What happened

It has been a volatile couple of days for Metropolitan Bank (MCB -1.80%). On Monday, the stock sank some 67% to a low of about $14.48, but today it bounced back, up around 44.8% as of 2:15 p.m. ET. It had been up as much as 56% on the day. As of 2:15 p.m. ET, the stock price was back up to $35.12 per share, but still down about 40% year to date.

The major indexes were all up on Monday as of 2:15 p.m. ET. The S&P 500 was up 62 points (1.6%), the Dow Jones Industrial Average was up 313 points (1%), and the Nasdaq Composite was up 137 points (1.2%).

So what

Metropolitan Bank is a small New York City-based bank with about $6.3 billion in assets as of Dec. 31. It is the 201st largest bank in the U.S., according to the Federal Reserve.

On Monday, its stock fell like many regional and community banks' did on fears of a run on deposits, similar to what brought Silicon Valley Bank, owned by SVB Financial, down last Friday, and Signature Bank down on Sunday.

The parallels between Silicon Valley Bank and Metropolitan Bank were quite clear, at least from the standpoint that the latter also serves venture capital investors and start-ups. It even brands itself as "The Entrepreneurial Bank."

But around midday the stock price started moving up from the depths and it continued surging north on Tuesday. The catalyst was measures taken by federal regulators, the Federal Reserve, Treasury, and Federal Deposit Insurance Corp. (FDIC) to provide funding to protect depositors and shore up the banking system.

They created a bridge bank to support depositors at SVB and launched a new Bank Term Funding Program (BTFP) to provide banks, credit unions, and other depository institutions with loans for up to one year.

The Treasury Department also made available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. But the Federal Reserve does not anticipate that these backstop funds will be necessary.

The bottom line is that the Federal Reserve said it is "prepared to address any liquidity pressures that may arise."

Now what

This certainly alleviated a lot of worries from banks, as well as investors, and the markets reflected that on Tuesday. Not only was Metropolitan Bank up big on the day, but many small, regional banks rocketed higher on Tuesday. 

The situation is way too volatile right now for small banks like Metropolitan Bank to warrant any type of recommendation, other than to monitor this situation and keep an eye on what the Fed does with interest rates at its next FOMC meeting.