Zacks Industry Outlook Features ServisFirst Bancshares, WSFS Financial, and Heritage Financial

Press Release

Chicago, IL – February 26, 2026 – Zacks Equity Research has released an analysis focusing on ServisFirst Bancshares Inc. (SFBS), WSFS Financial Corp. (WSFS), and Heritage Financial Corp., Inc. (HFWA).

Savings & Loan Sector Overview

The Savings and Loan industry is currently benefiting from declining interest rates and more relaxed lending criteria. As borrowing costs decrease, funding expenses are stabilizing, which is helping to increase both net interest income and net interest margins.

Ongoing digital transformation is also strengthening the sector. Although some credit quality indicators have risen above pre-pandemic levels, the lower interest rate environment is expected to support borrowers’ ability to repay. As a result, companies such as ServisFirst Bancshares Inc., WSFS Financial Corp., and Heritage Financial Corp., Inc. are positioned as attractive investment opportunities.

What Defines the Industry?

The Savings and Loan sector tracked by Zacks is made up of specialized U.S. banks, often locally owned, that primarily focus on residential mortgage lending. These institutions offer a variety of loans, including home mortgages, commercial and industrial mortgages, home equity loans, auto loans, and other business lending products.

These banks fund their lending activities through deposits insured by the Federal Deposit Insurance Corporation (FDIC) and typically offer competitive interest rates to attract savers. While they provide many of the same services as commercial banks, such as checking and savings accounts, they were previously required to allocate at least 65% of their assets to mortgages—a rule that was lifted for FDIC-insured institutions as of July 1, 2019.

Key Trends in Savings & Loan

• Interest Rates Fueling Loan Growth: Since 2024, the Federal Reserve has reduced rates by 175 basis points and signaled further cuts. This environment is expected to stimulate loan demand, supporting net interest income and margins as funding costs stabilize. Mortgage rates are at their lowest since September 2022, driving increased purchase and refinancing activity.
• Digital Transformation: Institutions are investing in technology to modernize operations, reduce costs, and better serve a diverse customer base. While these upgrades may temporarily increase expenses, they are projected to significantly improve efficiency in the long run.
• Asset Quality: Lower rates are helping borrowers stay current on their obligations, reducing the need for large loan loss reserves. However, a slight uptick in non-performing loans is still anticipated, which could impact overall asset quality.

Industry Outlook: Zacks Ranking

The Savings and Loan group, part of the broader Finance sector, currently holds the #29 spot in the Zacks Industry Rank, placing it in the top 12% of over 243 industries. This ranking, based on the average Zacks Rank of all member stocks, suggests the sector is likely to outperform in the near term. Historically, the top half of Zacks-ranked industries have outperformed the bottom half by more than two to one.

This strong ranking reflects a positive earnings outlook, with analysts increasingly optimistic about the sector’s growth. Over the past year, the industry’s aggregate earnings estimate for the current year has increased by 10%. Before highlighting specific stocks, let’s review recent performance and valuation metrics.

Recent Performance vs. Broader Market

Over the past year, the Savings and Loan sector has lagged behind both the overall Finance sector and the S&P 500. The industry posted a collective gain of 9.9%, compared to an 18.8% rise for the S&P 500 and a 13.7% increase for the Finance sector.

Valuation Snapshot

To assess relative value, investors often look at the price-to-tangible book (P/TB) ratio. The industry’s trailing 12-month P/TB stands at 2.32x, above its five-year median of 2.14x. However, this is well below the S&P 500’s 11.74x, indicating the sector trades at a discount to the broader market. Compared to the Finance sector’s P/TB of 6.12x, Savings and Loan stocks remain attractively valued.

Top Savings & Loan Stocks to Watch

• ServisFirst Bancshares (SFBS): Operating across several southeastern states, SFBS reported $17.7 billion in assets and $13.7 billion in loans as of December 31, 2025. The company’s strong loan portfolio, expanding market share, and the current rate environment are expected to support its financial performance. Management’s focus on net interest margin growth, cost control, and franchise expansion positions SFBS for continued success in 2026.
  The Zacks Consensus Estimate projects 2026 earnings at $6.40 per share, up 21.9% from the prior year, with revenues expected to reach $686.2 million—a 20.2% increase. SFBS holds a market cap of $4.74 billion and carries a Zacks Rank #1 (Strong Buy).
• WSFS Financial (WSFS): With $21.3 billion in assets and $94.5 billion under management as of year-end 2025, WSFS is on a stable growth path, supported by strong deposits and a diverse lending pipeline. The company anticipates mid-single-digit growth in loans and deposits for 2026, with a targeted net interest margin of 3.80%. Expected net charge-offs are between 0.35% and 0.45% of average loans.
  The Zacks Consensus Estimate for 2026 earnings is $5.73 per share, up 9.9% year-over-year, and revenues are forecasted at $1.10 billion, a 3.3% increase. WSFS has a $3.70 billion market cap and a Zacks Rank #1.
• Heritage Financial (HFWA): Based in Olympia, WA, Heritage operates 50 branches across Washington, Oregon, and Idaho. The company has improved its return on assets and net interest margin, reflecting stronger core operations and better balance sheet management. Growth in deposits and lower costs on interest-bearing accounts have boosted net interest income and profitability.
  Heritage continues to optimize its balance sheet for future returns. The recent acquisition of Olympic Bancorp, Inc. (February 2026) expands its market reach and earnings potential. The Zacks Consensus Estimate for 2026 is $2.53 per share, up 12.9% year-over-year, with revenues projected at $346.7 million—a 40.8% increase. HFWA’s market cap stands at $959.9 million, and it currently holds a Zacks Rank #2 (Buy).

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