# COMMERCE BROKERAGE SERVICES, INC. X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: COMMERCE BROKERAGE SERVICES, INC. - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0000783344-22-000002 - 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 - Signed by: Tiffany Simpson (Treasurer) Original filing: https://www.sec.gov/Archives/edgar/data/783344/000078334422000002/cbsifs.pdf --- {0}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Financial Statements and Schedules Part III December 3 1, 2021 (With Report of Independent Registered Public Accounting Firm Thereon) {1}------------------------------------------------ ## **Table of Contents** | | | Page | |---|------------------------------------------------------------------------------------------------------------------------|------| | | Report of Independent Registered Public Accounting Finn | | | | Statement of Financial Condition | 2 | | | Statement of Earnings | 3 | | | Statement of Stockholder's Equity | 4 | | | Statement of Cash Flows | 5 | | | Notes to Financial Statements | 6 | | | Schedules | | | l | Computation ofNet Capital Requirement Pursuant to Rule 15c3-l | 12 | | 2 | Computation for Determination of Customer Account Reserve Requirements Pursuant
to Rule 15c3-3 | 13 | | 3 | Computation for Determination of Proprietary Account of Broker Dealers Reserve
Requirements Pursuant to Rule 15c3-3 | 14 | | 4 | Information Relating to Possession or Control Requirements under Rule 15c3-3 | 15 | {2}------------------------------------------------ Armanino LLP 6 Cityplace Drive Suite 900 St. Louis, MO 63141-7194 314-983-1200 main armaninoLLP.com ![](_page_2_Picture_1.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, 2021, the related statements of earnings, changes in stockholder's equity, and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Commerce Brokerage Services, Inc. as of December 31, 2021, 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, lnc.'s management. Our responsibility is to express an opinion on Commerce Brokerage Services, lnc.'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 misstatement, 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 that 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 Commerce Brokerage Services, lnc.'s financial statements. The supplemental information is the responsibility of Commerce Brokerage Services, lnc.'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. §240.1 ?a-5. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Commerce Brokerage Services, lnc.'s auditor since 2016. Armanino LLP St. Louis, Missouri February 25, 2022 ![](_page_2_Picture_15.jpeg) An independent firm associated with Moore Global Network Limited {3}------------------------------------------------ #### (A Wholly Owned Subsidiary of Commerce Bank) #### Statement of Financial Condition #### December 31, 2021 | | | 2021 | | | | |--------------------------------------------------------------------------------------------------------------------------|----|---------------|--|--|--| | Assets | | | | | | | Cash | \$ | 3,575,933 | | | | | U.S. government securities, at fair value | | 18,994,840 | | | | | Receivable from clearing organization | | 1,226,066 | | | | | Furniture, equipment, and leasehold improvements, at cost less
accumulated depreciation and amortization of \$935,425 | | 1,427 | | | | | Deferred income taxes, net | | 188,626 | | | | | Other assets | | 325,528 | | | | | Total assets | | \$ 24,312,420 | | | | | Liabilities and Stockholder's Equity | | | | | | | Liabilities: | | | | | | | Payable to clearing organization | \$ | 1,041,539 | | | | | Accounts payable and accrued expenses | | 948,754 | | | | | Current income taxes payable | | 62,750 | | | | | Total liabilities | | 2,053,043 | | | | | Stockholder's equity: | | | | | | | Common stock, \$5 par value. Authorized, 6,000 shares; issued
and outstanding, 5,000 shares | | 25,000 | | | | | Additional paid-in capital | | 1,870,960 | | | | | Retained earnings | | 20,363,417 | | | | | Total stockholder's equity | | 22,259,377 | | | | | Total liabilities and stockholder's equity | | \$ 24,312,420 | | | | | | | | | | | {4}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) #### Statement of Earnings For the Year Ended December 31, 2021 | | 2021 | |---------------------------------------|-----------------| | Revenues: | | | Commissions | \$
6,560,285 | | Advisory and administrative fees | 9,122,748 | | 12b-1 fees | 1,003,567 | | Mutual fund revenue | 553,896 | | Interest income | 12,140 | | Other income | 121,085 | | Total revenues | 17,373,721 | | Expenses: | | | Salaries and benefits | 8,529,235 | | Rent and fees paid to affiliates, net | 2,617,956 | | Clearing charges, net | 553,875 | | Professional fees | 369,656 | | Online subscriptions | 338,124 | | Office supplies and postage | 130,762 | | Regulatory fees | 112,985 | | Travel and entertainment | 14,147 | | Depreciation and amortization | 9,113 | | Other | 369,824 | | Total expenses | 13,045,677 | | Earnings before income taxes | 4,328,044 | | Income tax expense: | | | Current | 954,750 | | Deferred | (9,292) | | Total income tax expense | 945,458 | | Net earnings | \$
3,382,586 | {5}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Statement of Stockholder's Equity For the Year Ended December 31, 2021 | | | Additional | | | |------------------------------|--------------|-----------------|------------------|------------------| | | Common | paid-in | Retained | | | | stock | capital | earnings | Total | | Balance at December 31, 2020 | \$
25,000 | \$
1,686,494 | \$
16,980,831 | \$
18,692,325 | | Net earnings | | | 3,382,586 | 3,382,586 | | Stock-based compensation | | 184,466 | | 184,466 | | Balance at December 31, 2021 | \$
25,000 | \$
1,870,960 | \$
20,363,417 | \$
22,259,377 | {6}------------------------------------------------ #### (A Wholly Owned Subsidiary of Commerce Bank) #### Statement of Cash Flows #### For the Year Ended December 31, 2021 | | 2021 | |----------------------------------------------------------------------------------------|-----------------| | Cash flows from operating activities: | | | Net earnings | \$
3,382,586 | | Adjustments to reconcile net earnings to net cash provided by
operating activities: | | | Depreciation and amortization | 9,113 | | Deferred income taxes | (9,292) | | Accrued current income taxes | (39,810) | | Increase in securities owned | (2,998,520) | | Increase in net receivable from clearing organization | (26,772) | | Stock-based compensation | 184,466 | | Decrease in other assets | 63,995 | | Decrease in accounts payable and accrued expenses | (11,032) | | Net cash provided by operating activities | 554,734 | | Increase in cash | 554,734 | | Cash at beginning of year | 3,021,199 | | Cash at end of year | \$
3,575,933 | | Cash payments (net of refunds) of income taxes | \$
994,560 | {7}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December 31, 2021 ## **(1) Organization and Purpose of Company** Commerce Brokerage Services, Inc. (the Company) is a wholly owned subsidiary of Commerce Bank (the Parent). The 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 offering oversight over all 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 customers for a variety of securities including mutual funds, exchange-listed 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 cleared 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 fmancial statements are prepared in accordance with U.S. generally accepted accounting principles. ## **(2) Summary of Significant Accounting Policies** ### *(a) Cash* Cash includes cash on hand and cash received from customers held by the Company as of year-end that is due to National Financial Services LLC. As of December 31, 2021, cash received from customers and due to NFS totaled \$5,082. A corresponding liability is recorded in accounts payable and accrued expenses. ## *(b) 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) 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 customer enters into a buy-or-sell 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 date basis, which approximates U.S. generally accepted accounting principles. As of December 31, 2021, commission receivables from investment and insurance companies were \$127,316 and are recorded in other assets. {8}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Notes to Financial Statements December 31, 2021 ## *(d) Advisory fees* The Company offers professionally managed, fee-based advisory programs through an arrangement with subadvisors 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 are 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. ## *(e) 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 2021 as a reduction of clearing charge expense charged by its clearing organization. At December 31, 2021, deferred revenue of\$320,833 was included in accounts payable and accrued expenses. ## *(I) Securities owned, at fair value* Securities owned, at fair value consist of U.S. government securities with initial maturities of six months. They are 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) 820-10-3 5. Changes in fair value are recorded in other income in the Statement of Earnings. ## *(g) 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. ### *(h) 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. ### (i) *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. ## **0)** *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 rates. The amount of expense or benefit is either remitted to or received from CBI. Deferred income taxes are provided for temporary differences between the financial reporting bases and income tax bases of the Company's assets and liabilities 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 that includes the change. The {9}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Notes to Financial Statements December 31, 2021 significant components of the net deferred tax asset as of December 31, 2021 included a deferred tax asset of \$122,959 relating to stock-based compensation, \$74,447 relating to unearned fee income, and a deferred tax liability of \$12,045 relating to prepaid expenses. Management believes it is more likely than not that the 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 were no accrued interest and penalties at December 31, 2021. ## *(k) 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 CBI'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. ## *(l) 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. ### *(m) Subsequent events* The Company evaluated potential subsequent events through February 25, 2022, which is the date that the financial statements were issued. ## **(3) Related-Party 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 services provided to the Company, and fees under revenue-sharing arrangements. Under an ongoing agreement that was effective January 1, 2011, the Company was reimbursed by an affiliated company during 2021 for certain expenses, paid by the Company on the affiliate'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, 2021: | | 2021 | | |------------------------------------|-----------------|--| | Rent | \$
650,532 | | | Fees paid to affiliates | 2,073,568 | | | Expenses reimbursed from affiliate | (106,144) | | | | \$
2,617,956 | | {10}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December 31, 2021 The Company leases office space from the Parent under month-to-month arrangements. Rent expense aggregated approximately \$54,000 per month in 2021. As of December 31, 2021, the Company had an intercompany payable due to CBI of \$60,462 for federal and state income taxes. During 2021, the Company paid CBI \$991,408 for income taxes. The Company maintains interest and noninterest-bearing deposit accounts at the Parent. These balances amounted to \$3 ,575,933 at December 31, 2021. As mentioned above, certain employees of the Company receive stock-based compensation under CBI's 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 2021, 4,111 shares vested. At December 31, 2021, employees of the Company held 20,093 nonvested shares and there was \$598,051 of unrecognized compensation cost related to these nonvested shares. That cost is expected to be recognized over a weighted average period of approximately 3 years. Stock-based compensation expense recognized in the Statement of Earnings during 2021 was \$184,466 while the related income tax benefit recognized in the Statement of Earnings was \$42,608. Stock-based compensation is recorded as a contribution to additional paid-in capital, which also totaled \$184,466 during 2021. ## **(4) Fair Value of Financial Instruments** The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 2021: | | | 2021 | | |-------------------------------------------|----------------------------------------------|-----------------|--------------| | | Level in Fair Value
Measurement Hierarchy | Carrying Amount | Fair Value | | Financial assets: | | | | | U.S. government securities, at fair value | Level 1 | \$18,994,840 | \$18,994,840 | Some of the Company's financial instruments are 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, 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. ### **(5) 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 following table shows the components of revenue for the Company for the year ended December 31, 2021. For these revenue categories, none of the transaction price has been allocated to performance obligations that are unsatisfied as of the end of a reporting period. {11}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Notes to Financial Statements December 31, 2021 | (In thousands) | | 2021 | |------------------------------------------------|----|------------| | Commission income | | | | Annuity, bond and other investment commissions | | 6,560,285 | | 12b-1 fees | | 1,003,567 | | Mutual fund revenue | | 553,896 | | Total commission income | | 8,117,748 | | Advisory and administrative fees | | 9,122,748 | | Total revenue from contracts with customers | \$ | 17,240,496 | The Company's opening and closing receivable balances for the years ended December 31 , 2021 and 2020 for the Company's significant revenue from contracts with customers were \$391,417 and \$431,733, 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 to sales of annuities and certain limited insurance products in an agency capacity. Also, fees are earned on professionally managed advisory programs through arrangements with sub-advisors. 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 service period for advisory programs. 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 is satisfied over time as the service period elapses, while the second type of obligation is satisfied upon the execution of each purchase/sale transaction. Contracts for advisory services contain a single performance obligation comprised of providing the management services and related reporting/administrative 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) Net Capital Requirements** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1 ), 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 31, 2021, the Company had regulatory net capital of \$19,118,084, which was \$18,868,084 in excess of its required net capital of \$250,000. {12}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) #### Notes to Financial Statements December 31, 2021 ### **(7) 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. All participants are 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 CBI pension plan was slightly underfunded at December 31, 2021, as the projected benefit obligation exceeded the value of plan assets by approximately 3%. The Company recorded pension benefit of \$3,964 in 2021 related to the plan. Substantially all of the Company's employees are covered by a defined contribution (40l(k)) plan offered by CBI, under which the Company makes matching contributions. During 2021 , the Company recorded \$341,906 of expense related to CBI's 40l(k) plan. ### **(8) Income Taxes** Income tax expense for the year ended December 31, 2021 is comprised of the following components: | 2021 | | | 2021 | | |-----------------|----|---------|------------------|---------------| | Current expense | | | Deferred benefit | | | Federal | \$ | 854,216 | Federal | \$
(7,277) | | State | | 100,534 | State | (2,015) | | Total | \$ | 954,750 | Total | \$
(9,292) | {13}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) #### Computation of Net Capital Requirement Pursuant to Rule 15c3-1 #### December 31, 2021 | Total stockholder's equity per statement of financial condition | \$
22,259,377 | |-----------------------------------------------------------------------|------------------| | Deductions/charges: | | | Nonallowable assets: | | | Other assets | 281,578 | | Deferred income taxes, net | 188,626 | | Furniture, equipment, and leasehold improvements, net | 1,427 | | Cash at affiliate in excess of estimated four weeks' average expenses | 2,619,686 | | Haircuts on securities | 49,976 | | Net capital | 19,118,084 | | Minimum net capital requirement | 250,000 | | Excess of net capital over minimum net capital requirement | \$
18,868,084 | | Aggregate indebtedness | \$
2,053,043 | | Ratio aggregate indebtedness to net capital | .11 to 1 | There are no material differences between the preceding computation and the Company's corresponding unaudited Part IIA of Form X-17A-5 as of December 31, 2021. {14}------------------------------------------------ (A Wholly Owned Subsidiary of Commerce Bank) Computation for Determination of Customer Account Reserve Requirements Pursuant to Rule 15c3-3 #### December 31 , 2021 The Company is exempt from Rule 15c3-3 pursuant to the provisions of subparagraphs (k)(2)(i) and (k)(2)(ii) of that rule. {15}------------------------------------------------ ## **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 15c3-3 December 31 , 2021 The Company is exempt from Rule 15c3-3 pursuant to the provisions of subparagraphs (k)(2)(i) and (k)(2)(ii) of that rule. {16}------------------------------------------------ #### **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 31 , 2021 The Company is exempt from Rule 15c3-3 pursuant to the provisions of subparagraphs (k)(2)(i) and (k)(2)(ii) of that rule. {17}------------------------------------------------ Armanino LLP 6 Cityplace Drive Suite 900 St. Louis, MO 63141-7194 314-983-1200 main ![](_page_17_Picture_1.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. §15c3-3(k) under which Commerce Brokerage Services, Inc. claimed the following exemptions from 17 C.F.R. §240.15c3-3: (k)(2)(i) and (k)(2)(ii) ("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, lnc.'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 other required procedures to obtain evidence about Commerce Brokerage Services, lnc.'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 (k)(2)(i) and (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. Armanino LLP St. Louis, Missouri February 25, 2022 ![](_page_17_Picture_10.jpeg) An independent firm associa led with Moore Global Network Limited {18}------------------------------------------------ ![](_page_18_Picture_0.jpeg) 8000 Forsyth Boulevard, Suite 1200 Post Office Box 16891 St. Louis, Missouri 63105-1491 1-800-772-7283 - Phone 314-746-3877 - Fax ## **Commerce Brokerage Services, Inc. (A Wholly Owned Subsidiary of Commerce Bank) Exemption Report** Commerce Brokerage Services, Inc. (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-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)(l) and (4). To the best of its knowledge and belief, the Company states the following: - 1) The Company claimed an exemption from 17 C.F.R. § 240.15c3-3 under the following provisions of 17 C.F.R. § 240.15c3-3 *(k):* Rule 15c3-3 subparagraph (k)(2)(i) and Rule 15c3- 3 subparagraph (k)(2)(ii) (Exemption Provisions). - 2) The Company met the identified exemption provisions of (k)(2)(i) throughout the year ended December 31, 2021. - 3) The Company met the identified exemption provisions of (k)(2)(ii) throughout the year ended December 31, 2021, except as described below. - During the year ended December 31, 2021, a total of 15 checks were not transmitted by noon of the next business day following receipt. The nature of each exception and the month in which the exception occurred are as follows: | Month | Incomplete/
Inaccurate
Instructions | Associate
Delay | Mail Delay | |-----------|-------------------------------------------|--------------------|------------| | April | | 2 | | | May | | 1 | | | June | 1 | | | | September | 1 | 1 | | | October | 2 | 1 | | | December | 6 | | | | Total | 10 | 5 | 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 Sf PC {19}------------------------------------------------ • During the year ended December 31, 2021, there were 11 instances of securities that were not transmitted by noon of the next business day following receipt. The nature of the exception and the month in which the exception occurred are as follows: | Month | Incomplete/
Inaccurate
Instructions | Associate
Delay | Mail Delay | |----------|-------------------------------------------|--------------------|------------| | February | | 2 | | | October | 7 | 1 | | | November | | | 1 | | Total | 7 | 3 | 1 | 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 25, 2022 Mutual Funds, Annuities and Other Investment Products: - Not FDIC Insured - No Bank Guarantee - May Lose Value A Subsidiary of Commerce Bank Member FINRA and Sf PC {20}------------------------------------------------ ![](_page_20_Picture_1.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES** To the Board of Directors of Commerce Brokerage Services, Inc. We have performed the procedures included in Rule 17a-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 and were agreed to by Commerce Brokerage Services, Inc. and the SIPC, solely to assist you and the SIPC in evaluating Commerce Brokerage Services, lnc.'s compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2021. Management of Commerce Brokerage Services, Inc. is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-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 SIPC-7 for the year ended December 31, 2021. 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 this 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 Part Ill (FOCUS report) for the year ended December 31 , 2021 , with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2021 , noting no differences; - 3) Compared any adjustments reported in Form SIPC-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 which it was originally computed, noting no differences. We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA 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 for its compliance with the applicable instructions on Form SIPC-7 for the year ended December 31 , 2021. 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 been reported to you. ![](_page_20_Picture_12.jpeg) An independent firm associated with Moore Global Network Limited {21}------------------------------------------------ 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 not be used by anyone other than these specified parties. Armanino LLP St. Louis, Missouri February 25, 2022 {22}------------------------------------------------ | SIPC-7 | | SECURITIES INVESTOR PROTECTION CORPORATION
Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001 | | SIPC-7 | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------| | (36-REV 12/18) | | General Assessment Reconciliation
For the fiscal year ended 12/31/2021
(Read carefully the instructions in your Working Copy before completing this Form) | | (36-REV 12/18) | | I
L | TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS
1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for
purposes of the audit requirement of SEC Rule 17a-5:
Commerce Brokerage Services, Inc.
P.O. Box 16891
Clayton, MO 63105-1491 | 7
_J | Note: If any of the information shown on the
any corrections to form@sipc.org and so
indicate on the form filed.
Name and telephone number of person to
contact respecting this form.
Tiffany Simpson 816-760-7740 | mailing label requires correction, please e-mail | | 2. A.
B.
7/22/2021
Date Paid
C.
D.
E.
F.
G. PAYMENT:
H. | General Assessment (item 2e from page 2)
Less payment made with SIPC-6 filed (exclude interest)
Less prior overpayment applied
Assessment balance due or (overpayment)
Interest computed on late payment (see instruction E) for ______ days at 20% per annum
•
Total assessment balance and interest due (or overpayment carried forward)
r7J
✓ the box
Check mailed to P.O. BoxliJFunds Wired
Total (must be same as F above)
Overpayment carried forward
3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registration number): | q
226.00
__________
AC
________
\$( | \$
\$
_
_ | __
___
63_2_.0_0
406.00
__________
_ | | and complete.
Dated the1.i_ day of January
a:: Dates:
LLI
Postmarked
3:
LLI
>
Calculations
LLI
a::
c=, Exceptions:
c
Cl) Disposition of exceptions: | The SIPC member submitting this form and the
person by whom it is executed represent thereby
that all information contained herein is true, correct
'2022
This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form
for a period of not less than 6 years, the latest 2 years in an easily accessible place.
Received | J~~-
Treasurer
Reviewed
Documentation | Commerce Brokerage Services, Inc.
(Name of Corporation, Partnership or other organization)
::r:i:
(Authorized Signature)
(Title) | Forward Copy | **1** {23}------------------------------------------------ # **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** | | | Amounts for the fiscal period | |---------------------------|--|-------------------------------| | beginning _11_11_20_21 | | ____
----
_ | | and ending _,21_s,12_0,_, | | | | | | | | Item No.
2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) | Eliminate cents
17,322,946
\$ | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------| | 2b. Additions:
(1) Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not included above. | | | (2) Net loss from principal transactions in securities in trading accounts. | | | (3) Net loss from principal transactions in commodities in trading accounts. | | | (4) Interest and dividend expense deducted in determining item 2a. | | | (5) Net loss from management of or participation in the underwriting or distribution of securities. | | | (6) Expenses other than advertising, printing, registration lees and legal fees deducted in determining net
profit from management of or participation in underwriting or distribution of securities. | | | (7) Net loss from securities in investment accounts. | 349 | | Total additions | 349 | | 2c. Deductions:
(1) Revenues from the distribution of shares of a registered open end investment company or unit
investment trust, from the sale of variable annuities, from the business of insurance, from investment
advisory services rendered to registered investment companies or insurance company separate
accounts , and from transactions in security futures products. | 16,348,241 | | (2) Revenues from commodity transactions. | | | (3) Comm issions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | 553,875 | | (4) Reimbursements for postage in connection with proxy solicitation. | | | (5) Net gain from securities in investment accounts. | | | (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and
(ii) Treasury bills, bankers acceptances or commercial paper that mature nine months or less
from issuance date. | | | (7) Direct expenses of printing advertising and legal fees incurred in connection with other revenue
related to the securities business (revenue defined by Section 16(9)(L) of the Act). | | | (8) Other revenue not related either directly or indirectly to the securities business.
(See Instruction C): | | | (Deductions in excess of \$100,000 require documentation) | | | (9) (i) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
0
Code 4075 plus line 2b(4) above) but not in excess
__________
of total interest and dividend income.
\$
_ | | | __________
(ii) 40% of margin interest earned on customers securities
126
\$
_
accounts (40% of FOCUS line 5, Code 3960). | | | Enter the greater of line (i) or (ii) | 126 | | Total deductions | 16,902,242 | | 2d. SIPC Net Operating Revenues | 421,053
\$========== | | 2e. General Assessment@ .0015 | 632
\$========== | | | (to page 1, line 2.A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.