3 Savings & Loan Stocks to Watch Amid High Interest Rate

Company Overview - Citizens Financial Group, Inc. (CFG) has a healthy loan and deposit base, with loans and leases and deposits recording a CAGR of 6.3% and 6.4% respectively over the last three years [1] - WSFS Financial Corporation has $20.6 billion in assets and $80.5 billion in assets under management as of March 31, 2024, operating from 114 offices across multiple states [4] - HomeStreet, Inc. has total assets of $9.5 billion and is engaged in commercial banking, mortgage banking, and consumer/retail banking activities [28] Financial Performance - CFG's market capitalization is $16.69 billion, with a current-year earnings per share estimate of $3.16 [1] - WSFS has a market capitalization of $2.82 billion, with a current-year earnings estimate of $4.27, indicating a 6.2% year-over-year decline [6] - HomeStreet's revenues for 2024 are expected to be $176 million, with shares gaining 9% in the past year [30] Industry Trends - The Zacks Savings and Loan industry is facing challenges due to high interest rates, which have led to increased funding costs and pressure on net interest income (NII) [8][10] - The industry is currently ranked 190 by Zacks, placing it in the bottom 24% of over 250 Zacks industries, indicating bleak near-term prospects [14] - The industry's earnings estimates for 2024 have moved 39.2% downward over the past year, reflecting a loss of confidence in earnings growth potential [15] Growth Outlook - CFG's total deposits continued to grow in the first quarter of 2024, driven by retail and private banking [1] - WSFS expects mid-single-digit loan growth and low-single-digit deposit growth for 2024, with net interest margin projected to be in the range of 3.80-3.90% [5] - HomeStreet's merger with FirstSun Capital Bancorp is expected to create a leading regional bank with $17 billion in total assets, enhancing its market presence [31] Valuation Metrics - The Zacks Savings and Loan industry has a trailing 12-month P/TBV of 1.25X, below the median level of 1.37X over the past five years [20] - The industry is trading at a discount compared to the S&P 500, which has a trailing 12-month P/TBV ratio of 15.32X [26]