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3 Savings & Loan Stocks to Buy on Solid Industry Prospects
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Lower interest rates and easing lending standards are brightening the outlook for the Zacks Savings and Loan industry. The Federal Reserve’s interest rate cuts and signs of decent economic growth are expected to sustain and even boost loan demand, supporting net interest income (NII) and net interest margin expansion.
The digitization of operations will also support the industry players. However, despite credit quality metrics creeping above the pre-pandemic levels, companies like WSFS Financial Corp. (WSFS - Free Report) , Southern Missouri Bancorp (SMBC - 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 has lowered interest rates by 175 basis points since 2024. However, any further near-term cut is less likely, given the ongoing Middle East conflict and its impacts on inflation.
Nonetheless, as rates remain low compared with historically high levels seen in 2024, savings and loan companies will likely witness improvements in NII and NIM, driven by increasing loan demand and stabilizing funding/deposit costs.
Mortgage rates are also relatively lower than the highs seen in 2025. 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: Though lower interest rates will help borrowers to remain current on loan and interest repayments, the lingering macroeconomic and geopolitical headwinds are expected to result in persistent inflation. This will likely hurt borrowers' paying capacity to some extent.
Hence, Savings and Loans industry players are likely to set aside a huge amount of money for potential delinquent loans. Also, several credit quality metrics are trending above the pre-pandemic levels.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Savings and Loan industry is a 16-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #69, which places it in the top 28% of more than 240 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 50% 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 5.4% 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 S&P 500, Outperform Sector
The Zacks Savings and Loan Industry has widely underperformed the S&P 500 composite over the past year, while outperforming the Zacks Finance sector.
The stocks in the industry have collectively returned 13%, whereas the S&P 500 Index has risen 29.4%. In the same period, the sector has appreciated 10.1%.
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 2.12X 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 12.01X.
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/TB of 5.91X is way above the Zacks Savings and Loan industry's ratio.
WSFS Financial is a multi-billion-dollar financial services company with $22.1 billion in assets, and $97.6 billion in assets under management and administration as of March 31, 2026.
WSFS is managing a stable, sustainable loan growth trajectory, backed by deposit strength and a diversified lending pipeline.
Declining deposit costs and disciplined expense management continue to support profitability, while strategic capital returns enhance shareholder value.
WSFS is also benefiting from diversified revenue streams, growing market share, and continued investments in talent and product offerings that strengthen its competitive position.
The company witnessed an improving credit trend across its loan portfolio in the first quarter of 2026.
WSFS reported a recovery of credit losses of $2 million compared with provision expenses in the prior periods, reflecting improved borrower performance and lower credit stress. Non-performing assets remained low at just 0.40% of the total assets.
The Zacks Consensus Estimate for WSFS’s 2026 earnings and sales indicates 20.9% and 5.6% year-over-year rallies, respectively. It has a market capitalization of $3.64 billion.
Southern Missouri Bancorp, the parent corporation of Southern Bank, provides a broad range of commercial and consumer banking products, including lending, deposit services, wealth management and digital banking solutions.
The company continues to demonstrate strong growth through expanding loan balances, improving profitability and disciplined capital management.
SMBC also benefited from an expanding NIM of 3.67%, supported by lower funding costs and higher earning assets, which helped increase NII year over year by more than 9% in the third quarter of fiscal 2026 (ended March 31).
Additionally, Southern Missouri is strengthening shareholder value through steady earnings growth, share repurchases and its 128th consecutive quarterly dividend, while continuing to expand its regional footprint and loan origination pipeline across the key Midwest and Southern markets.
However, weakening asset quality is concerning for the company. Nonperforming assets represented 0.62% of total assets, while the allowance for credit losses was 1.29% of gross loans as of March 31, 2026.
The Zacks Consensus Estimate for its 2026 earnings and sales indicates 20.7% and 9.9% year-over-year increases, respectively. The company has a market capitalization of $733.9 million.
SMBC presently carries a Zacks Rank #2.
Price & Consensus: SMBC
Citizens Community is the holding company of Citizens Community Federal N.A., a national bank based in Altoona, WI, with 21 branch locations. As of March 31, 2026, the company had assets of $1.82 billion and total loans of $1.34 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. The company’s strong liquidity position and disciplined expense management support its ability to generate stable shareholder value, while benefiting from loan growth, improving margins and diversified revenue streams.
However, CZWI’s asset quality is deteriorating. As of March 31, 2026, non-performing assets to total assets were 1%, up from 0.75% as of June 30, 2025.
Citizens Community also presently carries a Zacks Rank #2. The Zacks Consensus Estimate for CZWI’s 2026 earnings and sales indicates 23.9% and 8.8% year-over-year increases, respectively. The company has a market capitalization of $198.5 million.
Price & Consensus: CZWI
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3 Savings & Loan Stocks to Buy on Solid Industry Prospects
Lower interest rates and easing lending standards are brightening the outlook for the Zacks Savings and Loan industry. The Federal Reserve’s interest rate cuts and signs of decent economic growth are expected to sustain and even boost loan demand, supporting net interest income (NII) and net interest margin expansion.
The digitization of operations will also support the industry players. However, despite credit quality metrics creeping above the pre-pandemic levels, companies like WSFS Financial Corp. (WSFS - Free Report) , Southern Missouri Bancorp (SMBC - 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 has lowered interest rates by 175 basis points since 2024. However, any further near-term cut is less likely, given the ongoing Middle East conflict and its impacts on inflation.
Nonetheless, as rates remain low compared with historically high levels seen in 2024, savings and loan companies will likely witness improvements in NII and NIM, driven by increasing loan demand and stabilizing funding/deposit costs.
Mortgage rates are also relatively lower than the highs seen in 2025. 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: Though lower interest rates will help borrowers to remain current on loan and interest repayments, the lingering macroeconomic and geopolitical headwinds are expected to result in persistent inflation. This will likely hurt borrowers' paying capacity to some extent.
Hence, Savings and Loans industry players are likely to set aside a huge amount of money for potential delinquent loans. Also, several credit quality metrics are trending above the pre-pandemic levels.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Savings and Loan industry is a 16-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #69, which places it in the top 28% of more than 240 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 50% 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 5.4% 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 S&P 500, Outperform Sector
The Zacks Savings and Loan Industry has widely underperformed the S&P 500 composite over the past year, while outperforming the Zacks Finance sector.
The stocks in the industry have collectively returned 13%, whereas the S&P 500 Index has risen 29.4%. In the same period, the sector has appreciated 10.1%.
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 2.12X 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 12.01X.
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/TB of 5.91X is way above the Zacks Savings and Loan industry's ratio.
Price-to-Tangible Book TTM
3 Savings & Loan Stocks to Invest In: WSFS, SMBC & CZWI
WSFS Financial is a multi-billion-dollar financial services company with $22.1 billion in assets, and $97.6 billion in assets under management and administration as of March 31, 2026.
WSFS is managing a stable, sustainable loan growth trajectory, backed by deposit strength and a diversified lending pipeline.
Declining deposit costs and disciplined expense management continue to support profitability, while strategic capital returns enhance shareholder value.
WSFS is also benefiting from diversified revenue streams, growing market share, and continued investments in talent and product offerings that strengthen its competitive position.
The company witnessed an improving credit trend across its loan portfolio in the first quarter of 2026.
WSFS reported a recovery of credit losses of $2 million compared with provision expenses in the prior periods, reflecting improved borrower performance and lower credit stress. Non-performing assets remained low at just 0.40% of the total assets.
The Zacks Consensus Estimate for WSFS’s 2026 earnings and sales indicates 20.9% and 5.6% year-over-year rallies, respectively. It has a market capitalization of $3.64 billion.
WSFS Financial presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: WSFS
Southern Missouri Bancorp, the parent corporation of Southern Bank, provides a broad range of commercial and consumer banking products, including lending, deposit services, wealth management and digital banking solutions.
The company continues to demonstrate strong growth through expanding loan balances, improving profitability and disciplined capital management.
SMBC also benefited from an expanding NIM of 3.67%, supported by lower funding costs and higher earning assets, which helped increase NII year over year by more than 9% in the third quarter of fiscal 2026 (ended March 31).
Additionally, Southern Missouri is strengthening shareholder value through steady earnings growth, share repurchases and its 128th consecutive quarterly dividend, while continuing to expand its regional footprint and loan origination pipeline across the key Midwest and Southern markets.
However, weakening asset quality is concerning for the company. Nonperforming assets represented 0.62% of total assets, while the allowance for credit losses was 1.29% of gross loans as of March 31, 2026.
The Zacks Consensus Estimate for its 2026 earnings and sales indicates 20.7% and 9.9% year-over-year increases, respectively. The company has a market capitalization of $733.9 million.
SMBC presently carries a Zacks Rank #2.
Price & Consensus: SMBC
Citizens Community is the holding company of Citizens Community Federal N.A., a national bank based in Altoona, WI, with 21 branch locations. As of March 31, 2026, the company had assets of $1.82 billion and total loans of $1.34 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. The company’s strong liquidity position and disciplined expense management support its ability to generate stable shareholder value, while benefiting from loan growth, improving margins and diversified revenue streams.
However, CZWI’s asset quality is deteriorating. As of March 31, 2026, non-performing assets to total assets were 1%, up from 0.75% as of June 30, 2025.
Citizens Community also presently carries a Zacks Rank #2. The Zacks Consensus Estimate for CZWI’s 2026 earnings and sales indicates 23.9% and 8.8% year-over-year increases, respectively. The company has a market capitalization of $198.5 million.
Price & Consensus: CZWI