US bank stocks nosedived into negative territory during a turbulent month for the industry.

Major exchange-traded banks posted a median month-to-date return of negative 17.2% in March, in stark contrast with positive median returns of 0.2% in February and 1.3% in January, according to an S&P Global Market Intelligence analysis. Only four major exchanged-traded US banks posted positive month-to-date returns in March. Similarly, the S&P US BMI Banks index had a negative 18.7% return for the month, while the S&P 500 recorded a positive 3.7% return.

The banking industry's underperformance came during a month of market turmoil, including the failures of SVB Financial Group unit Silicon Valley Bank and Signature Bank, which were the second- and third-largest US bank failures, respectively, in US history. The closures sparked concerns about industry liquidity.

Not long after the collapses sent many bank stocks tumbling, the Federal Reserve announced a 25-basis-point increase to the federal funds rate, causing bank stocks to fall again.

Worst-performing stocks

Beleaguered First Republic Bank was the worst-performing bank stock by total return in March, with a month-to-date return of negative 88.6%. The stock tumbled in premarket trading March 13 after the company announced additional liquidity from the Fed and JPMorgan Chase & Co. failed to ease investor concerns following the bank failures. Three days later, 11 major US banks made a total uninsured deposit of $30 billion into First Republic Bank.

Silvergate Capital Corp. ranked second with a return of negative 88.4%. On March 8, the company announced plans to wind down operations and voluntarily liquidate its banking subsidiary, Silvergate Bank.

While stock underperformance was widespread in March, some banks, including those with venture capital exposure, were more impacted and landed on the worst-performing stocks list. PacWest Bancorp posted a return of negative 64.9%, Western Alliance Bancorp. negative 52.1%, Zions Bancorp. NA negative 40.9%, Customers Bancorp Inc. negative 39.9% and Metropolitan Bank Holding Corp. negative 39.3%.

As of mid-March, Western Alliance had the lowest price-to-estimated 2023 earnings ratio among US bank stocks, trading at 3.2x its estimated earnings per share for the year.

Best-performing stocks

Buyers of the bridge banks established by the Federal Deposit Insurance Corp. to facilitate the receivership of Silicon Valley Bank and Signature Bank were among the best-performing bank stocks in March.

First Citizens BancShares Inc., the buyer of Silicon Valley Bridge Bank NA, ranked No. 1 with a month-to-date return of 32.6%. New York Community Bancorp Inc., the buyer of Signature Bridge Bank NA, was third with a return of 1.8%.

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Aside from First Citizens and New York Community, only two other banks posted positive returns in March: Village Bank and Trust Financial Corp. and Citizens Financial Services Inc.

Triumph Financial Inc., the most expensive bank stock by price-to-estimated 2023 EPS as of March 15, was part of the best-performing stocks list with a return of negative 4.6%.