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3 Savings & Loan Industry Stocks to Buy on Solid Industry Prospects
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The Zacks Savings and Loan industry is gaining from the improving lending environment, supported by the Federal Reserve’s recent rate cut and signals of further easing. With relatively lower rates, funding costs will gradually stabilize, boosting net interest income (NII) and net interest margin (NIM) expansion.
The digitization of operations will also support industry players. However, despite credit quality metrics creeping above the pre-pandemic levels, companies like Northpointe Bancshares Inc. (NPB - Free Report) , West Bancorporation (WTBA - Free Report) and Citizens Community Bancorp, Inc. (CZWI - Free Report) are worth betting on.
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 for 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 Loan Demand: The Federal Reserve lowered interest rates by 50 basis points (bps) this year, followed by a 100-bps rate cut in 2024. Market participants are also expecting a further easing, given the cooling labor market trends.
As the rates come down further, savings and loan companies will likely witness improvements in their NII and margins, driven by increasing loan demand and stabilizing funding/deposit costs.
Furthermore, mortgage rates have been declining lately. As such, purchase originations and refinancing activities are improving. This is expected to instill confidence among borrowers and support demand in most loan categories.
Digital Ramp-Ups: Savings and loan companies have been facing numerous challenges, including legacy technologies and an unbalanced customer base. To counter this, industry players have been ramping 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 increase costs in the near term, these will support industry participants' operational efficiency as expenses will eventually decrease.
Asset Quality: Declining interest rates are making it easier for borrowers to stay current on their loans and interest payments. As a result, industry players, who traditionally maintain sizable reserves to guard against unexpected defaults or payment delays, may not need to allocate as much for potential delinquencies.
Nonetheless, the industry is still expected to experience a slight uptick in non-performing loans, which will continue to weigh on asset quality. Moreover, several credit quality indicators remain elevated compared with their pre-pandemic levels.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Savings and Loan industry is a 17-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #96, which places it in the top 40% of more than 243 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 40% 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 43.2% over the past year.
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 & S&P 500
The Zacks Savings and Loan Industry has widely underperformed the Zacks Finance sector and the S&P 500 composite over the past year.
The stocks in the industry have collectively declined 12.2%, whereas the S&P 500 Index has risen 16.2%. In the same period, the sector has appreciated 9.7%.
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/TB), 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/TB of 1.97X, below the median level of 2.13X over the past five years. The industry is trading at a discount compared with the market at large, as the trailing 12-month P/TB ratio for the S&P 500 composite is 12.89X.
P/TB 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/TB of 5.93X is way above the Zacks Savings and Loan industry's ratio.
P/TB TTM
3 Savings & Loan Stocks to Invest In
Northpointe Bancshares is the holding company of Northpointe Bank, a client-focused company that provides home loans and retail banking products to communities across the nation.
The company is leaning heavily on its Mortgage Purchase Program (MPP) as a core engine of growth. Its third-quarter 2025 results highlighted the solid performance of MPP, which has become a key driver of loan-book expansion and profitability. Gross loans grew 6.8% sequentially in the third quarter.
On the funding side, total deposits increased by $295.6 million in the quarter, driven by new interest-bearing demand deposits tied to a custodial deposit initiative. Also, the wholesale funding ratio improved to 67.58% from 70.71% in the prior quarter, a positive sign for funding stability and cost control.
Northpointe Bancshares appears to be executing a growth-through-scale strategy, including scaling up mortgage-backed assets, funding through deposit growth (especially interest-bearing demand) and cost control. The combination of rapidly growing interest-earning assets and steady, deposit-based funding produced meaningful increases in net interest income and an improved net interest margin.
With strong asset growth, expanding NII, and improved funding stability, the bank enters the next period with momentum and a solid foundation for continued earnings growth.
NPB presently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for NPB’s 2025 and 2026 earnings indicates a rise of 19.7% and 24.4% year-over-year, respectively.
The company has a market capitalization of $599.3 million. Its shares have climbed 34.3% over the past six months.
Price & Consensus: NPB
West Bancorporation is a community bank that focuses on lending, deposit services and trust services for small to medium-sized businesses and consumers.
The company's strategic management of deposit mix, shifting toward lower-cost, stable funding sources, combined with proactive deposit cost optimization, is positioned to drive a sustained NIM expansion and enhance profitability over the coming period.
During the third-quarter earnings call, management highlighted planned enhancements to treasury management services and digital banking capabilities, part of its customer-centric push to deepen relationships and meet modern banking needs. It is focused on disciplined, relationship-driven growth rather than rapid balance-sheet expansion.
Total loans increased 1.4% in the third quarter of 2025 from the prior quarter. NII rose around 25% year over year in the third quarter of 2025.
In terms of credit quality, as of Sept. 30, 2025, there were no non-accrual loans and no loans past due more than 30 days.
Overall, by focusing on commercial and commercial real estate loans (CRE) loans (rather than riskier construction loans), maintaining low non-performing assets, and improving margin and efficiency, WTBA seems to be positioning for steady earnings growth and dividend sustainability.
West Bancorporation presently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for WTBA’s 2025 and 2026 earnings indicates year-over-year increases of 43.7% and 17.7%, respectively.
The company has a market capitalization of $376.4 million. Its shares have rallied 16.1% over the past six months.
Price & Consensus: WTBA
Citizens Community is the holding company of Citizens Community Federal N.A., a national bank based in Altoona, WI, with 21 branch locations. It offers traditional community banking services to businesses, agricultural operators and consumers, including residential mortgage loans. Its strategy is to focus on organic growth and the buyout of smaller community banks in its markets. As of Sept. 30, 2025, the company had assets of $1.73 billion and total loans of $1.32 billion.
CZWI’s efforts to transform its loan portfolio and achieve a favorable deposit mix will likely strengthen its balance sheet in the upcoming period. Further, rising yields on repricing assets (loans and securities) and stabilizing costs will support NII growth. Also, the portfolio schedule shows large volumes of loans repricing through 2026 at rates below current rates, setting up future yield expansion as they roll over.
However, CZWI’s commercial-related loans jumped from 34% of the portfolio in 2016 to 90% as of Sept. 30, 2025. Such high exposure may affect the asset quality of these loan categories in the case of any economic downturn. As of Sept. 30, 2025, non-performing assets to total assets were 0.96%, up from 0.95% as of Sept. 30, 2024.
Citizens Community presently carries a Zacks Rank #2. The Zacks Consensus Estimate for CZWI’s 2025 and 2026 earnings indicates 2.2% and 26.8% year-over-year increases, respectively. The company has a market capitalization of $166.3 million. Its shares have risen 19.6% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: CZWI
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3 Savings & Loan Industry Stocks to Buy on Solid Industry Prospects
The Zacks Savings and Loan industry is gaining from the improving lending environment, supported by the Federal Reserve’s recent rate cut and signals of further easing. With relatively lower rates, funding costs will gradually stabilize, boosting net interest income (NII) and net interest margin (NIM) expansion.
The digitization of operations will also support industry players. However, despite credit quality metrics creeping above the pre-pandemic levels, companies like Northpointe Bancshares Inc. (NPB - Free Report) , West Bancorporation (WTBA - Free Report) and Citizens Community Bancorp, Inc. (CZWI - Free Report) are worth betting on.
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 for 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 Loan Demand: The Federal Reserve lowered interest rates by 50 basis points (bps) this year, followed by a 100-bps rate cut in 2024. Market participants are also expecting a further easing, given the cooling labor market trends.
As the rates come down further, savings and loan companies will likely witness improvements in their NII and margins, driven by increasing loan demand and stabilizing funding/deposit costs.
Furthermore, mortgage rates have been declining lately. As such, purchase originations and refinancing activities are improving. This is expected to instill confidence among borrowers and support demand in most loan categories.
Digital Ramp-Ups: Savings and loan companies have been facing numerous challenges, including legacy technologies and an unbalanced customer base. To counter this, industry players have been ramping 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 increase costs in the near term, these will support industry participants' operational efficiency as expenses will eventually decrease.
Asset Quality: Declining interest rates are making it easier for borrowers to stay current on their loans and interest payments. As a result, industry players, who traditionally maintain sizable reserves to guard against unexpected defaults or payment delays, may not need to allocate as much for potential delinquencies.
Nonetheless, the industry is still expected to experience a slight uptick in non-performing loans, which will continue to weigh on asset quality. Moreover, several credit quality indicators remain elevated compared with their pre-pandemic levels.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Savings and Loan industry is a 17-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #96, which places it in the top 40% of more than 243 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 40% 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 43.2% over the past year.
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 & S&P 500
The Zacks Savings and Loan Industry has widely underperformed the Zacks Finance sector and the S&P 500 composite over the past year.
The stocks in the industry have collectively declined 12.2%, whereas the S&P 500 Index has risen 16.2%. In the same period, the sector has appreciated 9.7%.
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/TB), 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/TB of 1.97X, below the median level of 2.13X over the past five years. The industry is trading at a discount compared with the market at large, as the trailing 12-month P/TB ratio for the S&P 500 composite is 12.89X.
P/TB 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/TB of 5.93X is way above the Zacks Savings and Loan industry's ratio.
P/TB TTM
3 Savings & Loan Stocks to Invest In
Northpointe Bancshares is the holding company of Northpointe Bank, a client-focused company that provides home loans and retail banking products to communities across the nation.
The company is leaning heavily on its Mortgage Purchase Program (MPP) as a core engine of growth. Its third-quarter 2025 results highlighted the solid performance of MPP, which has become a key driver of loan-book expansion and profitability. Gross loans grew 6.8% sequentially in the third quarter.
On the funding side, total deposits increased by $295.6 million in the quarter, driven by new interest-bearing demand deposits tied to a custodial deposit initiative. Also, the wholesale funding ratio improved to 67.58% from 70.71% in the prior quarter, a positive sign for funding stability and cost control.
Northpointe Bancshares appears to be executing a growth-through-scale strategy, including scaling up mortgage-backed assets, funding through deposit growth (especially interest-bearing demand) and cost control. The combination of rapidly growing interest-earning assets and steady, deposit-based funding produced meaningful increases in net interest income and an improved net interest margin.
With strong asset growth, expanding NII, and improved funding stability, the bank enters the next period with momentum and a solid foundation for continued earnings growth.
NPB presently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for NPB’s 2025 and 2026 earnings indicates a rise of 19.7% and 24.4% year-over-year, respectively.
The company has a market capitalization of $599.3 million. Its shares have climbed 34.3% over the past six months.
Price & Consensus: NPB
West Bancorporation is a community bank that focuses on lending, deposit services and trust services for small to medium-sized businesses and consumers.
The company's strategic management of deposit mix, shifting toward lower-cost, stable funding sources, combined with proactive deposit cost optimization, is positioned to drive a sustained NIM expansion and enhance profitability over the coming period.
During the third-quarter earnings call, management highlighted planned enhancements to treasury management services and digital banking capabilities, part of its customer-centric push to deepen relationships and meet modern banking needs. It is focused on disciplined, relationship-driven growth rather than rapid balance-sheet expansion.
Total loans increased 1.4% in the third quarter of 2025 from the prior quarter. NII rose around 25% year over year in the third quarter of 2025.
In terms of credit quality, as of Sept. 30, 2025, there were no non-accrual loans and no loans past due more than 30 days.
Overall, by focusing on commercial and commercial real estate loans (CRE) loans (rather than riskier construction loans), maintaining low non-performing assets, and improving margin and efficiency, WTBA seems to be positioning for steady earnings growth and dividend sustainability.
West Bancorporation presently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for WTBA’s 2025 and 2026 earnings indicates year-over-year increases of 43.7% and 17.7%, respectively.
The company has a market capitalization of $376.4 million. Its shares have rallied 16.1% over the past six months.
Price & Consensus: WTBA
Citizens Community is the holding company of Citizens Community Federal N.A., a national bank based in Altoona, WI, with 21 branch locations. It offers traditional community banking services to businesses, agricultural operators and consumers, including residential mortgage loans. Its strategy is to focus on organic growth and the buyout of smaller community banks in its markets. As of Sept. 30, 2025, the company had assets of $1.73 billion and total loans of $1.32 billion.
CZWI’s efforts to transform its loan portfolio and achieve a favorable deposit mix will likely strengthen its balance sheet in the upcoming period. Further, rising yields on repricing assets (loans and securities) and stabilizing costs will support NII growth. Also, the portfolio schedule shows large volumes of loans repricing through 2026 at rates below current rates, setting up future yield expansion as they roll over.
However, CZWI’s commercial-related loans jumped from 34% of the portfolio in 2016 to 90% as of Sept. 30, 2025. Such high exposure may affect the asset quality of these loan categories in the case of any economic downturn. As of Sept. 30, 2025, non-performing assets to total assets were 0.96%, up from 0.95% as of Sept. 30, 2024.
Citizens Community presently carries a Zacks Rank #2. The Zacks Consensus Estimate for CZWI’s 2025 and 2026 earnings indicates 2.2% and 26.8% year-over-year increases, respectively. The company has a market capitalization of $166.3 million. Its shares have risen 19.6% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: CZWI