Investors Bancorp (ISBC) saw its shares climb more than 6% as of Wednesday afternoon after being added to the S&P SmallCap 600 Index earlier this morning.
As its name suggests, the S&P SmallCap 600 Index covers U.S. small-cap stocks with market capitalizations ranging from $700 million to $3.2 billion at the time the company is added to the index.
The $27 billion asset Investors Bancorp based in Short Hills, New Jersey, currently has a market cap of $3.09 billion. The bank got into the index because the medical laboratory company BioTelemetry is getting acquired by Koninklijke Philips N.V. Investors is replacing BioTelemetry.
Stocks tend to appreciate when they are added to an index because funds that track that index must now buy the new stock. Also, being added to an index results in greater awareness and visibility for the stock.
Even after the bump from being added to the SmallCap 600 Index, Investors Bancorp still only trades for around $12.47 per share, or roughly 114% of tangible book value.
Despite the troubles in the banking sector in 2020, the bank managed to grow earnings in 2020, and could be in for another solid year as it is projecting much better loan growth in 2021. The bank also recently increased its dividend.