not divulge, or furnish or make accessible to any third party, company, corporation or other organization (including, but not limited to, customers, competitors or governmental agencies), without the Company’s prior written consent, any trade secrets, customer lists, information regarding customers, or other confidential information concerning any Employing Company or its business, including without limitation confidential methods of operation and organization, trade secrets, confidential matters related to pricing, markups, commissions and customer lists.

     9.2 In the event of a breach by Employee of all or any part of the provisions of subdivisions (b) or (c) of Section 9.1, the Employee shall immediately forfeit all rights to any benefits under this Plan attributable to Employer Contributions and the Company shall be entitled to receive from the Employee an amount equal to all benefits previously paid to Employee attributable to Employer Contributions.

     9.3 In the event of a breach or threatened breach by Employee of all or any part of the provisions of subdivisions (b) of Section 9.1 within the two-year period following his termination of employment or (c) of this Section 9.1 at any time, the Company shall in addition to any remedies that may be applicable under Section 9.2, be entitled to a preliminary and permanent injunction restraining Employee from such breach without limiting any other rights or remedies available to the Company for such breach or threatened breach. The two-year period during which the Company shall be entitled to an injunction for a breach or threatened breach of subdivision (b) of Section 9.1 shall be extended by any period of time during which Employee is in default of the covenants contained in this Article IX.

     9.4 Employee specifically recognizes and affirms that each of the covenants contained in subdivisions (b) and (c) of this Section 9.1 is a material and important term of this Plan which has induced the Company to permit Employee to participate in this Plan, and Employee further agrees that should all or any part or application of subdivisions (b) or (c) of Section 9.1 of this Plan be held or found invalid or unenforceable for any reason whatsoever by a court of competent jurisdiction in an action between Employee and the Company, such invalidity or unenforceability shall not affect any other provisions of the Plan, and the Company shall be entitled to rescind (but not obligated to do so) all benefits attributable to Employer Contributions

under Article VII granted to Employee under this Plan. If Employee has been paid benefits under this Plan, the Company shall be entitled to receive from Employee an amount equal to all benefits paid to Employee attributable to Employer Contributions.

     9.5 Notwithstanding any provision to the contrary herein contained, Section 9.1(b) shall not apply:

          (a) Upon the involuntary termination of the Employee’s employment by an Employing Company other than for Cause within one (1) year following a Change in Control; or

          (b) Upon the voluntary termination of employment by the Employee for any reason within the thirty (30) day period immediately after the one (1) year period following a Change in Control.

For purposes of this Agreement, “Cause” shall mean (i) a willful and material violation of applicable banking laws and regulations, (ii) dishonesty, (iii) theft, (iv) fraud, (v) embezzlement, (vi) commission of a felony or a crime involving moral turpitude, (vii) substantial dependence or addiction to alcohol or any drug, (viii) conduct disloyal to an Employing Company or its affiliates, or (ix) willful dereliction of duties or disregard of lawful instructions or directions of the officers of directors of an Employing company or its affiliates relating to a material matter.

For purposes of this Article, “Change in Control” shall have the meaning set forth in Section 2.5.

ARTICLE X
Nature of Employer Obligation and Participant Interest

     10.1 A Participant, his Beneficiary, and any other person or persons having or claiming a right to payments under this Plan shall rely solely on the unsecured promise of the Company set forth herein, and nothing in this Plan shall be construed to give a Participant, Beneficiary, or any other person or persons any right, title, interest, or claim in or to any specific assets, fund, reserve, account, or property of any kind whatsoever owned by the Company or in which it may have any right, title, or interest now or in the future; but a Participant shall have the right to enforce his or her claim against the Company in the same manner as any =secured creditor.

     10.2 All amounts paid under this Plan shall be paid in cash from the general assets of the Company. Benefits shall be reflected on the accounting records of the Company but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust or a fiduciary relationship of any kind between the Company and an employee or any other person. Neither the employee nor a Beneficiary of an employee shall acquire any interest greater than that of an unsecured creditor.

     10.3 Any Benefits payable under this Plan shall be independent of, and in addition to, any other benefits or compensation of any sort, payable to or on behalf of the Participant under or pursuant to any other arrangement sponsored by the Company or any other agreement between the Company and the Participant.

ARTICLE XI
Miscellaneous Provisions

     11.1 Neither the Participant, his Beneficiary, nor his legal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and

     nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.

     11.2 The assets from which Participant’s benefits shall be paid shall at all times be subject to the claims of the creditors of the Employing Companies and a Participant shall have no right, claim or interest in any assets as to which account is deemed to be invested or credited under the Plan.

     11.3 The Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to benefits under the Plan prior to such amendment, modification, or termination. The Plan may also be amended or modified by the Administrative Committee if such amendment or modification does not involve a substantial increase in cost to the Employing Companies.

     11.4 It is expressly understood and agreed that the payments made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment by an Employing Company.

     11.5 The Company shall deduct from each payment under the Plan the amount of any tax (whether federal, state or local income taxes, Social Security taxes or Medicare taxes) required by any governmental authority to be withheld and paid over by the Employing Company to such governmental authority for the account of the person entitled to such distribution.

     11.6 Any Employer Contributions credited to a Participant’s Account while employed by an Employing Company shall not be considered compensation earned currently for purposes of any tax-qualified retirement plan sponsored by Compass. Distributions from a Participant’s Account shall not be considered wages, salaries or compensation under any other employee benefit plan.

     11.7 No provision of this Plan shall be construed to affect in any manner the existing rights of an Employing Company to suspend, terminate, alter, modify, whether or not for cause, the employment relationship of the Participant and an Employing Company.

     11.8 Except to the extent pre-empted by federal law, this Plan, and all its rights under it, shall be governed by and construed in accordance with the laws of the State of Alabama.

     11.9 This Plan shall be binding upon the Company, its assigns, and any successor which shall succeed to substantially all of its assets and business through merger, consolidation or acquisition.

     11.10 Compliance with the AJCA. Code Section 409A, as added by the American Jobs Creation Act of 2004 (AJCA), substantially revised the requirements applicable to certain deferred compensation arrangements. This Plan is intended to comply, and to be operated in all respects in compliance, with the requirements of Code Section 409A and all Internal Revenue Service rulings, Treasury regulations or other pronouncements or guidance implementing or interpreting its provisions. All provisions of this Plan shall be interpreted or construed so as to meet the requirements of Code Section 409A and all regulations, rulings and other pronouncements or guidance thereunder and no action, amendment or termination of the Plan shall be effective to the extent it would cause the Plan to violate the requirements of Code Section 409A.

     In the event subsequent Treasury regulations, Internal Revenue Service rulings or other pronouncements or guidance interpreting or implementing the provisions of Code Section 409A affect any provisions of this Plan or any election or other administrative form used for the Plan, this Plan and any election or other administrative form used for the Plan shall be amended, as necessary, to comply with such regulation, ruling or other pronouncement or guidance; and, until adoption of any such amendment, the provisions hereof shall be construed and interpreted to comply with the applicable provisions of such regulation, ruling or other pronouncement or guidance. No such amendment to the Plan or to any administrative form shall be considered prejudicial to any interest of a Participant or Beneficiary hereunder.

     11.11 It is intended that Plan transactions and elections made by Participants who are subject to Section 16 of the Exchange Act meet applicable requirements for exemption pursuant to Rule 16b-3 under the Exchange Act and that this Plan be operated and interpreted in all respects in compliance therewith. Accordingly, notwithstanding anything in this Plan to the contrary, all transactions, elections, amendments, applications or other actions or determinations in connection with the Plan (including without limitation elections and amendments under Article VIII, hardship distribution applications under Section 8.6, and amendments to the Plan) with respect to or affecting any Participant subject to Section 16 of the Exchange Act shall be subject to the prior approval of the Board of Directors (or the Compensation Committee thereof}. Notwithstanding anything in this Plan to the contrary, the Administrative Committee may restrict, rescind or deem void any Plan transaction or election, or impose other restrictions, rules or procedures with respect to the Plan or participation therein, to the extent deemed necessary or appropriate by the Administrative Committee in furtherance of this Section 11.11.

     IN WITNESS WHEREOF, the Plan as amended and restated as of January 1, 2005, has been executed pursuant to approval of the Administrative Committee, this 18^th day of December, 2006.

ATTEST:			COMPASS BANCSHARES, INC.
By:	/s/ Joseph B. Cartee		By:	/s/ Garrett R. Hegel
	Its:	Associate General Counsel		Its:	Chief Financial Officer

Exhibit A
Compass Bancshares, Inc.
Smartlnvestor Retirement Restoration Plan

Name

Exhibit B
Compass Bancshares, Inc.
SmartInvestor Retirement Restoration Plan

William C. Helms

EX-10.(U)

Exhibit (10)(u)

NON-EMPLOYEE DIRECTOR
RESTRICTED STOCK AWARD AGREEMENT

     THIS NON-EMPLOYEE DIRECTOR RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made and entered into as of                     , 20                     by and between Compass Bancshares, Inc., a Delaware corporation (the “Corporation”) and                      (the “Participant”).

     Pursuant to the terms of the Corporation’s 2006 Incentive Compensation Plan (the “Plan”), the Participant has been awarded shares of Restricted Stock (hereinafter defined), conditioned upon the execution and delivery by the Corporation and the Participant of this Agreement setting forth the terms and conditions applicable to such award.

     In consideration of the mutual covenants and obligations of the parties contained herein and in the Plan, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Definitions. The following definitions have the following meanings:

     “Award Date” shall mean                     , 20                    .

     “Board” shall mean the Board of Directors of the Corporation.

     “Committee” shall mean the Compensation Committee of the Board of Directors of the Corporation.

     “Common Stock” shall mean shares of the Corporation’s common stock, par value $2.00 per share.

     “Disability” shall mean that a Participant: (i) has established to the satisfaction of the Board that he or she is unable to perform his or her duties as a member of the Board by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve (12) months and (ii) has satisfied any requirement imposed by the Committee in regard to evidence of such disability.

     “Dividends” shall mean any dividends received by the Participant with respect to the Restricted Stock whether in the form of cash, stock or other securities and whether obtained by virtue of any distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares or other transaction.

     “Retirement” shall mean a Participant’s mandatory retirement from service as a member of the Board pursuant to the Corporation’s retirement policy for directors, as the same may be amended from time to time.

     “Sale of the Corporation” shall mean: (i) acquisition by any individual, entity or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3) of more than fifty percent of either the then outstanding shares of Common Stock or the combined voting power of the then

outstanding voting securities of the Corporation entitled to vot e generally in the election of directors, or (ii) consummation by the Corporation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Corporation.

All other capitalized terms not defined herein shall have the meanings set forth in the Plan.

     2. Award of Restricted Stock. Pursuant to the terms of the Plan, the Corporation hereby awards to the Participant, effective as of the Award Date, ___shares of Common Stock, subject to the terms, conditions and restrictions described in this Agreement and in the Plan (the “Restricted Stock”). Except as provided in this Agreement, the Participant shall have, with respect to the Restricted Stock, all of the rights of a stockholder of the Corporation, including the right to vote and to receive any Dividends. All Dividends shall be subject to the same restrictions as are applicable to such Restricted Stock.

     3. Restrictions and Conditions. The following conditions and restrictions shall apply to the Restricted Stock:

     (a) Prior to release pursuant to Section 4 hereof, the Participant shall not sell, transfer, pledge or assign any portion of the Restricted Stock except as specifically permitted by the Plan and this Agreement.

     (b) The shares of Restricted Stock issued hereunder in the name of the Participant shall be held in an account for the benefit of the Participant maintained by the Corporation at its transfer agent. Any certificate evidencing shares of Restricted Stock issued for such account prior to the release date hereunder shall bear a legend or other appropriate restriction substantially of the following substance:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Compass Bancshares, Inc., 2006 Incentive Compensation Plan and a Restricted Stock Award Agreement, dated                     , 20                    , entered into between the registered owner and the Corporation. Copies of such Plan and Agreement are on file in the offices of the Corporation, 15 South 20^th Street, Birmingham, Alabama 35233.”

     (c) If the Participant ceases to serve as a member of the Board prior to the third anniversary of the Award Date (other than through the Participant’s Retirement, the Participant’s death, the Participant’s Disability, or Sale of the Corporation), the Restricted Stock and any Dividends shall be forfeited.

     4. Release of Restrictions.

     (a) The Restricted Stock and any Dividends shall be held by the Corporation until released to the Participant in accordance with the terms of the Plan and this Agreement. Except as otherwise provided in this Agreement, the Restricted Stock and any Dividends shall be released to Participant as soon as administratively practicable following the third anniversary of the Award Date.

     (b) If, prior to the third anniversary of the Award Date, the Participant ceases to be a member of the Board as a result of (i) the Participant’s Retirement or (ii) the Participant’s death or Disability, the Restricted Stock and any Dividends shall be released to the Participant (or the Participant’s personal representative or estate in case of the Participant’s death).

     (c) In the event of a Sale of the Corporation prior to the third anniversary of the Award Date while the Participant is a member of the Board, the Restricted Stock and any Dividends shall be released as and when determined by the Committee.

     5. Waiver of Rights under the 2002 Incentive Compensation Plan. Effective as of the Award Date and in consideration of the award of the Restricted Stock under this Agreement, the Participant hereby waives and relinquishes any and all rights to receive options to acquire Common Stock pursuant to Section 12 of the Compass Bancshares, Inc. 2002 Incentive Compensation Plan.

     6. Adjustments. In the event of any change in the outstanding Common Stock of the Corporation by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares or otherwise, the Committee shall adjust the number of shares of Common Stock which may be issued under the Plan and the Committee shall provide for an equitable adjustment of any shares issuable pursuant to awards outstanding under the Plan.

     7. Assignment and Transfer. Participant may assign or transfer his rights under this Agreement under the following circumstances: (i) by will or the laws of descent and distribution, in which case the Restricted Stock may be received in accordance with the provisions of this Agreement or (ii) by gift or pursuant to a domestic relations order to a family member (or a trust for their benefit), in which case the Participant shall promptly report the transfer to the Secretary of the Corporation so that the Corporation may deliver to his transferee all requisite documents concerning the Plan (including the prospectus meeting the requirements of Section 10(a) of the Securities Act of 1933, as amended). For this purpose, “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, a trust in which these persons have more than fifty (50) percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty (50) percent of the voting interests. A transfer to an entity in which more than fifty (50) percent of the voting interests are owned by family members, or the Participant, in exchange for an interest in that entity is also permitted pursuant to this Section 7.

     8. Disposition of Shares. Participant agrees to notify the Corporation promptly of the sale, gift or other disposition of any shares of Common Stock awarded pursuant to this Agreement.

     9. Compliance with Laws and Regulations. The obligation of the Corporation to deliver shares of Restricted Stock hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.

     10. Participant Bound by Plan. Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof, including the terms and provisions adopted after the award of the Restricted Stock but prior to the vesting thereof. In the event of any conflict between the provisions of the Plan and this Agreement, the Plan shall control.

     11. Notices. Any notice hereunder to the Corporation shall be in writing and addressed to the Secretary of the Corporation, 15 South 20^th Street, Birmingham, Alabama 35233, subject to the right of the Corporation to designate at any time hereafter in writing some other address.

     12. Miscellaneous. This Agreement shall be governed by the laws of the State of Alabama. This Agreement together with the Plan contains the entire agreement and understanding of the parties hereto with respect to the matters covered hereby and may not be amended except in writing, signed by the parties hereto. This Agreement may be executed in one or more counterparts each of which shall be considered one and the same instrument.

     13. Headings. The section headings used herein are solely for reference only and shall not affect in any way the meaning and interpretation of the terms and conditions set forth herein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

	COMPASS BANCSHARES, INC.
	By:
	Name:
	Title:
WITNESS:	PARTICIPANT
Printed Name

EX-10.(CC)

Exhibit (10)(cc)

SUMMARY OF COMPENSATION ARRANGEMENTS
FOR NAMED EXECUTIVE OFFICERS AND DIRECTORS

Named Executive Officers

     Following is a description of compensation arrangements that have been approved by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of Compass Bancshares, Inc. (“Compass”) for the Company’s Chief Executive Officer, Chief Financial Officer and the other three most highly compensated executive officers as of the end of the 2006 fiscal year (the “Named Executive Officers”). This description is intended to be a summary of existing oral, at-will arrangements, and in no way is intended to provide any additional rights to any of the Named Executive Officers.

     2007 Annual Base Salaries and 2006 Bonus Payouts. The Compensation Committee has approved the following annual base salaries, calculated from January 1, 2007, and cash bonus payments for performance in fiscal year 2006 under the 2006 Management and Executive Incentive Plan (“2006 MEIP”) for the Named Executive Officers: D. Paul Jones, Jr. – Chairman and Chief Executive Officer, annual base salary of $1,075,000 and 2006 cash bonus payment of $1,535,625; Garrett R. Hegel – Chief Financial Officer, annual base salary of $495,000 and 2006 cash bonus payment of $392,634; George M. Boltwood – Senior Executive Vice President, annual base salary of $430,000 and 2006 cash bonus payment of $228,085; James D. Barri – Executive Vice President, annual base salary of $455,000 and 2006 cash bonus payment of $212,967; and William C. Helms – Executive Vice President, annual base salary of $370,000 and 2006 cash bonus payment of $321,942. These 2006 MEIP payouts were determined based on the level of attainment of previously-disclosed company-wide performance criteria (earnings per share growth and return on common equity) as well as, for all of the Named Executive Officers other than Mr. Jones, individual performance goals related to the departments or divisions for which they have supervisory responsibility (including such measures as pretax income after charge-offs, deposit balances, loan balances, targeted revenue growth, net charge-offs, non-performing asset levels, non-interest expense, production loan spreads, and asset management fee revenue). The Compensation Committee also approved an additional discretionary 2006 bonus amount of $53,280 for Mr. Barri.

     Performance Criteria for 2007 Bonus Awards. The Compensation Committee has approved the 2007 Management and Executive Incentive Plan (“2007 MEIP”), as well as maximum bonus opportunities and certain performance measures for determination of Named Executive Officer cash bonus awards for the 2007 fiscal year. Under the 2007 MEIP, the bonus awards payable for the 2007 fiscal year, if any, will vary depending on the extent to which actual performance meets, exceeds or falls short of specified performance criteria. The company-wide performance criteria applicable to all 2007 MEIP awards are earnings per share growth (85% weight) and return on common equity (15% weight). The 2007 MEIP payout for Mr. Jones will depend solely on these company-wide measures. The 2007 MEIP payouts to the other Named Executive Officers may also depend in part on achievement of other goals related to their individual performance or the performance of the departments or divisions for which they have

supervisory responsibility (which may include similar measures as those used in 2006 MEIP awards), to be determined by Mr. Jones. The maximum 2007 bonus opportunity established by the Committee for Mr. Jones is 200 percent of his 2007 base salary, and the maximum bonus opportunity for the other Named Executive Officers is 100 percent of their respective 2007 base salaries. Mr. Jones’s 2007 MEIP award (like his 2006 MEIP award) will be evidenced by dollar-denominated performance units pursuant to a Performance Unit Award Agreement.

     Performance Contingent Restricted Stock (“PCRS”) Awards. The Compensation Committee granted each Named Executive Officer a 2007 PCRS award under the 2002 Incentive Compensation Plan covering the following maximum number of shares of restricted stock that vest based on pre-established performance goals measured over the 2007-2009 performance period: D. Paul Jones, Jr.—43,143; Garrett R. Hegel—9,933; George M. Boltwood—8,628; James D. Barri—9,130; and William C. Helms—7,424. As with the 2006 PCRS awards, vesting of the 2007 PCRS awards is based on three different performance criteria: (1) Compass’ performance on earnings per share growth and return on average tangible equity benchmarks; (2) Compass’ relative performance against banks represented in the Standard & Poor’s 500 Stock Index on the same two goals; and (3) Compass’ performance on the return on average tangible equity benchmark only. At the conclusion of the performance period, the approach yielding the largest payout is used to determine award levels. The first two measures have the potential to yield maximum awards at 100% of the grant amount. The third performance measure will result in maximum awards at 50% of the grant amount. If Compass’ performance is below threshold levels on all three measures, no shares will be earned. The other terms of the 2007 PCRS awards, which are the same as the 2006 PCRS awards, are set forth in the forms of Performance Contingent Restricted Stock Award Agreements exhibited to Compass’ periodic reports.

     In addition, on January 31, 2007, the Named Executive Officers’ PCRS awards relating to the 2004-2006 measurement period vested. In 2005, the original 2004 PCRS awards were truncated such that one-third of the covered shares would be eligible to vest based on the originally established criteria, with the remainder cancelled. A number of shares equal to the remaining two-thirds of each Named Executive Officer’s original award was added to his PCRS award for the 2005-2007 performance period. The vesting of the truncated 2004 awards resulted in the release of the following shares: Jones—10,865; Hegel—2,824; Boltwood—2,488; Barri—2,488 and Helms—2,078; with the following shares withheld for taxes: Hegel—764; Boltwood—541; Barri—673 and Helms—452.

     Stock Option Awards. The Compensation Committee granted each Named Executive Officer a 2007 stock option award covering the following number of shares: D. Paul Jones, Jr.—187,681; Garrett R. Hegel—43,210; George M. Boltwood—37,536; James D. Barri—39,718; and William C. Helms—32,298. The options (which are incentive stock options to the extent permitted) have a ten-year term and vest in equal annual installments over a three-year period. The remaining terms of the stock option awards are set forth in the forms of Stock Option Agreements exhibited to Compass’ periodic reports.

     Other. The Named Executive Officers also participate in Compass’ executive and regular benefit plans and programs, including retirement plans, deferred compensation plans and equity

incentive plans, as disclosed in Compass’ 2006 Proxy Statement and in other exhibits to Compass’ filings with the Securities and Exchange Commission.

Directors

     The Board of Directors has approved the following cash compensation schedule for non-employee directors: (1) a monthly retainer of $2,083.33; (2) an additional monthly retainer of $666.66 for the Audit Committee Chairman and $333.33 for the other committee chairmen; (3) meeting fees of $1,750 for each Board meeting attended and $1,300 for each committee meeting attended; and (4) reimbursement of reasonable out-of-pocket expenses incurred for attendance at Board, committee and shareholder meetings and other business related expenses (including the travel expenses of spouses if they are specifically invited to attend the meeting for appropriate business purposes). Directors may use Compass’ aircraft for travel to such meetings if available and approved in advance by the Chief Executive Officer.

     In addition, for 2007, each non-employee director received an award of 690 shares of restricted stock under Compass’ 2006 Incentive Compensation Plan, which vests in full after a three-year period. This award was granted in lieu of the regular annual stock option award covering 2,000 shares of common stock, and in connection with this restricted stock grant, each non-employee director agreed to waive his right to receive automatic stock option grants under the 2002 Incentive Compensation Plan.

     In order to encourage share ownership in Compass and the long-term retention of those shares, each non-employee director has the option to receive monthly retainers and attendance fees in cash or to have all or a portion of those fees paid into an account for the purchase of Compass common stock under the Director & Executive Stock Purchase Plan, which provides for an additional matching contribution from Compass of 45 percent and a “gross-up” to reimburse the directors for all federal and state income tax obligations attributable to the matching contributions.

EX-21

Exhibit (21)

Subsidiaries of the Registrant

Subsidiaries	State of Incorporation
Compass Bank	Alabama
Central Bank of the South	Alabama
Compass Southwest LP	Delaware
Tucson Loan Holdings, Inc.	Delaware
Compass Capital Markets, Inc.	Alabama
Compass Limited Partner, Inc.	Delaware

EX-23.(A)

Exhibit (23)(a)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

     (1) Registration Statements (Form S-3 Nos. 333-60725, 333-76422, 333-81371, 333-84160, 333-84556, and 333-90798) of
           Compass  Bancshares, Inc.,

     (2)  Registration Statements (Form S-4 Nos. 333-69524 and 333-129940) of Compass  Bancshares, Inc., and

     (3)  Registration Statements (Form S-8 Nos. 33-26884, 33-57003, 33-65437, 333-15115, 333-15117, 333-66266, 333-67835, 333-86455,
           333-90806, 333-101674, and 333-101975) of Compass Bancshares, Inc.;

of our reports dated February 26, 2007, with respect to the consolidated financial statements of Compass Bancshares, Inc., Compass Bancshares, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Compass Bancshares, Inc., included in the Annual Report (Form 10-K) for the year ended December 31, 2006.

/s/ Ernst & Young LLP

Birmingham, Alabama
February 26, 2007

EX-23.(B)

Exhibit (23)(b)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-60725, 333-76422, 333-81371, 333-84160, 333-84556 and 333-90798), Registration Statements on Form S-4 (Nos. 333-69524 and 333-129940), and Registration Statements on Form S-8 (Nos. 33-26884, 33-57003, 33-65437, 333-15115, 333-15117, 333-66266, 333-67835, 333-86455, 333-90806, 333-101674 and 333-101975) of Compass Bancshares, Inc. of our report dated February 23, 2006 relating to the financial statements, which appear in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Birmingham, Alabama
February 22, 2007

EX-31.(A)

Exhibit (31)(a)

CERTIFICATION

I, D. Paul Jones, Jr., certify that:

(1) I have reviewed this Annual Report on Form 10-K of Compass Bancshares, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2007

/s/ D. Paul Jones, Jr.  

D. Paul Jones, Jr. 

Chief Executive Officer
Compass Bancshares, Inc. 

EX-31.(B)

Exhibit (31)(b)

CERTIFICATION

I, Garrett R. Hegel, certify that:

(1) I have reviewed this Annual Report on Form 10-K of Compass Bancshares, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 26, 2007

/s/ Garrett R. Hegel  

Garrett R. Hegel 

Chief Financial Officer
Compass Bancshares, Inc. 

EX-32.(A)

Exhibit (32)(a)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Compass Bancshares, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, D. Paul Jones, Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ D. Paul Jones, Jr.  

D. Paul Jones. Jr. 

Chief Executive Officer
Compass Bancshares, Inc. 

February 26, 2007

A signed original of this written statement required by Section 906 has been provided to Compass Bancshares, Inc. and will be retained by Compass Bancshares, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.(B)

Exhibit (32)(b)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Compass Bancshares, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Garrett R. Hegel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Garrett R. Hegel  

Garrett R. Hegel 

Chief Financial Officer
Compass Bancshares, Inc. 

February 26, 2007

A signed original of this written statement required by Section 906 has been provided to Compass Bancshares, Inc. and will be retained by Compass Bancshares, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.