INVESTMENT SECURITIES

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



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(amounts in thousands)
Available for Sale:
Agency-guaranteed residential mortgage-backed securities	$	197,606	$	521	$	(1,800	)	$	196,327
Agency-guaranteed commercial real estate mortgage-backed securities	337,683		2,843		(418		)	340,108
Corporate notes (1)	44,958		1,119		—			46,077
Equity securities (2)	2,311		—		—			2,311
	$	582,558	$	4,483	$	(2,218	)	$	584,823


(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 nine months ended September 30, 2017 and 2016:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
(amounts in thousands)
Proceeds from sale of available-for-sale securities	$	554,540	$	5		$	698,451	$	2,853
Gross gains	$	5,349	$	—		$	8,532	$	26
Gross losses	—		(1		)	—		(1		)
Net gains (losses)	$	5,349	$	(1	)	$	8,532	$	25

These gains (losses) were determined using the specific identification method and were reported as gain (loss) 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:



	September 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	42,958		43,854
Due after ten years	2,000		2,223
Agency-guaranteed residential mortgage-backed securities	197,606		196,327
Agency-guaranteed commercial real estate mortgage-backed securities	337,683		340,108
Total debt securities	$	580,247	$	582,512

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 September 30, 2017 and December 31, 2016 were as follows:



	September 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	$	54,525	$	(279	)	$	45,682	$	(1,521	)	$	100,207	$	(1,800	)
Agency-guaranteed commercial real estate mortgage-backed securities	105,044		(418		)	—		—			105,044		(418		)
Total	$	159,569	$	(697	)	$	45,682	$	(1,521	)	$	205,251	$	(2,218	)



	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 September 30, 2017, there were sixteen available-for-sale investment securities in the less-than-twelve-month category and eleven 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 September 30, 2017, management evaluated its equity holdings issued by Religare Enterprises, Ltd. ("Religare") 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 $8.3 million and $12.9 million, respectively, for the three and nine months ended September 30, 2017 for the full amount of the decline in fair value below the cost basis established at June 30, 2017 and December 31, 2016. The fair value of the equity securities at September 30, 2017 of $2.3 million became the new cost basis of the securities. Because of the change in disposition strategy for BankMobile at September 30, 2017, Customers did not record a deferred tax asset for the other-than-temporary impairment loss recorded in third quarter 2017. In addition, Customers reversed $4.6 million of previously recorded deferred tax assets in third quarter 2017 as the tax-free spin-off/merger strategy for BankMobile does not result in capital gains that could be used to offset any capital losses resulting from the disposition of the Religare equity securities.

At September 30, 2017 and December 31, 2016, Customers Bank had pledged investment securities aggregating $127.6 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.