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3 Solid Stocks to Bet on From the Prospering Savings & Loan Industry
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The Zacks Savings and Loan industry is benefiting from the improving lending scenario following the Federal Reserve’s interest rate cuts last year. Also, relatively lower rates have resulted in stable funding costs, supporting net interest income (NII) and net interest margin (NIM) expansion.
The digitization of operations will aid industry players. Despite deteriorating asset quality, companies like WSFS Financial (WSFS - Free Report) , Provident Financial Services (PFS - Free Report) and Riverview Bancorp (RVSB - Free Report) are poised to gain from these favorable developments.
Industry Description
The Zacks Savings and Loan industry consists of specialized U.S. banks, which are generally locally owned, focusing on extending residential mortgage finance. Companies in the industry provide residential mortgages, commercial and industrial mortgages, home equity loans, vehicle loans, and other business loans. The institutions fund mortgages with savings insured by the Federal Deposit Insurance Corporation ("FDIC"). They offer high interest rates on savings to attract deposits, enhancing their ability to lend mortgages. Although the firms operate similarly to commercial banks by providing various banking services, such as checking and savings accounts, they were previously legally bound to invest at least 65% of their asset holdings in mortgages. Effective July 1, 2019, a ruling lifted the restriction for institutions insured by the FDIC.
3 Savings & Loan Industry Trends to Watch
Relatively Lower Interest Rates to Aid NII: Though the Federal Reserve is taking a cautious approach now, given the uncertainty surrounding Trump’s tariff plans, it has lowered interest rates by 100 basis points in 2024. With relatively lower rates, savings and loan companies will likely witness an improvement in their NII and margins, which were under pressure because of higher funding/deposit costs.
Further, with relatively lower interest rates, mortgage rates are also witnessing a declining trend. With a gradual decrease in mortgage rates, purchase originations and refinancing activities will likely improve. This is expected to instill confidence among borrowers and support loan demand in most loan categories.
Digital Ramp-Ups: Numerous challenges, including legacy technologies and an unbalanced customer base, have cropped up for savings and loan companies. These companies have been trying to ramp up the transition to digitally focused, technology-driven and flexible operating institutions to remain competitive and reap profits in the rapidly evolving market.
Though technology upgrades are expected to raise costs in the near term, these will support industry participants' customer experience and operational efficiency, along with reducing costs over time.
Worsening Asset Quality: With prolonged higher interest rates, industry players are likely to witness some weakness in asset quality as the portfolio companies may find it difficult to service debt. Also, heightened geopolitical risk and uncertainty over tariff-related headwinds will put a strain on Savings and Loan companies’ asset quality.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Savings and Loan industry currently carries a Zacks Industry Rank #14, which places it in the top 6% of more than 245 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 7% of the Zacks-ranked industries is an outcome of the positive earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential. The industry’s current-year earnings estimate has moved up 7% over the past six months.
Before we present a few stocks that you may want to bet on, let us take a look at the industry's recent stock market performance and the valuation picture.
Industry Underperforms Sector, Outperforms S&P 500
The Zacks Savings and Loan Industry has widely underperformed the Zacks Finance sector while outperforming the S&P 500 composite over the past year.
The stocks in the industry have collectively gained 20%, whereas the S&P 500 Index has risen 10.5%. In the same period, the sector has appreciated 20.4%.
Price Performance
Industry's Current Valuation
One might get a good sense of the industry's relative valuation by looking at its price-to-tangible book ratio (P/TBV), which is commonly used for valuing finance companies because of large variations in their earnings from one quarter to the next.
The industry currently has a trailing 12-month P/TBV of 1.72X, below the median level of 1.97X over the past five years. The industry is trading at a discount compared with the market at large, as the trailing 12-month P/TBV ratio for the S&P 500 composite is 12.74X and the median level is 13.91X.
Price-to-Tangible Book TTM
As finance stocks typically have a low P/TB ratio, comparing savings and loan stocks with the S&P 500 may not make sense to many investors. A comparison of the group's P/TB ratio with that of its broader sector ensures that the group is trading at a decent discount. The Zacks Finance sector's current trailing 12-month P/TBV of 5.25X is way above the Zacks Savings and Loan industry's ratio.
Price-to-Tangible Book TTM
3 Savings & Loan Stocks Worth Betting On
WSFS Financial: This is a multi-billion-dollar financial services company with $20.5 billion in assets on its balance sheet, and $89.6 billion in assets under management and administration as of the first-quarter 2025 end. WSFS operates from 115 offices across Pennsylvania, Delaware, New Jersey, Florida, Nevada and Virginia. It provides comprehensive financial services, including commercial banking, treasury management, consumer banking, and trust and wealth management services.
WSFS is managing a stable, sustainable loan growth trajectory, backed by deposit strength and a diversified lending pipeline. For 2025, the company expects mid-single-digit growth in commercial lending, with consumer loans projected to remain steady. The net interest margin is expected to be 3.80% through strategic repricing and funding cost management. The deposit is anticipated to grow in the low-single-digit in 2025.
WSFS Financial presently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for the company’s current-year earnings is pegged at $4.59, indicating a 4.6% year-over-year rise. Revenues for 2025 are expected to be $1.04 billion. Shares of the company have gained 16% in the past year. WSFS has a market capitalization of $2.94 billion.
Price & Consensus: WSFS
Provident Financial: The company offers a comprehensive suite of financial products and services through its extensive network of branches throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania, and Nassau and Queens Counties in New York.
In May 2025, Provident Financial completed its previously announced merger with Lakeland Bancorp, Inc., creating a super-community bank. The combined franchise will benefit from incremental revenue growth opportunities. It will include Provident Financial’s fee-based insurance and wealth management businesses, as well as Lakeland Bancorp’s growth in asset-based lending, equipment lease financing and mortgage warehouse lending.
As of March 31, 2025, the company had assets of $24.2 billion and net loans of $18.7 billion.
Given the improving mortgage origination market, Provident Financial’s mortgage banking revenues are likely to improve in the upcoming period. The company’s servicing business is expected to continue driving earnings, with additional upside potential from the production segment, backed by improvement in the origination market.
PFS presently carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2025 earnings is pegged at $2.05, indicating a year-over-year rise of 69.4%. Revenue estimates for 2025 are pegged at $857.8 million, indicating a year-over-year rise of 23.5%. PFS has a market capitalization of $2.1 billion. Its shares have climbed 29.1% over the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: PFS
Riverview Bancorp: The company, with assets of $1.51 billion as of March 31, 2025, offers community banking services and financial products to commercial and retail clients through 17 branches.
Riverview Bancorp continues to expand revenue opportunities through its commercial and industrial (C&I), business banking, and treasury management initiatives. The company is demonstrating consistent, moderate loan growth, driven by an increase in new originations. Also, given stabilizing funding costs, the company will witness gradual expansion in NII. The rising loan pipeline and originations, paired with rising NII, indicate healthy growth momentum going forward.
RVSB presently carries a Zacks Rank of 2. The Zacks Consensus Estimate for fiscal 2025 earnings is pegged at 24 cents, indicating an increase of 4.4%. Fiscal 2025 revenues are expected to rise 9.5% year over year to $55.4 million. Shares of the company have gained 41.6% in the past year. It has a market capitalization of $113.1 million.
Price & Consensus: RVSB
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3 Solid Stocks to Bet on From the Prospering Savings & Loan Industry
The Zacks Savings and Loan industry is benefiting from the improving lending scenario following the Federal Reserve’s interest rate cuts last year. Also, relatively lower rates have resulted in stable funding costs, supporting net interest income (NII) and net interest margin (NIM) expansion.
The digitization of operations will aid industry players. Despite deteriorating asset quality, companies like WSFS Financial (WSFS - Free Report) , Provident Financial Services (PFS - Free Report) and Riverview Bancorp (RVSB - Free Report) are poised to gain from these favorable developments.
Industry Description
The Zacks Savings and Loan industry consists of specialized U.S. banks, which are generally locally owned, focusing on extending residential mortgage finance. Companies in the industry provide residential mortgages, commercial and industrial mortgages, home equity loans, vehicle loans, and other business loans. The institutions fund mortgages with savings insured by the Federal Deposit Insurance Corporation ("FDIC"). They offer high interest rates on savings to attract deposits, enhancing their ability to lend mortgages. Although the firms operate similarly to commercial banks by providing various banking services, such as checking and savings accounts, they were previously legally bound to invest at least 65% of their asset holdings in mortgages. Effective July 1, 2019, a ruling lifted the restriction for institutions insured by the FDIC.
3 Savings & Loan Industry Trends to Watch
Relatively Lower Interest Rates to Aid NII: Though the Federal Reserve is taking a cautious approach now, given the uncertainty surrounding Trump’s tariff plans, it has lowered interest rates by 100 basis points in 2024. With relatively lower rates, savings and loan companies will likely witness an improvement in their NII and margins, which were under pressure because of higher funding/deposit costs.
Further, with relatively lower interest rates, mortgage rates are also witnessing a declining trend. With a gradual decrease in mortgage rates, purchase originations and refinancing activities will likely improve. This is expected to instill confidence among borrowers and support loan demand in most loan categories.
Digital Ramp-Ups: Numerous challenges, including legacy technologies and an unbalanced customer base, have cropped up for savings and loan companies. These companies have been trying to ramp up the transition to digitally focused, technology-driven and flexible operating institutions to remain competitive and reap profits in the rapidly evolving market.
Though technology upgrades are expected to raise costs in the near term, these will support industry participants' customer experience and operational efficiency, along with reducing costs over time.
Worsening Asset Quality: With prolonged higher interest rates, industry players are likely to witness some weakness in asset quality as the portfolio companies may find it difficult to service debt. Also, heightened geopolitical risk and uncertainty over tariff-related headwinds will put a strain on Savings and Loan companies’ asset quality.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Savings and Loan industry currently carries a Zacks Industry Rank #14, which places it in the top 6% of more than 245 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 7% of the Zacks-ranked industries is an outcome of the positive earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group's earnings growth potential. The industry’s current-year earnings estimate has moved up 7% over the past six months.
Before we present a few stocks that you may want to bet on, let us take a look at the industry's recent stock market performance and the valuation picture.
Industry Underperforms Sector, Outperforms S&P 500
The Zacks Savings and Loan Industry has widely underperformed the Zacks Finance sector while outperforming the S&P 500 composite over the past year.
The stocks in the industry have collectively gained 20%, whereas the S&P 500 Index has risen 10.5%. In the same period, the sector has appreciated 20.4%.
Price Performance
Industry's Current Valuation
One might get a good sense of the industry's relative valuation by looking at its price-to-tangible book ratio (P/TBV), which is commonly used for valuing finance companies because of large variations in their earnings from one quarter to the next.
The industry currently has a trailing 12-month P/TBV of 1.72X, below the median level of 1.97X over the past five years. The industry is trading at a discount compared with the market at large, as the trailing 12-month P/TBV ratio for the S&P 500 composite is 12.74X and the median level is 13.91X.
Price-to-Tangible Book TTM
As finance stocks typically have a low P/TB ratio, comparing savings and loan stocks with the S&P 500 may not make sense to many investors. A comparison of the group's P/TB ratio with that of its broader sector ensures that the group is trading at a decent discount. The Zacks Finance sector's current trailing 12-month P/TBV of 5.25X is way above the Zacks Savings and Loan industry's ratio.
Price-to-Tangible Book TTM
3 Savings & Loan Stocks Worth Betting On
WSFS Financial: This is a multi-billion-dollar financial services company with $20.5 billion in assets on its balance sheet, and $89.6 billion in assets under management and administration as of the first-quarter 2025 end. WSFS operates from 115 offices across Pennsylvania, Delaware, New Jersey, Florida, Nevada and Virginia. It provides comprehensive financial services, including commercial banking, treasury management, consumer banking, and trust and wealth management services.
WSFS is managing a stable, sustainable loan growth trajectory, backed by deposit strength and a diversified lending pipeline. For 2025, the company expects mid-single-digit growth in commercial lending, with consumer loans projected to remain steady. The net interest margin is expected to be 3.80% through strategic repricing and funding cost management. The deposit is anticipated to grow in the low-single-digit in 2025.
WSFS Financial presently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for the company’s current-year earnings is pegged at $4.59, indicating a 4.6% year-over-year rise. Revenues for 2025 are expected to be $1.04 billion. Shares of the company have gained 16% in the past year. WSFS has a market capitalization of $2.94 billion.
Price & Consensus: WSFS
Provident Financial: The company offers a comprehensive suite of financial products and services through its extensive network of branches throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania, and Nassau and Queens Counties in New York.
In May 2025, Provident Financial completed its previously announced merger with Lakeland Bancorp, Inc., creating a super-community bank. The combined franchise will benefit from incremental revenue growth opportunities. It will include Provident Financial’s fee-based insurance and wealth management businesses, as well as Lakeland Bancorp’s growth in asset-based lending, equipment lease financing and mortgage warehouse lending.
As of March 31, 2025, the company had assets of $24.2 billion and net loans of $18.7 billion.
Given the improving mortgage origination market, Provident Financial’s mortgage banking revenues are likely to improve in the upcoming period. The company’s servicing business is expected to continue driving earnings, with additional upside potential from the production segment, backed by improvement in the origination market.
PFS presently carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2025 earnings is pegged at $2.05, indicating a year-over-year rise of 69.4%. Revenue estimates for 2025 are pegged at $857.8 million, indicating a year-over-year rise of 23.5%. PFS has a market capitalization of $2.1 billion. Its shares have climbed 29.1% over the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: PFS
Riverview Bancorp: The company, with assets of $1.51 billion as of March 31, 2025, offers community banking services and financial products to commercial and retail clients through 17 branches.
Riverview Bancorp continues to expand revenue opportunities through its commercial and industrial (C&I), business banking, and treasury management initiatives. The company is demonstrating consistent, moderate loan growth, driven by an increase in new originations. Also, given stabilizing funding costs, the company will witness gradual expansion in NII. The rising loan pipeline and originations, paired with rising NII, indicate healthy growth momentum going forward.
RVSB presently carries a Zacks Rank of 2. The Zacks Consensus Estimate for fiscal 2025 earnings is pegged at 24 cents, indicating an increase of 4.4%. Fiscal 2025 revenues are expected to rise 9.5% year over year to $55.4 million. Shares of the company have gained 41.6% in the past year. It has a market capitalization of $113.1 million.
Price & Consensus: RVSB