U.S. bank stocks posted a negative median return in December 2022 as the Federal Reserve made the latest move in its effort to slow inflation.

Major exchange-traded banks had a median month-to-date return of negative 4.8%, compared with positive 1.9% in November 2022 and positive 8.6% in October 2022, according to an S&P Global Market Intelligence analysis. The S&P U.S. BMI Banks index recorded a negative 7.6% return, while the S&P 500 booked a negative 5.8%.

During the month, the rate-setting Federal Open Market Committee boosted the benchmark interest rate by 50 basis points. Although the increase was smaller than the four straight 75-basis-point hikes earlier in 2022, U.S. bank stocks moved down following the announcement. In his post-rate-setting committee meeting news conference, Fed Chair Jerome Powell noted that the economic pain from higher rates was far from over.

Silvergate tops the list

Silvergate Capital Corp.'s stock was the worst-performing bank stock in December 2022 with a month-to-date return of negative 36.6%, more than double the negative return of the second on the list, Triumph Financial Inc.'s stock.

Silvergate shares had suffered for most of 2022 amid the turmoil in the cryptocurrency market and more recently due to the company's exposure to troubled cryptocurrency exchange FTX Trading Ltd. Earlier in December 2022, Silvergate CEO Alan Lane issued a letter to push back on what he called "misinformation" regarding the company's role in the digital asset ecosystem.

The stock of Triumph Financial, which was the second-most expensive U.S. bank stock by price-to-estimated 2023 earnings in December 2022, returned a negative 18.2%. Signature Bank, another cryptocurrency-friendly bank, was the third-worst performer with a return of negative 17.4%.

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Republic First Bancorp Inc. shares posted a negative return of 15.7%. During the month, the company announced leadership changes and its receipt of an updated investment proposal worth $75 million from a group of activist shareholders.

The largest bank by market capitalization on the worst-performer list was Wells Fargo & Co.'s stock, returning a negative 13.9%. In December 2022, the Consumer Financial Protection Bureau ordered the Wall Street giant to pay $2 billion in redress to consumers and pay a $1.7 billion civil penalty, among other enforcement actions.

Merger targets on the best-performer list

Merger targets were among the best performers in December 2022: Malvern Bancorp Inc., with a 24.1% return; Salisbury Bancorp Inc., with 7.2%; and HV Bancorp Inc., with 6.7%.

Malvern Bancorp is in a pending deal to be sold to First Bank, and Salisbury Bancorp will merge with and into NBT Bancorp Inc. HV Bancorp will be acquired by Citizens Financial Services Inc., which also made it to the list with a return of 6.2%.

ChoiceOne Financial Services Inc. posted the highest month-to-date return of 29.1%, followed by Old Point Financial Corp. with a 28.0% return.