U.S. bank stocks continued to take a beating in September as the Federal Reserve remained committed to reining in inflation through aggressive monetary policy tightening.

The month-to-date industry median return of major exchange-traded U.S. banks was negative 4.3% in September, compared to negative 1.7% in August and positive 5.8% in July, according to an S&P Global Market Intelligence analysis.

After positive returns at the beginning of the month, bank stocks dropped into negative territory after the Fed announced a third straight 75-basis-point interest rate increase and indicated that the pain of rate hikes could stretch into 2023.

The S&P U.S. BMI Banks index was negative 7.9% at the end of September, compared to the S&P 500's negative return of 9.2%.

Worst performers in September

Camp Hill, Pa.-based LINKBANCORP Inc. was the worst-performing stock in September with a negative return of 21.1%. It was followed by Las Vegas-based Axos Financial Inc. that posted a negative return of 18.1%.

Third on the list was Santa Clara, Calif.-based SVB Financial Group with a negative return of 17.4%, while its in-state peer, La Jolla-based Silvergate Capital Corp., was fourth with a negative return of 17.3%. Seattle-based HomeStreet Inc. was fifth with a negative return of 17.2%.

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New York-based Carver Bancorp Inc. continued to be among the worst-performing stocks after posting a negative return of 16.1% in September, though it was an improvement from its negative 21.4% return in August. A month after posting a positive return of 8.9%, Gettysburg, Pa.-based ACNB Corp. registered a negative return of 15.5% in September.

Best performers in September

Hampton, Va.-based Old Point Financial Corp. posted the highest return in the industry in September at 18.5%, followed by Middleton, N.Y.-based Orange County Bancorp Inc. and its 15.9% return.

Anniston, Ala.-based Southern States Bancshares Inc. and Rancho Cordova, Calif.-based Five Star Bancorp were third and fourth on the list with returns of 13% and 11.5%, respectively.

Southern States Bancshares' sale of two Southern States Bank branches to Talladega, Ala.-based First Bank of Alabama is expected to be completed in early October, according to Southern States' most recent Form 10-Q.

Emlenton, Pa.-based Emclaire Financial Corp, which is involved in a cash-and-stock deal with Canfield, Ohio-based Farmers National Banc Corp., posted a positive return of 10.0%. Finally, Memphis, Tenn.-based First Horizon Corp., which is involved in the largest bank M&A deal of 2022 with Toronto-Dominion Bank, saw its stock return 1.9% in September.