Some acquisition targets in the bank M&A realm emerged as the best-performing stocks in March in the U.S. banking sector.

The performance stood out in a month when industrywide returns dropped further into negative territory, according to S&P Global Market Intelligence data.

Best performers

Emlenton, Pa.-based Emclaire Financial Corp. was the top performer with a 34% return as of March 31. Emclaire is being purchased by Canfield, Ohio-based Farmers National Banc Corp. in a $105 million cash-and-stock deal that is estimated to boost Farmers National's assets to about $5.2 billion.

Randolph Bancorp Inc. followed, posting a month-to-date total return of 28.5%, up from a negative 9.3% in February. The Quincy, Mass.-based company is being acquired by Easthampton, Mass.-based Hometown Financial Group Inc. for about $146.5 million.

Philadelphia-based Prudential Bancorp Inc. saw a return of 14.8% in March, the same month its $142.1 million stock-and-cash merger with Lancaster, Pa.-based Fulton Financial Corp. was announced.

La Jolla, Calif.-based Silvergate Capital Corp. posted a positive return of 17.6%, continuing recovery for the second consecutive month, from a negative 27.3% return at the start of 2022.

Month-over-month decline

Overall, major exchange-traded U.S. bank stock returns continued to decline month over month, falling to a negative 3.1% from 0.5% in February.

The S&P U.S. BMI Banks index dropped to a negative return of 6.6% from the previous month, while the S&P 500 bounced back to a positive return of 3.7%.

Worst performers

Several top-performing stocks in February landed in the negative territory in March, including Wilmington, N.C.-based Live Oak Bancshares Inc. and Murray, Utah-based FinWise Bancorp. with total returns of negative 20.4% and negative 18.8%, respectively. Live Oak had a positive return of 8.7% and FinWise had a double-digit return of 20.1% in February.

New York-based Signature Bank returned a negative 14.9% in the latest month, compared to 13.2% in the previous month.

Other bank stocks that fared below the industry median include Las Vegas-based Axos Financial Inc. with a negative return of 15.3%, Raleigh, N.C.-based First Citizens BancShares Inc. with a negative return of 15.6%, West Reading, Pa.-based Customers Bancorp Inc. with a negative return of 15.3% and Dallas-based Texas Capital Bancshares Inc. with a negative return of 13.9%.

Providence, R.I.-based Citizens Financial Group Inc. and its acquisition target, Short Hills, N.J.-based Investors Bancorp Inc., were also among the worst-performing bank stocks month-to-date, with a negative return of 13.5% and 10.8%, respectively.

Similarly, Tacoma, Wash.-based Columbia Banking System Inc. and Portland, Ore.-based Umpqua Holdings Corp. posted negative returns of 11.9% and 11.7%, respectively. The companies announced their merger in October 2021.