Top 3 Rising-Rate Bank Stocks

A few banks offer strong potential upside amid a climate of rising interest rates, Mendon Capital Advisors President Anton Schutz said Monday.

"I think the market's been a little early in terms of expecting results immediately," he said. "I've been on four separate road trips, and what's very clear is the security portfolios of these banks are going to take a little hit."

On CNBC's "Fast Money," Schutz added that over the longer term regional banks would likely see strong earnings from lending, although mortgages could experience headwinds and refinancing has calmed down.

(Read More: 2 Sectors to Play Amid Rising Rates)

Margins not going to change dramatically until LIBOR moves

"Earnings near-term, I think, are going to be suspect," he said. "They're still really cheap to where they were long-term, and I still see them as great return-to-capital stories through dividends and buybacks."

Schutz said that his top bank pick was M&T Bank.

"I think it's going to be one of the fastest-growing larger-cap financials out there," he added.

Schutz's other top picks included Regions and South Carolina Bank and Trust.

He also said that he had been playing the money-center banks by selling out-of-the-money puts.

(Read More: 'Still Too Early' for Stocks: Stephen Weiss)

But for the sector as a whole to see improvement, Schutz said consumer lending was key.

"We need the consumer to stop de-levering and start borrowing again, and home equity is one place we could potentially see that down the road," he said.

Trader disclosure: On June 24, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Steve Weiss is long THC; Steve Weiss is long C; Steve Weiss is long BAC; Steve Weiss is long AIG; Steve Weiss is short X; Steve Weiss is short CAT; Stephanie Link is long AAPL; Stephanie Link is long JPM ; Stephanie Link is long GS; Stephanie Link is long CSCO; Stephanie Link is long FB; Stephanie Link is long EBAY; Stephanie Link is long HD; Stephanie Link is long WFC; Simon Baker is long AAPL; Simon Baker is long BAC; Simon Baker is long GS; Simon Baker is long YHOO; Simon Baker is long FB; Simon Baker is long RF; Simon Baker is long PHM; Simon Baker is long F; Simon Baker is long THC; Simon Baker is long HD; Simon Baker is long MU; Jon Najarian is long CAT; Jon Najarian is long HALO; Jon Najarian is long EA; Jon Najarian is long UVXY; Jon Najarian is long TOL; Jon Najarian is long TIVO; Jon Najarian is long PAAS.