# COMMERCE BROKERAGE SERVICES, INC. X-17A-5 (2023-02-28) — Broker-dealer annual report - Company: COMMERCE BROKERAGE SERVICES, INC. - Form: X-17A-5 - Filed: 2023-02-28 - Period: 2022-12-31 - Accession: 0000783344-23-000002 - CIK: 783344 - File #: 8-35096 - Type: Broker-dealer - Material weakness: No - Auditor: Armanino LLP - Auditor location: St. Louis, MO - Contact: Tiffany Simpson - Phone: 816-760-7740 - Email: torm@sipo.org - Website: sipo.org - Signed by: Tiffany Simpson (Treasurer) Original filing: https://www.sec.gov/Archives/edgar/data/783344/000078334423000002/cbsifsfin.pdf --- {0}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Financial Statements and Schedules Pan III December 31, 2022 (With Report of Independent Registered Public Accounting Firm Thereon) {1}------------------------------------------------ ### Table of Contents | | | Page | |---|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------| | | of
Accounting
Report
Independent
Registered
Public
Firm | 1 | | | Statement
Condition
of
Financial | 2 | | | Statement (if
Earnings | 1 | | | Statement
of
Stockholder's
Equity | 4 | | | Statement
of
Cash
Flows | 5 | | | to
Notes
Financial
Statements | & | | | Schedules | | | I | of
Compulation
Capital
to
1 5c3-
Nel
Requirement
Pursuant
Rule
1 | 13 | | 2 | ofCustomer
Computation
for
Determination
Account
Reserve
Pursuant
Requirements
to
Rule
1 5c3-3 | 14 | | 3 | for
of
Computation
Determination
Account
of
Broker
Dealers
Reserve
Proprietary
!5c3-3
Requirements
to
Pursuant
Rule | 15 | | 4 | Information
Relating
Possession
or
Control
Requirements
under
to
Rule
1 5c3-3 | 16 | | | | | {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors of Commerce Brokerage Services, Inc. #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Commerce Brokerage Services, Inc. as of December 31, 2022, the related statements of earnings, changes in stockholder's equity, and cash flows for (he year then ended, and the related notes and schedules (collectively referred to as the "financial statements"). Incur opinion, the financial statements present fairly, in all material respects, the financial position of Commerce Brokerage Services, Inc. as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of Commerce Brokerage Services, Inc.'s management. Our responsibility is to express an opinion on Commerce Brokerage Services Inc.'s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Commerce Brokerage Services, Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatemeni, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures (hat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. #### **Auditor's Report on Supplemental Information** The supplemental information included at pages 12 - 15 has been subjected to audit procedures performed in conjunction with the audit of Commence Brokerage Services, Inc.'s financial statements. The supplemental information is the responsibility of Commerce Brokerage Services, Inc.'s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the supplemental information is fairly slated, in all material respects, in relation to the financial statements as a whole. We have served as Commerce Brokerage Services, Inc.'s auditor since 2016. ArmaninoLLP St. Louis, Missouri February 28, 2023 ![](_page_2_Picture_14.jpeg) {3}------------------------------------------------ #### (A Wholly Owned Subsidiary of Commerce Bank) #### Statement of Financial Condition #### December 3 1 , 2022 | | | 2022 | |-------------------------------------------------------------------------------------------------------------------------------------------------------------|----|------------| | Assets | | | | Cash
and
cash
equivalents | 5 | 21,971,210 | | U.S.
government
securities*
at
value
fair | | 23,101,260 | | Receivable
clearing
from
organization | | 13,814.854 | | improvements,
at
cost
less
Furniture,
equipment*
and
leasehold
5921,136
of
accumulated
depreciation
amortization
and | | 606 | | taxes,
income
Deferred
net | | 419,121 | | Other
assets | | 921,582 | | Total
assets | 5 | 60,228,635 | | andStockholder's
Liabilities
Equity | | | | Liabilities; | | | | clearing
Payable
to
organization | 5 | 12,315.995 | | Accounts
payable
expenses
and
accrued | | 2,023,740 | | taxes
Current
income
payable | | 205,321 | | Total
liabilities | | 14,545,056 | | Stockholder's
equity; | | | | stock,
Common
S5
par
Authorized,
6,000
issued
value*
shares:
and
outstanding,
5,000
shares | | 25,000 | | Additional
capital
paid-in | | 22,158,100 | | earnings
Retained | | 23,500,479 | | Total
stockholder's
equity | | 45,683,579 | | Total
liabilities
stockholder's
equity
and | \$ | 60,228,635 | See accompanying notes to financial statements. {4}------------------------------------------------ #### (A Wholly Owned Subsidiary of Commerce Bank) #### Statement of Earnings For the Year Ended December 31, 2022 | 2022 | |----------------| | | | 7,970,212
S | | 8,825,157 | | 1 ,522,424 | | 858,294 | | 279305 | | 568,793 | | 134,671 | | 20,158,856 | | | | 9,640.455 | | 3,136.681 | | 630,141 | | 810,833 | | 769,936 | | 363,237 | | 138.896 | | 118,069 | | 93.644 | | 7,945 | | 416,218 | | 16,126,055 | | 4,032,801 | | | | 1,126,236 | | (230,497) | | 895,739 | | 3,137,062
S | | | See accompanying notes to financial statements. {5}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Statement of Stockholder's Equity For the Year Ended December 31, 2022 | | Additional | | | | | | | | |------------------------------------------|------------|-----------------|---|--------------------|----|----------------------|----|------------| | | | Common
stock | | paid-in
capital | | Retained
earnings | | Total | | Balance
at December
3 1.
2021 | S | 25.000 | S | 1.870,960 | S> | 20,363.417 | \$ | 22,259.377 | | Nel
earnings | S | | | | | 3,137,062 | | 3,137,062 | | Contribution
from
Commerce
Bank | | — | | 20,000,000 | | — | | 20,000,000 | | Stock-based
compensation | | — | | 287,140 | | — | | 287,140 | | 31,
Balance
at December
2022 | S | 25,000 | S | 22.158,100 | S | 23,500,479 | S | 45,683,579 | See accompanying notes to financial statements. {6}------------------------------------------------ #### (A Wholly Owned Subsidiary of Commerce Bank) #### Statement of Cash Flows #### For the Year Ended December 31, 2022 | | | 2022 | |---------------------------------------------------------------------------------------------------|---|-------------| | Cash flows
from operating activities: | | | | Net earnings | S | 3,137,062 | | to reconcile
to
Adjustments
net earnings
net cash used in
operating
activities: | | | | Depreciation tint! amortization | | 7,945 | | Deferred income
taxcs | | (230,497) | | Accrued current
income taxes | | 142,571 | | Increase in
securities
owned | | (4.106,420) | | Increase in
net
receivable
from
clearing
organization | | (1.314,332) | | Stock-based
compensation | | 287,140 | | other
Increase in
assets | | (603,178) | | Increase in
accounts
payable
and accrued expenses | | 1.074,986 | | activities
Net cash
used in operating | | (1,604,723) | | flows
Cash
from financing
activity: | | | | Contribution
from Coinmciee
Bank | | 20,000,000 | | Net cash
provided
by financing
activity | | 20,000,000 | | increase
in cash
und cash
equivalents | | 1 8,395.277 | | Cash
and cash
of
equivalents
at beginning
year | | 3,575,933 | | Cash
and cash
at cud of
equivalents
year | S | 21,971,210 | | ofrefunds)
(net
Cash payments
of
income
taxes | £ | 983,666 | See accompanying notes to Iinan dal statements. {7}------------------------------------------------ # **COMMERCE** brokerage **SERVICES, INC.** (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December 3 I , 2022 #### **(1) Organization and Purpose of Company** Commerce Brokerage Services, Inc. (the Company) is a wholly owned subsidiary of Commerce Bank (the Parent). Hie Parent is a wholly owned subsidiary of Commerce Bancshares, Inc. (CBI). The Company is registered with the Securities and Exchange Commission as a broker/dealer to conduct general securities business and as an investment adviser offering fee-based managed accounts. The Company is a member of the Financial industry Regulatory Authority, a regulatory organization otTcring oversight over at! securities firms that do business with the public. It is also a member of the Securities Investor Protection Corporation, a corporation whose purpose is to protect the customers of brokers or dealers from loss in case of financial failure of the member. Current activities of the Company consist of providing investment services to retail customers and, beginning in 2022, institutional customers for a variety of securities including mutual funds, exchangelisted and over-the-counter equity securities, options, municipal bonds, corporate bonds, and U.S. government debt issues. The Company also sells fixed and variable annuities, which are investment products provided by insurance companies. Transactions for equities, options, and a substantial portion of the Company's mutual fund sales are executed and cleaned through National Financial Services LLC (NFS), a clearing organization that also maintains customer brokerage accounts on a fully disclosed basis. #### *Basis of presentation* The accompanying financial statements arc prepared in accordance with U.S. generally accepted accounting principles, ### **(2) Summary of Significant Accounting Policies** # *(a) Cask and equivalents* Cash includes cash on hand, cash received from customers held by the Company as of year-end that is due to National Financial Services LLC (NFS) and cash held at NFS in a money market fund. As of December 31, 2022, cash received from customers and due to NFS totaled \$402, A corresponding liability is recorded in accounts payable and accrued expenses. In addition, cash and cash equivalents held at NFS totaled \$20,816,667. In March 2022, the contract with NFS was updated to require the Company to hold a clearing deposit of S1 ,000,000 and a net capital requirement of \$5,000,000 with NFS, ## *th) Securities transactions* Customer securities positions are not reflected in the Statement of Financial Condition as the Company does not have title to these assets. #### **(c)** *Receivables from clearing organization* Receivables from the clearing organization include amounts receivable for cash on deposit, pending purchases and sales, and other receivables with the clearing organization. See Note 6 for additional information regarding these receivables and payables. #### *Id) Commissions* The Company acts as a broker-dealer or agent to buy and sell securities or insurance contracts on behalf of its customers. In return for such services, for most transactions, the Company earns a commission each time a {8}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Notes lo Financial Statements December 31, 2022 customer enters into a buy-or-sel! transaction. For equity securities purchased, the commission is recorded as a receivable from the customer, and for securities sold, it is recorded as a reduction in the payable to the customer. For other security and contract transactions, such as sales of mutual funds, fixed or variable annuities, etc., a concession is earned and becomes part of the customer's price of the security or contract. Commissions and concessions, along with any related expenses, are recorded on a settlement dale basis, which approximates U.S. generally accepted accounting principles. As of December 31, 2022, commission receivables from investment and insurance companies were 56N I.25S and are recorded in other assets. # fe) *Advisory' fees* The Company offers professionally managed, fee-based advisory programs through an arrangement with sub advisors to provide investment management and advisory services. In return for these services, the Company receives a portion of the customer's advisory fee. Advisory fees arc calculated and charged in advance on a quarterly basis, based on the prior quarter's period ending account balance, and are recorded in revenue during the period in which they are earned. # *(f) Contract fees and deferred revenue* The Company's contract with its clearing organization was renewed and amended in November 2017. Under the contract, the Company will receive seven annual payments, which commenced with the effective date of the contract, in the event of termination for certain causes during the seven year term of the contract (which the Company believes is unlikely to occur), the Company will be required to remit a pro-rated portion of the annual payments received from the clearing organization. Under the terms of the contract, the Company recognized \$350,000 during 2022 as a reduction of clearing charge expense charged by its clearing organization. Ai December 31, 2022, deferred revenue of 5320,833 was included in accounts payable and accrued expenses. # *(g) Securities owned, at fair value* Securities owned, at fair value consist of U.S. government securities with initial maturities of six months. They arc stated at fair value, which is based on published bid prices. The fair value measurement is considered to be a Level 1 measurement within the fair value hierarchy of Accounting Standards Codification (ASC) 820-10-35. Changes in fair value are recorded in other income in the Statement of Earnings. # *(h) Furniture, equipment, and leasehold improvements* Furniture, equipment, and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on the straight-line basis using estimated useful lives, ranging from three to ten years. Leasehold improvements are amortized over the lesser of the economic useful life of the improvement or the remaining term of the lease. # *(i) Other assets* Other assets are comprised of commission receivables from investment and insurance companies, prepaid expenses, and capitalized software, net of amortization, The Company does not have any significant leases. # *(j) Accounts payable and accrued expenses* Accounts payable and accrued expenses consist of deferred fees, accrued incentives and sales commissions, accounts payable, and other accrued liabilities. {9}------------------------------------------------ (A Wholly **Owned** Subsidiary of **Commerce Bank)** Notes lo Financial Statements December 31, 2022 ### *(k) Litigation settlement* On January 30, 2023. a FINRA arbitration panel awarded SI ,500 to the Company in compensatory damages and \$812,233 in compensatory damages to Wells Fargo Advisors tn. a cross-claim dispute between the Company and Wells Fargo Advisors et al The Company is exploring its options to appeal/vacate the FINRA award, bur no final decision in that regard has been made as of February 28, 2023. This settlement was accrued as of December 31, 2022. # *(I) Income taxes* The Company is included in the consolidated federal income tax return filed by CBI, Amounts provided for income tax expense are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws, Current income taxes are calculated on a separate return basis utilizing currently enacted tax laws and nates. The amount of expense or benefit is either remitted to or received from CBI. Deferred income raxes are provided for temporary ditferences between the financial reporting bases and income tax bases of the Company's assets and liabilities using the tax rates and laws that arc expected to be in effect when the ditferences 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 that includes rhe change. The significant components of the net deferred tax asset as of December 31, 2022 included a deferred tax asset of 3152,599 relating to stock-based compensation, £74304 relating to unearned fee income, \$205,720 relating to accrued expenses, and a deferred tax liability of 315,617 relating to prepaid expenses. Management believes it is more likely than nor that (he results of future operations will generate sufficient taxable income to realize the deferred tax assets. Based upon its evaluation, the Company has concluded that there are no significant uncertain income tax positions relevant to the jurisdictions where it is required to file income tax returns requiring recognition in the financial statements. In accordance with ASC 740, the Company recognizes accrued interest and penalties, as appropriate, related to unrecognized income tax benefits in income tax expense. There was accrued interest of 346 and penalties of 3110 at December 31, 2022. # *Im) Stock-based compensation* The Company complies with the accounting requirements of ASC 718 for stock-based compensation. Employees of the Company receive shares of CBI common stock in connection with CBf's equity compensation plan. The fair value of awards granted to employees of the Company is determined at the date of grant and recognized ratably as compensation expense and a corresponding capital contribution over the period the award is earned. # *(it) Use of estimates* To prepare these financial statements in conformity with U.S. generally accepted accounting principles, management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts or revenues and expenses during the reporting period. Actual results could differ from those estimates. # *((>) Subsequent events* The Company evaluated potential subsequent events through February 28, 2023, which is the dale that the financial statements were issued. On November 18, 2022, it was announced that the Company will be transferring its retail business to LPL Financial LLC on Or around August I, 2023. The institutional division of the Company will continue to operate as a FINRA registered broker-dealer. {10}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December **3 I .** 2022 #### **(3) Roland-Pat ty Transactions** A significant portion of the Company's expenses represent payments to the Parent and affiliated companies for rent on the Company's offices, various administrative sen ices provided to the Company, and tees tinder revenue-sharing arrangements. Under an ongoing agreement that was effective January 1, 2011, the Company was reimbursed by an affiliated company during 2022 for certain expenses, paid by the Company on die atlihatc's behalf, which support revenue production at the affiliate. The reimbursements primarily relate to occupancy, data processing, and management fee expenses. The following table shows the amounts paid (received) by the Company to (from) the Parent and affiliated companies for the year ended December 31, 2022; | | 2022 | | | |---------------------------------------------|-----------------|--|--| | Rent | \$
770,373 | | | | affiliates
Fees
paid
to | 2,484,209 | | | | affiliate
Expenses
reimbursed
from | (117,901) | | | | | \$
3,136,681 | | | I he Company rents office space from the Parent under month-to-month arrangements. Rent expense aggregated approximately 364.000 per month in 2022, As of December 31, 2022, the Company had an intercompany payable due to CHI of \$203,134 for federal and state income taxes. During 2022, the Company paid CHI £981,308 for income taxes. The Company maintains interest and noninterest-bearing deposit accounts at the Parent. These balances amounted to \$2,154,543 at December 31, 2022. As mentioned above, certain employees of the Company receive stock-based compensation under CBTs stockholder-approved plan. This compensation has been issued in the form of nonvested shares of CBI common stock. These awards generally vest after 4 to 7 years of continued employment, and during 2022, 3,644 shares vested. At December 31. 2022, employees of the Company held 25,926 nonvested shares and there was 3882,189 of unrecognized compensation cost related to these nonvested shares. That cost is expected to be recognized over a weighted average period of approximately 3.5 years. Stock-based compensation expense recognized in the Statement of Earnings during 2022 was \$287,140 while the related income tax benefit recognized in the Statement of Earnings was 366,2 1 3. Stock-based compensation is recorded as a contribution to additional paid-in capital, which also totaled \$287,140 during 2022. {11}------------------------------------------------ # **COMMERCE** brokerage **SERVICES, INC.** (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December 3 I , 2022 #### **(4) Fair Value of Financial Instrwments** The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 2022: | | | 2022 | | | |----------------------------------------------------------|----------------------------------------------------------|--------------------|---------------|--| | | Fair
Value
Level
in
Hierarchy
Measurement | Carrying
Amount | Fair
Value | | | assets;
Financial | | | | | | fair
U.S.
government
securities*
at
value | Level
1 | 523,101,260 | 523,101,269 | | Some of the Company's financial instruments arc not measured at fair value on a recurring basis, but the carrying amounts approximate fair value because of the liquidity or short maturity of these instruments. Such financial assets and financial Liabilities include cash and cash equivalents, receivable from and payable to clearing organization\* other assets and accounts payable and accrued expenses. The fair value of securities owned is based on published bid prices in an active market for identical assets and liabilities as of the reporting date and are categorized in Level 1 of the fair value hierarchy. #### **(S) Revenue from Contracts with Customers** The Company's revenue from contracts with customers mainly included commission, mutual fund, and 12b- 1 fees, as well as fees for advisory and administrative services. The foilown ng tabic shows the components of revenue for the Company for the year ended December 3L 2022. For these revenue categories, none of the transaction price has been allocated to performance obligations that are unsatisfied as of rhe end of a reporting period. | ihou^ancls) | | 2022 | |---------------------------------------------------------------|---|--------------| | Commission
income | | | | other
bond
commissions
Annuity,
and
investment | 5 | 7,970,212 | | 12b-1 fees | | 1,522,424 | | Mutual
fund
revenue | | 279,305 | | income
Total
commission | | 9,771,941 | | and
administrative
fees
Advisory | | 8,825J
57 | | Total
revenue
contracts
with
customers
from | 5 | 18,597.098 | The Company's opening and closing receivable balances for the years ended December 31, 2022 and 2021 for the Company's significant revenue from contracts with customers were 5949,489 and 5391.417, respectively. The Company's revenue is comprised of commissions received upon the execution of purchases and sales of mutual fund shares and equity securities, in addition Io sales of annuities and certain limited insurance products in an agency capacity. Also, fees arc earned on professionally managed advisory programs through arrangements with sub-ad visors. Payment from the customer is due upon settlement date for purchases and sales of securities, at the purchase date for annuities and insurance products, and upon inception of the sen ice period for advisory programs. {12}------------------------------------------------ # **COMMERCE** brokerageservices,**me.** (A Wholly Owned Subsidiary of Commerce Bank) Notes to Financial Statements December 3!. 2022 Most of the contracts (except advisory contracts) encompass two types of performance obligations. The first is an obligation to provide account maintenance, record keeping and custodial services throughout the contract term. The second is the obligation to provide trade execution services for the customers' purchases and sales of the products mentioned above. The first obligation issatisfied over time as the service period elapses\* while the second type of obligation is satisfied upon the execution of each purchase/salc transaction. Contracts for advisory services contain a single performance obligation comprised of providing the management services and related rcporimg/admmistrutivc services over the contract term. The transaction price of the contracts (except advisory contracts) is a commission charged at the time of trade execution. The commission varies across different security types, insurance products and mutual funds. It is generally determined by standardized price lists published by the Company and its mutual fund and insurance vendors. Because the transaction price relates specifically to the trade execution, it has been allocated to that performance obligation and is recorded at the time of execution. The fee for advisory services is charged to the customer in advance of the quarterly service period, based on the account balance at the beginning of the period. Revenue is recognized ratably over the service period. # **(6) Receivables from and Payables to Clearing Organization** | | December
31,
2022 | | | | |----------------------------------------------|------------------------------------------------|------------|-------------------------------------------|------------| | | Receivable
from
clearing
organization | | Payable
clearing
Io
organization | | | Pending
purchases
and
sales | 5 | 12.599*932 | \$ | 12,315,995 | | other
receivables
and
Commission | | 214,822 | | | | Deposits
with
clearing
organization | | 1 ,000,000 | | | | Total | \$ | 13,814,854 | \$ | 12,315,995 | The following table presents the receivables from and payables due to the clearing organization: Pending purchases and sales arc amounts receivable and payable for securities that have not reached the contractual settlement dates and are recorded on a gross basis on the Statement of financial Condition, Deposits with clearing organization consist ofcash and cash equivalents. # **(7) Net Capital Requirements** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule ] 5c3-I), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 (and the rule of the applicable exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1). At December 3 1 , 2022, the Company had regulatory net capital of £42,838,815, which was \$41,869,144 in excess of its required net capital cf 5969,671. {13}------------------------------------------------ # **COMMERCE** brokerage **SERVICES, INC.** (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December 3 1,2022 ### **{8) Retirement Plans** A portion of the Company's employees are covered by a noncontributory defined benefit pension plan offered by CBI, however, participation in the pension plan is not available to employees hired after June 30, 2003. AH participants arc fully vested in their benefit payable upon normal retirement date, which is based on years of participation and compensation. Since January 2011, all benefits accrued under the pension plan have been frozen. However, the accounts continue to accrue interest at a stated annual rate. The t HI pension plan was slightly underfunded at December 31. 2022, as the projected benefit obligation exceeded the value of plan assets by approximately .2%, The Company recorded pension benefit of 37,556 in 2022 related to the plan. Substantially ah of the Company's employees are covered by a defined contribution (401 (k)) plan offered by **CBI,** under which the Company makes match**i** tig con:ri but ions. During 2022, the Company recorded 5370,389 of expense related toCBfs 401(k) plan, #### **(9) Income Taxes** Income tax expense for rhe year ended December 31, 2022 is comprised of the following components: | | | 3033 | | | 3023 | |--------------------|----|-----------|-----------------|----|-----------| | Current
expense | | | Deferredbenefit | | | | Federal | s | 1,004,595 | Federal | \$ | (205,244) | | State | | 121,641 | State | | (25,253) | | Total | \$ | 1,126,236 | Total | S | (230,497) | {14}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) ## Compulation 6fNet Capital Reqjiremeill Pursuant to Rule 1 5cS-1 # December 3 1 , 2022 | statement of
Total
financialcondition
stockholder's
equity
per | S | 45,683,579 | |-----------------------------------------------------------------------------------------------|---|----------------| | Deductions^charges: | | | | Nonallowable
assets: | | | | Other
assets | | 900,835 | | taxes,
Deferred
income
net | | 419,123 | | Furniture,
equipment,
and
leasehold
net
improvements, | | 606 | | at affiliate
in excess
of
estimated
four
weeks'
expenses
Cash
average | | 1.026,199 | | Haircuts
on
securities
and
money
market
fund
at
NFS
held | | 498,001 | | Net
capital | | 42.838,815 | | Minimum
net
capital
requirement | | 969,671 | | of
over
minimum
Excess
net
capital
net capital
requirement | | 41.869,144 | | Aggregate
indebtedness | S | 14,545,056 | | to
indebtedness
Ratio
aggregate
capital
net | | .34
to
1 | There arc no material differences between the preceding computation and the Company's corresponding unaudited Part 11A of form X-17A'5 as ot December 31, 2U22. as amended. See accompanying report of independent registered public accounting firm. {15}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Computation **for** Determination 0f Customer Account Reserve Requirements Pursuant to Rule 15c3-3 # December 3!. *2022* The Company is exempt from Rule 15c3-3 pursuant to the provisions ofsubparagraphs(k)(2Xi) **and** (kX2)(it)of that **rule.** See accompanying report of independent registered public accounting firm. {16}------------------------------------------------ ## **Schedule 3** #### **COMMERCE BROKERAGE SERVICES, INC.** (A Wholly Owned Subsidiary of Commerce Bank) ## Computation for Determination of Proprietary Account of Broker Dealers Reserve Requirements Pursuant to Rule I5c3-3 December 31 , 2022 The Company is exempt from Rule !5c3-3 pursuant to the provisions of subparagraphs (k)(2)(i) **ami** (k)(2)(ii) of that rule. Sec accompanying report of independent registered public accounting firm. {17}------------------------------------------------ #### **Schedule** *4* # **COMMERCE BROKERAGE SERVICES, INC.** (A Wholly Owned Subsidiary' of Commerce Bank) Information Relating to Possession or Control Requirements under Rule 15c3-3 December 3 1 , 2022 The Company is exempt from Rule 1 5c3-3 pursuant to the provisions of subparagraphs (k)(2)(i) and (kX2)(it) of that rule. See Accompanying report of independent registered public accounting firm. {18}------------------------------------------------ ![](_page_18_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors of Commerce Brokerage Services, Inc. We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Commerce Brokerage Services, Inc. identified the following provisions of 17 C.F.R. §l5c3-3{k) under which Commerce Brokerage Services, Inc. claimed the following exemptions from 17 C.F.R. §240.15c3-3; (k)(2)G) and ("exemption provisions") and (2) Commerce Brokerage Services, Inc. stated that Commerce Brokerage Services, Inc, met the identified exemption provisions throughout the most recent fiscal year except as described in its exemption report. Commerce Brokerage Services, Inc.'s management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and otherrequired procedures to obtain evidence about Commerce Brokerage Services, Inc.'s compliance with the exemption provisions, A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph and (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. **Armanintf-LP** SL Louis, Missouri February 28. 2023 An innFpnndFni firm uuucjrtcdwillMlxhm GlMHi LimiWd ![](_page_18_Picture_9.jpeg) {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) S00() Ftirsylh Bautevard. Suite 1200 Po\$t Office Bo\* 16001 St. Louis. Missouri 63105-1491 1-BO0-772-7263 -Phone 314-746-367? - **Fax** # **Commerce Brokerage Services, Inc. (A Wholly Owned Subsidiary of Commerce Bank) Exemptton Report** Commerce Brokerage Services, Inc. (the "Company") is a registered broker-dealer subject to Rule l?a-5 promulgated by the Securities and Exchange Commission ( 17 C.F.R. §240, 1 7a-5. "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(1) and (4). To the best of its knowledge and belief, theCompany states the following: - 1; The Company claimed an exemption from 17 CF.R- § 240.15c3-3 under the following provisions of 17 C.F.R. § 240. 1 5^3-3 fk/ Rule 15c3-3 subparagraph (kX2Xi) and Rule I5c3- 3 subparagraph (kX^Mii) (Exemption Provisions). - 2) The Company mat the identified exemption provisions of (kX^KD throughout the year ended December 31, 2022. - 3) The Company met the identified exemption provisions of (kX2)(ii) throughout the year ended December 31, 2022, except as described below. - During the year ended December 31 , 2022, a total of six checks were not transmitted by noon of the next business day following receipt, fhe nature of each exception and the month in which the exception occurred are as follows: | Month | Incomplete/
Iiaccuralc
Instructions | Associate
Delay | Delay
Mail | |----------|-------------------------------------------|--------------------|---------------| | January | 2 | | | | February | 1 | | | | .March | 1 | | | | April | I | | | | December | | 1 | | | Total | 5 | 1 | 0 | Mutual Funds, Annuities and Other Investment Products: - Not FDIC Insured - No Bank Guarantee - May Lose Value *A Subsidiary of Commerce Bank Member FiNRA and SIPC* {20}------------------------------------------------ During the year ended December 31, 2022, there were no instances of securities that were not transmitted by noon ofthe next business day following receipt. Commerce Brokerage Services. Inc, I, Tiffany Simpson, affirm that, to my best knowledge and belief, this Exemption Report is true and correct. Tiffany Simpson Treasurer, Commerce Brokerage Services, Inc. February 28, 2023 Mutual Funds, Annuities and Other Investment Products: - Not FDIC Insured - No Bank Guarantee - May Lose Value *A Subsidiary of Commerce Bank Member BiNRA and SiPG* {21}------------------------------------------------ ![](_page_21_Picture_0.jpeg) # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPLYING AGREED-UPON PROCEDURES** To the Board of Directors of Commerce Brokerage Services, Inc. We have performed the procedures included in RuleI7a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities investor Protection Corporation ("SIPC") Series 600 Rules, which are enumerated below on the accompanying General Assessment Reconciliation ("Form SIPC-7'} for the year ended December 31. 2022. Management of Commerce Brokerage Services. Inc.is responsible for its Form SlPC-7 and for its compliance with the applicable instructions on Form SlPC-7. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and the SIPC in evaluating the Company's compliance with the applicable instructions on Form SlPC-7 for the year ended December 31, 2022. Additionally, the SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purpose. This report may not be suitable for any other purpose The procedures performed may not address all the items of interest to a user of :his report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed, and our findings are as follows; - 1) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amount reported on the Annual Audited Report Form X-17A-5 iPad III (FOCUS report) for the year ended December 31, 2022, with the Total Revenue amount reported in Form SlPC-7 for the year ended December 31, 2022, noting no differences, - 3) Compared any adjustments reported in Form SFC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SiPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on wnion it was originally computed, noting no differences. Ws were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AlCPA and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-7 and torIts compliance with the applicable instructions on Form SIPC-7 for Tie year ended December 31, 2022. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have bean reported to you. ![](_page_21_Picture_11.jpeg) {22}------------------------------------------------ We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of Commerce Brokerage Services, Inc. and the SIPC and is not intended to be and should nol be used by anyone other than these specified parties. A-maninotLp S:, Louie, Missouri February 28. 2023 {23}------------------------------------------------ | SIPC-7 | | |---------------|--| | (36REV 12/18) | | # SECURITIES INVESTOR PROTECTION CORPORATION Mail Cade: 3967 P.O. Box 7247 Philadelphia, PA 19170-0001 **SIPC-7** (35-REV 12/18) # **General Assessment Reconciliation** # 12/31/2022 For ihe fiscal year ended \_\_\_\_\_\_\_\_ (Read carefully tte instructions in your Nothing Copy before completing ihi& Form] ## TO **BE FILED BY ALL SIPG MEMBERS WITH FISCAL YEAR ENDINGS** 1. Name ol Member, address, Destgnated Examining Authority. 1934 Act registralion no. and month in which fiscal year ends tor purposes of the audit requirement ot SEC Rule 17a-5: | Commerce
Box
16691
P.O.
MO
Clayton, | Services,
inc.
Brokerage
63105-1491 | | Nate: It any pt the
mailing label requires correction, please
any corrections tn torm@sipo.org and so
indicate cm the form f ilert
Name and telephone number ot person lo
contact respecting this form.
Tiffany
Simpson | information shown on Ihe
e-mail
816-760-7740 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------| | General Assessment (item 2e from page 2)
A.
2
B.
7/27/2022
Date Paid
Less prior overpayment applied
C.
D.
Assessment balance due or (overpayment)
Interest compuled
E.
F.
V the box
G.
PAYMENT:
Check mailed to P.O. Box
Total (must be same as F
Overpayment carried forward
H.
3. Subsidiaries (S) and predecessors | Less payment made with SlPC-6 filed 'exclude interest;
on late payment (see instruction E) for
Total assessment balanca and interest due (or overpaymeni carried forward)
funds WlrsdD
IP)
included in this form (give | HoQ
251800
\$l | (
days at 20% per annum
l<
name and 1934 Act registration
number): | 3,032.00
514.00
I
2,518.00
00
2,518 | | The SIPC
member submitting this
person by whom it is executed represent
Ihat
all
and complete.
Dated the ^3
day of January
K
Dates:
s
Postmarked
LU
Calculations | form and (he
thereby
information contained herein is true, correct
23
, 20
This form and the assessment payment Is due 60 days after the end of the fiscal year. Relain the Working Copy of this form
for a period ot nol les? than 6 years, the latest 2 years in an easily accessible place
Received | Commerce
Treasurer
Reviewed
Documentation. | Services,
Brokerage
alien ParingFEhtp qf olhqr n tganijalicn
\AuMnnrod Signal jrn
(Till*) | Inc,
Forward Copy | **CO** Disposition of exceptions: {24}------------------------------------------------ # **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** Amounts far the fiscal periad **beginning** (io page 1, line 2.A.) | | .".
and ending/. | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------| | Item Ko.
2a. Total revenue (FOCUS Line 12;Par1 HA Une 9, Cede 4D30) | Eliminate cents
S 20,151,665 | | 2b. Additions. | | | Hl
Total revenues from the securities business of subsidiaries lexcepl foreign subsidiaries) and
predecessors not included above. | | | (2) Nel loss from principal transactions insecurities in trading accourts. | | | 1 3) Net loss from principal transactions in commodities
in trading acctunts. | | | 4 Interest
and dividend expense deducted in deter mi m ng item 2a. | | | (5) Nel loss from management of or participation in the underwriting ci distribution of securities. | | | (6) Expenses other than advertising. printing, registration lees and legal fees deducteo n determining net
profit from management of or participation in underwriting or distribution of securities. | | | (7) Net loss from securities in .nvestmem accounts. | | | Total additions | | | 2c. Deductions: | | | pl
H) Revenues irom the disiribulion of shares
a registered open end invastmenl company or unit
investment (rust, Irom the sale ol variable annuities, from the business of insurance, from investment
advisory services rendered 1o registered investment companies or insurance company separate
accounts, and Irom transactions in seturily futures products. | | | 2) Revenues irom commodity transactions | | | (3) Commissions, floor brokerage and clearance paid to other SiPC members in connection with
securities transactions | | | (4) Reimbursements lor postage in connection with proxy solicitation, | | | (5) Nel gam from securities in investment accounts. | | | (6) 100% ot commissions and markups earned from transactions in (i;
certiticates of deposit and
[iij
Treasury bills, bankers acceptances or commercial paper that mature nine months or less
irom issuance dale, | | | (7) Direct expenses of printing advertising and legal lees incurred in connection with other revenue
related to the securities business Irevenue delined by Section 16 8)(L] oi 1he Act), | | | (8) Other revenue n ot related eilher directly or indirectly to the securities business.
(See Instruction 0): | | | (Deductions in excess ot \$100 MO require documentation; | | | | | | (9) (I) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
n
Code 4075 plus fins 2b(4) above) but not in excess
u
ol lolal interest and dividend income.
\$ | | | I
e
n
jq
(ii) 48% ol margin interest earned on customers securities
US line 5, Code 3960).
aceounts ( 4D% of F0C | | | Enter the greater of line (i] or (ii) | 5,249 | | Total deductions | 18,130,617 | | 2d. SIPC Net Operating Revenues | t
2,021,048 | | 2e. General Assessment
.uu15 | 3,032
- | | | | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.