What happened
Shares of WSFS Financial (WSFS 1.96%) were up by close to 14% around 11.15 a.m. today as the bank prepares to join the S&P SmallCap 600 Index.
So what
WSFS will replace mining company Cleveland-Cliffs, which is joining the S&P MidCap 400 Index.
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.
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WSFS, a bank based in Wilmington, Delaware, with nearly $14 billion in assets, currently has a market cap of roughly $2.64 billion. It will formally join the S&P SmallCap 600 on March 1.
Stocks tend to appreciate when they are added to an index because funds that track that index must now buy the stock. Also, being added to an index results in greater visibility for the stock.
Now what
After the bump this morning, WSFS currently trades for around $53.25 per share, or about 206% of tangible book value, a very strong valuation and higher than what the bank traded at prior to the pandemic.
WSFS is in good shape after a strong fourth quarter. The banking sector overall is also off to a great start in 2021 as economic forecasts improve, more stimulus looks likely, and the yield on the U.S. 10-year Treasury note continues to climb.
