2. Summary of Significant Accounting Policies (cont.)
Administrative Expenses
The Plan’s administrative expenses are paid by either the Plan or the Company, as provided by the Plan document. Certain expenses incurred maintaining the Plan are paid directly by the Company and are excluded from these financial statements. Investment-related expenses are included in the net appreciation or depreciation in fair value of investments.
3. Related Party and Party-In-Interest Transactions
Certain Plan investments are shares of registered investment companies managed by Fidelity Investments Institutional Operations, which is related to Fidelity. At December 31, 2022, the Plan held 4,363.065 of Metropolitan Commercial Bank common stock valued at $255,981. For the year ended December 31, 2022, the Plan purchased 4,760.831 shares and sold 397.766 shares. At December 31, 2021, the Plan did not hold any shares of Metropolitan Commercial Bank common stock. These transactions and notes receivable from participants qualify as exempt party-in-interest transactions.
4. Fair Value Measurement
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy assigns the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurement) and lowest priority to unobservable inputs (Level 3 measurement). The three levels of fair value hierarchy are described as follows:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market asset or liability is a market in which the transaction for the asset or liability occurs with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 - Observable inputs other than Level 1 prices, such as a quoted price for similar assets or liabilities; quoted market prices in markets that are active; or model-derived valuation or other inputs that are observable or can be corroborated by observable market data for substantially the full terms of the assets or liabilities.
Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies used at December 31, 2022 and 2021.
Following is a description of the valuation methodologies used for assets measured at fair value at December 31, 2022 and 2021.
Employer Common Stock – The Employer common stock is valued at the closing price reported on the active market on which it is traded.