COMPASS BANCSHARES INC - 10-Q Quarterly Report

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

SECURITIES AND EXCHANGE COMMISSION


		WASHINGTON, D.C. 20549


		FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


For the Period Ended June 30, 2003		Commission File No. 0-6032

[Logo] Compass Bancshares, Inc.

(Exact name of registrant as specified in its charter)


Delaware		63-0593897

(State of Incorporation)		(I.R.S. Employer Identification No.)

15 South 20th Street
Birmingham, Alabama 35233

(Address of principal executive offices)

(205) 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

None		None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock, $2 par value

(Title of Class)

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 whether the registrant is an accelerated filer (as defined in Exchange Act rule 12b-2): Yes þ No o

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

The number of pages of this report is 35.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1 — Financial Statements
	Consolidated Balance Sheets
	Consolidated Statements of Income
	Consolidated Statements of Shareholders’ Equity
	Consolidated Statements of Cash Flows
	Notes to the Consolidated Financial Statements
Item 2 — Management’s Discussion and Analysis of Results of Operations and Financial Condition
Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Item 4 — Controls and Procedures
PART II. OTHER INFORMATION
Item 1 — Legal Proceedings
Item 4 — Submission of Matters to Vote of Security Holders
Item 6 — Exhibits and Reports on Form 8-K
EX-31.1 CEO Section 302 Cert
EX-31.2 CFO Section 302 Cert
EX-32.1 CEO Section 906 Cert
EX-32.2 CFO Section 906 Cert

COMPASS BANCSHARES, INC. AND SUBSIDIARIES

INDEX


PART I.	FINANCIAL INFORMATION	Page

Item 1	Financial Statements




	Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002		3




	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2003 and 2002		4




	Consolidated Statements of Shareholders’ Equity for the Six Months Ended June 30, 2003 and 2002		5




	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002		6




	Notes to Consolidated Financial Statements		8




Item 2	Management’s Discussion and Analysis of Results of Operations and Financial Condition		23




Item 3	Quantitative and Qualitative Disclosures About Market Risk		30




Item 4	Controls and Procedures		31





PART II.	OTHER INFORMATION

Item 1	Legal Proceedings		32




Item 4	Submission of Matters to Vote of Security Holders		32




Item 6	Exhibits and Reports on Form 8-K		32

-2-

PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements

COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
(Unaudited)


					June 30, 2003			December 31, 2002

Assets
Cash and due from banks					$	675,449		$	734,540
Federal funds sold and securities purchased under agreements to resell						14,643			24,822
Trading account securities						33,743			22,710
Investment securities available for sale						6,854,249			4,783,696
Investment securities held to maturity (fair value of $277,531 and $490,518 for 2003 and 2002, respectively)						268,379			475,445
Loans						16,329,359			16,481,320
Allowance for loan losses						(234,158	)		(232,830	)

			Net loans			16,095,201			16,248,490
Premises and equipment, net						513,159			491,884
Goodwill						292,843			283,835
Other assets						875,560			819,287

				Total assets	$	25,623,226		$	23,884,709

Liabilities and Shareholders’ Equity
Deposits:
	Noninterest bearing				$	4,560,143		$	3,964,471
	Interest bearing					10,576,690			11,170,916

			Total deposits			15,136,833			15,135,387
Federal funds purchased and securities sold under agreements to repurchase						3,281,533			1,343,200
Other short-term borrowings						149,215			290,939
FHLB and other borrowings						4,362,189			4,438,416
Guaranteed preferred beneficial interests in Company’s junior subordinated deferrable interest debentures						453,702			461,716
Accrued expenses and other liabilities						265,338			283,549

				Total liabilities		23,648,810			21,953,207
Shareholders’ equity:
	Preferred stock (25,000,000 shares authorized; Issued — none)					—			—
	Common stock of $2 par value:
		Authorized — 300,000,000 shares; Issued — 131,127,307 shares in 2003 and 130,412,173 shares in 2002				262,255			260,824
	Treasury stock, at cost (5,281,312 shares in 2003 and 4,295,758 shares in 2002)					(166,168	)		(129,415	)
	Surplus					215,553			199,907
	Loans to finance stock purchases					(1,216	)		(1,563	)
	Unearned restricted stock					(7,168	)		(2,877	)
	Accumulated other comprehensive income					104,865			136,109
	Retained earnings					1,566,295			1,468,517

				Total shareholders’ equity		1,974,416			1,931,502

				Total liabilities and shareholders’ equity	$	25,623,226		$	23,884,709

-3-

COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In Thousands Except Per Share Data)
(Unaudited)


					Three Months Ended				Six Months Ended
					June 30				June 30

					2003		2002		2003		2002

Interest income:
	Interest and fees on loans				$	248,365	$	257,886	$	507,143	$	508,338
	Interest on investment securities available for sale					64,920		78,668		126,472		167,355
	Interest on investment securities held to maturity					4,163		11,267		9,840		23,988
	Interest on federal funds sold and securities
		purchased under agreements to resell				103		128		218		236
	Interest on trading account securities					123		222		247		460

			Total interest income			317,674		348,171		643,920		700,377
Interest expense:
	Interest on deposits					44,022		63,517		92,168		126,087
	Interest on federal funds purchased and securities sold under agreements to repurchase					7,012		9,467		11,773		23,111
	Interest on other short-term borrowings					274		424		511		1,656
	Interest on FHLB and other borrowings					39,402		41,899		80,070		80,960
	Interest on guaranteed preferred beneficial interests in Company’s junior subordinated deferrable interest debentures					3,635		4,308		8,824		6,235

			Total interest expense			94,345		119,615		193,346		238,049

			Net interest income			223,329		228,556		450,574		462,328
Provision for loan losses						27,909		34,779		57,688		65,099

			Net interest income after provision for loan losses			195,420		193,777		392,886		397,229
Noninterest income:
	Service charges on deposit accounts					60,232		48,810		111,511		89,687
	Credit card service charges and fees					14,067		11,206		26,586		20,946
	Insurance commissions					10,051		2,497		20,855		5,184
	Retail investment sales					7,323		7,051		14,484		13,330
	Corporate and correspondent investment sales					7,057		4,892		15,480		9,688
	Asset management fees					5,452		5,127		10,798		10,329
	Bank owned life insurance					4,460		4,957		8,918		9,540
	Investment securities gains, net					—		3,452		—		3,972
	Other					23,331		21,921		46,448		42,207

				Total noninterest income		131,973		109,913		255,080		204,883
Noninterest expense:
	Salaries, benefits and commissions					106,948		93,306		214,677		187,931
	Equipment expense					18,413		16,847		36,199		32,486
	Net occupancy expense					15,259		13,914		29,819		27,763
	Professional services					14,515		12,272		27,000		23,915
	Marketing expense					6,923		7,881		16,150		15,280
	Communications expense					6,285		5,548		12,302		10,709
	Amortization of intangibles					1,827		2,221		3,626		4,455
	Merger and integration					455		679		921		1,447
	Other					24,872		32,656		50,936		64,262

				Total noninterest expense		195,497		185,324		391,630		368,248

				Net income before income tax expense		131,896		118,366		256,336		233,864
Income tax expense						44,848		39,913		87,203		79,203

				Net income	$	87,048	$	78,453	$	169,133	$	154,661

Basic earnings per share					$	0.69	$	0.62	$	1.34	$	1.22
Basic weighted average shares outstanding						125,858		127,429		125,879		127,194
Diluted earnings per share					$	0.68	$	0.60	$	1.32	$	1.19
Diluted weighted average shares outstanding						128,602		130,210		128,288		129,598
Dividends per share					$	0.28	$	0.25	$	0.56	$	0.50

-4-

COMPASS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
For the Six Months Ended June 30, 2003 and 2002
(In Thousands)
(Unaudited)

Accumulated

Other

Total

Common

Treasury

Retained

Comprehensive

Shareholders’

Comprehensive

Stock

Surplus

Earnings

Income (Loss)

Other

Equity

Income

(in Thousands)

Balance, December 31, 2002

260,824

(129,415

)

199,907

1,468,517

136,109

(4,440

)

1,931,502

Net income

—

169,133

—

169,133

Change in unrealized holding gains on securities available for sale, net of tax

—

(12,692

)

—

(12,692

)

(12,692

)

Change in accumulated gains on cash-flow hedging instruments, net of tax

—

(18,552

)

—

(18,552

)

(18,552

)

Comprehensive income

137,889

Common dividends declared ($0.56 per share)

—

(70,750

)

—

(70,750

)

Exercise of stock options and other issuances

1,104

—

10,117

(605

)

—

10,616

Issuance of restricted stock

327

—

5,302

—

Outstanding at July 31, 2003

Common Stock, $2 Par Value