Key Events

👉 The 6th largest bank failure since 2010

The FDIC took control of Republic First Bancorp, selling its assets and liabilities to Fulton Financial. 

This is the first bank failure of the year. And the 6th largest failure since 2010. Shares had plummeted -88% over the past year. 

Republic First is not First Republic. Easy to confuse. First Republic went under in April 2023 alongside SVB, and was much larger with ~$230B in assets. 

Republic First, based in Philadelphia, PA, has a fraction of the assets. ~$6B. 

Republic bank was seized by Pennsylvania regulators following a failed deal to infuse the regional bank with new money, given declining deposits and a struggling mortgage lending practice, which was exited in 2023 given regulatory pressures.

Similar to the regional banks that failed last year, Republic First had massive unrealized paper losses on bonds. 

Why? When interest rates rise, bond prices fall. Because investors can get better returns on new debt. So price adjusts downwards as investors demand the market rate. This is only a problem if the bank needs to sell the bonds into the market and realize the losses. Which can happen when depositors are fleeing due to a loss of confidence in the bank. 

👉 Another busy earnings week

175 of the S&P 500 companies report this week. 

Tuesday: Amazon (advertising growth), Eli Lily (Mounjarno revenue), Paypal (cryptocurrency payments), AMD, Starbucks, McDonald’s. 

Wednesday: Fed officials will meet and decide on monetary policy, likely holding rates after continued inflation reports from last week. The central bank will also provide quarterly updates for GDP, inflation, and unemployment. KKR, Mastercard, Pfizer and Devon Energy.

Thursday: Apple (AI integration and declining phone sales), Novo Nvordisk (Ozempic sales), Block (blockchain), Coinbase, Draftkings.

Friday: Department of Labor will release an employment report. Bloomberg forecast that employers added 250,000 jobs in April, a drop from March, but enough to keep unemployment at 3.8%. 

👉 Elon travels to China seeking regulatory approval 

Tesla rose 15% on news that it got government approval for its Full Self-driving (FSD) rollout in China. 

Following Tesla’s earnings call last week, Elon traveled to China in order to receive approval for the use of driver assistance software. 

A Chinese auto associate determined that the Model 3 and Y cars are compliant with the country’s data security requirements. This approval will help sales in the competitive Chinese EV market. 

Mergers & Acquisitions

Carlyle Group and Tamko Building Products, a roof shingles maker, are considering a sale valued at ~$3.5B.  

Private Equity 

Apollo to acquire US Silica Holdings, an industrial minerals company and last-mile logistics provider, for $1.9B.

Initial Public Offerings

CVC Capital Partners’ up 24% after its $2.15B IPO.

Venture Capital

Amae Health, a mental health care startup, raised a $15M Series A.