As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 1/19/06  Compass Bancshares Inc            424B3                  1:179                                    950129

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Compass Bancshares, Inc.- Registration              HTML  1,117K 
                          No.333-129940                                          

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-129940

Dear Fellow Shareholders:

      You are cordially invited to attend a special meeting of shareholders of TexasBanc Holding Co. to be held at The Fort Worth Club, located at 306 West 7^th Street 12^th Floor, Fort Worth, Texas 76102 at 2:00 p.m., local time on Thursday, February 16, 2006.

      At the special meeting, you will be asked to take certain action in connection with an Agreement and Plan of Merger, as amended, among TexasBanc, Compass Bancshares, Inc. and its wholly-owned subsidiary, XYZ Acquisition Corp. In the merger, XYZ Acquisition Corp. will merge with and into TexasBanc and subsequently TexasBanc will merge with and into Compass.

      Each TexasBanc shareholder will be entitled to elect to receive for each share of TexasBanc common stock either shares of Compass common stock or cash, subject to the amount of shares and cash available and the election and allocation procedures in the agreement and plan of merger. YOU MUST MAKE THIS ELECTION BY 5:00 P.M. NEW YORK TIME ON WEDNESDAY, FEBRUARY 15, 2006. Enclosed is a Form of Election and Letter of Transmittal, together with an envelope addressed to Continental Stock Transfer & Trust Company, which may be used for this purpose.

      Generally, to the extent that you receive Compass common stock, the merger will be tax-free to you, other than with respect to any cash consideration or cash you receive for fractional shares.

      If the merger is completed, you will receive, at your election (but subject to proration and adjustment as provided in the agreement and plan of merger), cash or shares of Compass common stock, in either case, having a value equal to $1,252.97 plus the product of 26.6987 multiplied by the average closing price of Compass common stock for the ten trading days immediately before completion of the merger, for each share of TexasBanc common stock you hold immediately before the completion date of the merger. On September 15, 2005, two days before the merger was publicly announced, the ten-day average closing per share price of Compass common stock was $46.93; if that were the average closing price of Compass common stock under the agreement and plan of merger, it would result in consideration per share of TexasBanc common stock of approximately $2,505.94 in cash or 53.3974 shares of Compass common stock. On January 12, 2006, the latest practicable date before the printing of this proxy statement/ prospectus, the ten-day average closing per share price of Compass common stock was $48.895; if that were the average closing price of Compass common stock under the agreement and plan of merger, it would result in consideration per share of TexasBanc common stock of approximately $2,558.40 in cash or 52.3244 shares of Compass common stock. These calculations of the merger consideration assume that approximately 2,264 shares of TexasBanc common stock will be issued on exercise of outstanding TexasBanc stock options. In no event will Compass issue more than 4,938,206 shares of Compass common stock or pay more than $231.75 million in cash in merger consideration, including if there are more than 2,264 shares of TexasBanc common stock issued as a result of the exercise of TexasBanc stock options, and the consideration payable to each shareholder will be proportionately reduced if necessary to give effect to these limits.

      The actual value of the merger consideration on the completion date of the merger that you will receive for each share of TexasBanc common stock will depend in part on the average closing price of Compass common stock for the ten trading days immediately before the completion date of the merger. If you receive Compass common stock as merger consideration, the price per share of Compass common stock on the date you receive the shares may be different than the average closing price of Compass common stock on the NASDAQ for the ten trading days immediately before the completion of the merger. These prices are impossible to know at this time and will not be known at the time of the special meeting. Therefore, the actual value of the merger consideration may be different than the estimated value based on the current price or the price at the time of the special meeting. Compass common stock is traded on the NASDAQ National Market under the trading symbol “CBSS.” You may obtain current market prices for Compass’ common stock through newspapers, from reputable internet sources or from your broker.

      As explained in more detail on pages 51 through 55 of this document, the dollar value of the consideration that you will receive upon completion of the merger will be approximately the same as of the completion of the merger regardless of whether you make a cash election or a stock election. Since elections

are subject to potential proration as described on pages 54 and 55 of this document, there can be no assurance that you will receive the type of consideration you elect as to all your shares of TexasBanc common stock.

      Based on the estimated number of shares of TexasBanc common stock on the record date of the special meeting, Compass expects to issue 4,938,206 shares of Compass common stock to TexasBanc’s shareholders in connection with the merger. Immediately after the merger, former TexasBanc’s shareholders are currently expected to own approximately 4.0% of the then-outstanding shares of Compass common stock (without giving effect to shares of Compass common stock held by TexasBanc’s shareholders before the merger).

      Holders of approximately 82% of the outstanding TexasBanc common stock have agreed with Compass to vote in favor of the agreement and plan of merger.

      After careful consideration, TexasBanc’s board of directors unanimously recommends that you vote “FOR” approval of the agreement and plan of merger.

      To complete the merger, holders of two-thirds of the outstanding shares of TexasBanc common stock must approve the agreement and plan of merger. Your vote is very important regardless of the number of shares of TexasBanc common stock you own. If you fail to vote your shares, either in person or by proxy, this will have the effect of a vote against the agreement and plan of merger and the transactions contemplated by the agreement and plan of merger, including the merger. Whether or not you expect to attend the special meeting, please vote as soon as possible to ensure that your shares are represented at the meeting. You may vote your shares by marking your votes on the proxy card, signing and dating it and mailing it with the envelope provided. If you sign and return your proxy card without specifying your choice, it will be understood that you wish to have your shares voted “FOR” the agreement and plan of merger and “FOR” approval of the payments to be made to certain executive officers of TexasBanc.

      This document provides you with detailed information about the merger. In addition to being a proxy statement of TexasBanc, this document is also the prospectus of Compass for Compass common stock that will be issued to you in connection with the merger. We encourage you to read the entire document carefully. Please pay particular attention to “Risk Factors” beginning on page 17 for a discussion of the risks related to the merger and owning Compass common stock after the merger.

      I hope to see you on February 16, 2006 in Fort Worth.

      Compass common stock is publicly traded through the NASDAQ National Market. Compass’ trading symbol is “CBSS”. There is no public trading market for TexasBanc’s common stock.

      NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORS HAVE APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THE MERGER OR DETERMINED IF THIS DOCUMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

      THE SHARES OF COMPASS COMMON STOCK TO BE ISSUED IN THE MERGER ARE NOT DEPOSITS OR SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

      This proxy statement/ prospectus is dated January 18, 2006 and is first being mailed to TexasBanc’s shareholders on or about January 19, 2006.

GENERAL INFORMATION

      This proxy statement/ prospectus incorporates important business and financial information about Compass Bancshares, Inc. from other documents that are not included in or delivered with this proxy statement/ prospectus. This information is available to you without charge upon your written or oral request. You can obtain those documents incorporated by reference in this proxy statement/ prospectus by accessing the Securities and Exchange Commission’s website maintained at www.sec.gov or by requesting copies in writing or by telephone from Compass at the following address:

Compass Bancshares, Inc.

Ed Bilek

15 South 20^th Street

Birmingham, Alabama 35233

(205) 933-3331

      TexasBanc is not subject to the reporting and informational requirements maintained by the Securities and Exchange Commission and does not file reports or other information with Securities and Exchange Commission.

      If you would like to request documents, please do so by February 9, 2006 in order to receive them before the special meeting. If you request any documents incorporated by reference from Compass, Compass will mail them to you within one business day by first-class mail, or similar means.

      You should rely only on the information contained or incorporated by reference in this document in determining how to vote your shares at the special meeting. Compass and TexasBanc have not authorized anyone to provide you with information that is different from what is contained in this document. This document is dated January 18, 2006. You should not assume that the information contained in this document is accurate as of any date other than that date, and neither the mailing of this document to shareholders nor the issuance of Compass’ common stock in the merger creates any implication to the contrary.

      See “Where You Can Find More Information” on page 94.

To the Shareholders of TexasBanc Holding Co.:

      TexasBanc Holding Co. will hold a special meeting of shareholders at The Fort Worth Club, located at 306 West 7^th Street 12^th Floor, Fort Worth, Texas 76102 on Thursday, February 16, 2006 at 2:00 p.m., local time, for the following purposes:

      No other business will be transacted at the special meeting. We have fixed the close of business on December 30, 2005 as the record date for determining those shareholders entitled to vote at the special meeting. Only TexasBanc shareholders of record at the close of business on that date are entitled to notice of the special meeting, and only the shareholders of record of TexasBanc common stock at the close of business on that date are entitled to vote at the special meeting. In order for the agreement and plan of merger to be approved by TexasBanc’s shareholders, the holders of two-thirds of the outstanding shares of TexasBanc common stock entitled to vote must vote for of approval of the agreement and plan of merger. Approval of the 280G Payments requires the affirmative vote of more than 75% of TexasBanc capital stock entitled to vote, excluding those shares held or constructively owned by the executive officers whose compensation is being considered. Abstentions and broker non-votes will have the same effect as votes against each of the proposals being presented. If you wish to attend the special meeting and your shares are held in the name of a broker, trust, bank or other nominee, you must bring with you a proxy or letter from the broker, trustee, bank or nominee to confirm your beneficial ownership of the shares. In compliance with Article 2.27 of the Texas Business Corporation Act, a list of shareholders entitled to vote at the special meeting will be available for inspection by any shareholder at the offices of TexasBanc during usual business hours for a period of ten days before the special meeting. The list of shareholders will also be available for inspection at the special meeting from 1:00 p.m., local time, until adjournment of the special meeting.

      If you do not vote in favor of the agreement and plan of merger and you strictly comply with the procedures set forth in Article 5.11, 5.12 and 5.13 of the Texas Business Corporation Act, you will be entitled to obtain payment in cash of the fair market value of your shares of common stock as determined under these provisions. A copy of these provisions is included as Appendix D to this document, and a summary of these provisions can be found in the section titled “The Agreement and Plan of Merger — Dissenters’ Rights” beginning on page 63 of this document.

Fort Worth, Texas

January 18, 2006

 

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

About the Merger

About the Special Meeting

About Electing the Merger Consideration

 

RISK FACTORS

      In addition to the other information included or incorporated by reference into this proxy statement/ prospectus, you should carefully read and consider the following factors in evaluating the proposals to be voted on at the special meeting and in deciding whether to elect to receive cash or shares of Compass common stock in the merger. Please also refer to the additional risk factors identified in the periodic reports and other documents of Compass incorporated by reference into this proxy statement/ prospectus and listed in “Information About Compass — Incorporation of Documents by Reference” on page 78 and “Where You Can Find More Information” on page 94.

      Upon completion of the merger, each share of TexasBanc common stock will be converted into Compass common stock or cash in accordance with the agreement and plan of merger. The value of the merger consideration to be received by TexasBanc’s shareholders will be based in part on the average closing prices of Compass common stock on the NASDAQ during the ten trading days ending on the day before the completion of the merger. This average price may vary from the closing price of Compass common stock on the date we announced the merger, on the date that this proxy statement/ prospectus is being mailed to TexasBanc’s shareholders, and on the date of the special meeting of TexasBanc’s shareholders. Any change in the market price of Compass common stock before completion of the merger will affect the value of the merger consideration that TexasBanc’s shareholders will receive upon completion of the merger. The price of Compass common stock may vary due to changes in the business, operations or prospects of Compass, any future issuances of debt or equity securities by Compass, market assessments of the merger, general market and economic conditions, regulatory considerations or other factors. Many of these factors are beyond our control.

      Accordingly, at the time of the special meeting, TexasBanc’s shareholders will not know or be able to calculate the amount of the cash consideration they would receive or the exchange ratio used to determine the number of any shares of Compass common stock they would receive upon completion of the merger. The merger may not be completed until a significant period of time has passed after the special meeting. The price of Compass common stock may decrease before the merger is completed.

      A decrease in the price of Compass common stock would reduce the amount of cash and value of Compass shares to be received with respect to each share of TexasBanc common stock. See “The Agreement and Plan of Merger — Merger Consideration” beginning on page 51 and the agreement and plan of merger attached to this document as Annex A for more detailed information regarding the merger consideration.

      Because the market price of Compass common stock may increase or decrease before the completion of the merger, Compass urges you to obtain current market quotations. Compass common stock is traded on the NASDAQ National Market under the trading symbol “CBSS.” No prediction can be made as to the market prices of Compass common stock at any time before or after the completion of the merger.

      In no event will Compass issue more than 4,938,206 shares of Compass common stock or pay more than $231.75 million in cash in merger consideration, including if there are more than 2,264 shares issued as a result of the exercise of TexasBanc stock options, and the consideration payable to each shareholder will be proportionately reduced if necessary to give effect to these limits. As of the date of this proxy statement/ prospectus, there were options to acquire 3,600 shares of TexasBanc common stock. All of the TexasBanc stock options had exercise prices below the value of the merger consideration as of the date of this proxy statement. Because TexasBanc option holders can pay the exercise price of their TexasBanc stock options either in cash or by surrendering shares of TexasBanc common stock, the exact number of shares to be issued as a result of the exercise of TexasBanc stock options will not be known until immediately before the closing of the merger.

      The success of the merger will depend, in part, on our ability to realize the anticipated cost savings from combining certain aspects of the businesses of Compass and TexasBanc. However, to realize the anticipated benefits from the merger, we must successfully combine the businesses of Compass and TexasBanc in a manner that permits those cost savings to be realized. The anticipated benefits of the merger also depend on the continued operating performance of TexasBanc’s businesses after the merger. If we are not able to combine the businesses of Compass and TexasBanc in a manner that permits the anticipated cost savings to be realized, or if TexasBanc’s businesses do not perform as anticipated after the merger, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

      Compass and TexasBanc have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.

      Although each TexasBanc shareholder may elect to receive all cash or all Compass common stock in the merger, the cash available for all TexasBanc shareholders (including persons who receive their shares as a result of the exercise of options) is fixed at $231.75 million and the number of shares of Compass common stock is fixed at 4,938,206 shares. As a result, if either the aggregate cash or stock elections exceed the maximum available, and you choose the consideration election that exceeds the maximum available, you will receive a portion of your consideration in cash and a portion of your consideration in Compass common stock.

      Sandler O’Neill, the financial advisor to TexasBanc, has delivered a “fairness opinion” to the board of directors of TexasBanc. The opinion which is dated September 17, 2005, states that, based upon and subject to the assumptions and limitations on review set forth in the opinion, the merger consideration to be paid to TexasBanc shareholders is fair, from a financial point of view, to those shareholders. The opinion does not reflect changes that may occur or may have occurred after the date of this opinion, including changes to the operations and prospects of Compass or TexasBanc, changes in general market and economic conditions or regulatory or other factors. Any such changes, or other factors on which the opinion is based, may alter the relative value of Compass and TexasBanc.

      Uncertainty about the effect of the merger on employees and customers may have an adverse effect on TexasBanc and consequently on Compass. These uncertainties may impair TexasBanc’s ability to attract, retain and motivate key personnel until the merger is consummated, and could cause customers and others that deal with TexasBanc to seek to change existing business relationships with TexasBanc. Retention of certain employees may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with Compass. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Compass, Compass’ business after the merger could be harmed. In addition, the agreement and plan of merger restricts TexasBanc from making certain acquisitions and taking other specified actions until the merger occurs. These restrictions may prevent TexasBanc from pursuing attractive business opportunities that may arise before the completion of the merger. Please see the section entitled “The Agreement and Plan of Merger — Conduct of TexasBanc Business Pending the Merger” beginning on page 56 of this proxy statement/ prospectus for a description of the restrictive covenants to which TexasBanc is subject.

      The interests of some of the directors and executive officers of TexasBanc may be different from those of TexasBanc’s shareholders, and directors and officers of TexasBanc may be participants in arrangements that are different from, or in addition to, those of TexasBanc’s shareholders. These interests are described in more detail in the section of this proxy statement/ prospectus entitled “Interests of Certain Persons in the Merger” beginning on page 44.

      The agreement and plan of merger contains provisions that limit TexasBanc’s ability to discuss competing third-party proposals to acquire all or a significant part of TexasBanc. See “The Agreement and Plan of Merger — Conduct of TexasBanc Business Pending the Merger” beginning on page 56 of this proxy statement/ prospectus. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of TexasBanc from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquirer proposing to pay a lower per share price to acquire TexasBanc than it might otherwise have proposed to pay.

      The rights associated with TexasBanc’s common stock are different from the rights associated with Compass common stock. See the section of this proxy statement/ prospectus entitled “Comparison of Shareholders Rights” on page 86 for a discussion of the different rights associated with Compass common stock.

      Either Compass or TexasBanc may terminate the agreement and plan of merger if the merger has not been completed by June 1, 2006, unless the failure of the merger to have been completed has resulted from the failure of the party seeking to terminate the agreement and plan of merger to have performed its obligations. See “The Agreement and Plan of Merger — Termination of the Agreement and Plan of Merger,” beginning on page 61 of this proxy statement/ prospectus.

      Compass and TexasBanc intend the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, although the Internal Revenue Service, or IRS, will not provide a ruling on the matter. TexasBanc and Compass each will, as a condition to closing, obtain an opinion from counsel that the merger will constitute a reorganization for federal income tax purposes. These opinions do not bind the IRS or prevent the IRS from adopting a contrary position. If the merger fails to qualify as a reorganization, the merger will be treated for tax purposes as a taxable sale of TexasBanc’s assets to Compass followed by a liquidation of TexasBanc, with Compass as TexasBanc’s successor liable for the associated corporate tax from the sale of assets. In such circumstances, you generally would recognize gain or loss on each share of TexasBanc common stock surrendered in an amount equal to the difference between your adjusted tax basis in that share and the sum of the amount of cash and the fair market value of the Compass common stock received in exchange for that share in the liquidation.

      The merger must be approved by the Federal Reserve (or that approval must be waived) and the Texas Department of Insurance. In addition, Compass must give notice of the merger to the Texas Department of Banking. The Federal Reserve will consider, among other factors, the competitive impact of the merger, the financial and managerial resources of our companies and their subsidiary banks and the convenience and needs of the communities to be served. As part of that consideration, we expect that the Federal Reserve will review capital position, safety and soundness, and legal and regulatory compliance, including compliance with anti-money laundering laws.

      There can be no assurance as to whether this and other regulatory approvals will be received, the timing of those approvals, or whether any conditions will be imposed.

      The agreement and plan of merger permits Compass to make acquisitions and dispositions and to issue capital stock in connection therewith if such transactions do not present a material risk that the completion of the merger will be materially delayed or that any required regulatory approvals will be materially more difficult to obtain.

      You currently have the right to vote in the election of the board of directors of TexasBanc and on other matters affecting TexasBanc. The merger will transfer control of TexasBanc to Compass. If the merger occurs, you will become a stockholder of Compass with a percentage ownership of Compass that is much smaller than your percentage ownership of TexasBanc. Because of this, you will no longer be able to influence the management policies of TexasBanc’s operations (to the extent you were able to do so before the merger), and as a stockholder of Compass with a small ownership percentage you will not be able to influence the management policies of Compass.

      General economic conditions impact the banking industry. The credit quality of Compass’ loan portfolio reflects the general economic conditions where it does business. The continued financial success of Compass and its subsidiaries depends on things beyond Compass’ control, like national and local economic conditions, the supply and demand for investable funds, interest rates and federal, state and local laws. Any deterioration in any of these conditions could have a material adverse effect on Compass’ financial condition and results of operations, which would probably negatively affect the market price of Compass common stock. See “Price Range of Common Stock and Dividends” on page 75.

      Compass believes it has reasonably estimated the likely costs of integrating the operations of TexasBanc into Compass and the incremental costs of operating as a combined company. However, it is possible that unexpected transaction costs such as taxes, fees or professional expenses or unexpected future operating expenses such as increased personnel costs or increased taxes, as well as other types of unanticipated adverse developments, could have a material adverse effect on the results of operations and financial condition of Compass after the merger. If unexpected costs are incurred, the merger could have a significant dilutive effect on Compass’ earnings per share. In other words, if the merger is completed and Compass incurs unexpected costs and expenses as a result of the merger, Compass believes that the earnings per share of Compass common stock could be less than they would have been if the merger had not been completed.

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

      This proxy statement/ prospectus and the filings made with the Securities and Exchange Commission, or SEC, that are incorporated by reference into this proxy statement/ prospectus contain or incorporate by reference forward-looking statements that have been made pursuant to the provisions of, and in reliance on the safe harbor under, the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “could,” “should,” “will,” “projects,” “estimates” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In that event, TexasBanc’s or Compass’ business, financial condition or results of operations could be materially adversely affected, and investors in TexasBanc’s or Compass’ securities could lose part or all of their investment. Additional factors that could cause Compass’ results to differ materially from those described in the forward-looking statements can be found in Compass’ Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/ prospectus or, in the case of documents incorporated by reference, the date referenced in those documents. We are not obligated to update these statements or publicly release the result of any revision to them to reflect events or circumstances after the date of this proxy statement/ prospectus or, in the case of documents incorporated by reference, the date referenced in those documents, or to reflect the occurrence of unanticipated events.

      You should understand that the following important factors, in addition to those discussed elsewhere in this document and in the documents which are incorporated by reference, could affect the future results of Compass and TexasBanc, and of the combined company after the merger, and could cause those results or other outcomes to differ materially from those expressed in our forward-looking statements: