INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities as of June 30, 2017 and December 31, 2016 are summarized in the tables below:



	June 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(amounts in thousands)
Available for Sale:
Agency-guaranteed residential mortgage-backed securities	$	210,688	$	755	$	(1,699	)	$	209,744
Agency-guaranteed commercial real estate mortgage-backed securities	735,116		11,318		(11		)	746,423
Corporate notes (1)	44,956		821		—			45,777
Equity securities (2)	10,661		—		—			10,661
	$	1,001,421	$	12,894	$	(1,710	)	$	1,012,605


(1)	Includes subordinated debt issued by other bank holding companies.

(2) Includes equity securities issued by a foreign entity.



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(amounts in thousands)
Available for Sale:
Agency-guaranteed residential mortgage-backed securities	$	233,002	$	918	$	(2,657	)	$	231,263
Agency-guaranteed commercial real estate mortgage-backed securities	204,689		—		(2,872		)	201,817
Corporate notes (1)	44,932		401		(185		)	45,148
Equity securities (2)	15,246		—		—			15,246
	$	497,869	$	1,319	$	(5,714	)	$	493,474


(1)	Includes subordinated debt issued by other bank holding companies.

(2) Includes equity securities issued by a foreign entity.

The following table presents proceeds from the sale of available-for-sale investment securities and gross gains and gross losses realized on those sales for the three and six months ended June 30, 2017 and 2016:



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
(amounts in thousands)
Proceeds from sale of available-for-sale securities	$	115,982	$	—	$	115,982	$	2,848
Gross gains	$	3,183	$	—	$	3,183	$	26
Gross losses	—		—		—		—
Net gains	$	3,183	$	—	$	3,183	$	26

These gains were determined using the specific identification method and were reported as gains on sale of investment securities included in non-interest income on the consolidated statements of income.

The following table presents available-for-sale debt securities by stated maturity. Debt securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay and, therefore, these debt securities are classified separately with no specific maturity date:



	June 30, 2017
	Amortized Cost		Fair Value
(amounts in thousands)
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	42,956		43,602
Due after ten years	2,000		2,175
Agency-guaranteed residential mortgage-backed securities	210,688		209,744
Agency-guaranteed commercial real estate mortgage-backed securities	735,116		746,423
Total debt securities	$	990,760	$	1,001,944

Gross unrealized losses and fair value of Customers' investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2017 and December 31, 2016 were as follows:



	June 30, 2017
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(amounts in thousands)
Available for Sale:
Agency-guaranteed residential mortgage-backed securities	$	76,237	$	(660	)	$	29,797	$	(1,039	)	$	106,034	$	(1,699	)
Agency-guaranteed commercial real estate mortgage-backed securities	6,172		(11		)	—		—			6,172		(11		)
Total	$	82,409	$	(671	)	$	29,797	$	(1,039	)	$	112,206	$	(1,710	)

(1) Includes subordinated debt issued by other bank holding companies.



	December 31, 2016
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(amounts in thousands)
Available for Sale:
Agency-guaranteed residential mortgage-backed securities	$	87,433	$	(1,330	)	$	30,592	$	(1,327	)	$	118,025	$	(2,657	)
Agency-guaranteed commercial real estate mortgage-backed securities	201,817		(2,872		)	—		—			201,817		(2,872		)
Corporate notes (1)	9,747		(185		)	—		—			9,747		(185		)
Total	$	298,997	$	(4,387	)	$	30,592	$	(1,327	)	$	329,589	$	(5,714	)


(1)	Includes subordinated debt issued by other bank holding companies.

At June 30, 2017, there were twelve available-for-sale investment securities in the less-than-twelve-month category and seven available-for-sale investment securities in the twelve-month-or-more category. The unrealized losses on the mortgage-backed securities are guaranteed by government-sponsored entities and primarily relate to changes in market interest rates. All amounts are expected to be recovered when market prices recover or at maturity. Customers does not intend to sell these securities and it is not more likely than not that Customers will be required to sell the securities before recovery of the amortized cost basis.

At June 30, 2017, management evaluated its equity holdings issued by a foreign entity for other-than-temporary impairment. Because management no longer has the intent to hold these securities until a recovery in fair value, Customers recorded an other-than-temporary impairment loss of $2.9 million and $4.6 million, respectively, for the three and six months ended June 30, 2017 for the full amount of the decline in fair value below the cost basis established at March 31, 2017 and December 31, 2016. The fair value of the equity securities at June 30, 2017 of $10.7 million became the new cost basis of the securities. Given that these equity securities continue to experience price declines, Customers is closely monitoring the issuer's stock performance while at the same time studying alternatives to exit the investment. As of July 31, 2017, the equity securities were trading at a price of $1.57 per share which represents an estimated fair value of $6.3 million for the equity securities that Customers still owns.

At June 30, 2017 and December 31, 2016, Customers Bank had pledged investment securities aggregating $642.6 million and $231.3 million in fair value, respectively, as collateral against its borrowings primarily with the FHLB and an unused line of credit with another financial institution. These counterparties do not have the ability to sell or repledge these securities.