Investment Securities

12 Months Ended

Dec. 31, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities as of December 31, 2020 and 2019 are summarized as follows:


	December 31, 2020
(amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale debt securities
Asset-backed securities	$	372,640	$	4,515	$	(10)	$	377,145
U.S. government agency securities	20,000		34		$	—	20,034
Agency-guaranteed mortgage-backed securities	61,178		1,913		$	—	63,091
Agency-guaranteed collateralized mortgage obligations	160,950		916		(99)		161,767
Collateralized loan obligations	32,367		—		—		32,367
Corporate notes (1)	372,764		24,144		(164)		396,744
Private label collateralized mortgage obligations	136,943		423		(374)		136,992
State and political subdivision debt securities	17,346		945		—		18,291
Available for sale debt securities	$	1,174,188	$	32,890	$	(647)	1,206,431

Equity securities (3)							3,854
Total investment securities, at fair value							$	1,210,285


	December 31, 2019
(amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale debt securities
Agency-guaranteed residential mortgage-backed securities	$	273,252	$	5,069	$	—	$	278,321

Corporate notes (1)	284,639		14,238		—		298,877
Available for sale debt securities	$	557,891	$	19,307	$	—	577,198
Interest-only GNMA securities (2)							16,272
Equity securities (3)							2,406
Total investment securities, at fair value							$	595,876

(1)At December 31, 2020 and 2019, includes corporate securities issued by domestic bank holding companies.

(2)Reported at fair value with fair value changes recorded in non-interest income based on fair value option election.

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

On June 28, 2019, Customers obtained ownership of certain interest-only GNMA securities that served as the primary collateral for loans made to one commercial mortgage warehouse customer through a Uniform Commercial Code private sale transaction. In connection with the acquisition of the interest-only GNMA securities, Customers recognized a pre-tax loss of $7.5 million for the year ended December 31, 2019 for the shortfall in the fair value of the interest-only GNMA securities compared to its credit exposure to this commercial mortgage warehouse customer. Upon acquisition, Customers elected the fair value option for these interest-only GNMA securities. The fair value of these securities at December 31, 2019 was $16.3 million. These securities were sold for $15.4 million with a realized gain of $1.0 million during the year ended December 31, 2020.

During the year ended December 31, 2020, Customers recognized unrealized gains of $1.4 million on its equity securities. During the year ended December 31, 2019, Customers recognized unrealized gains of $1.3 million on its interest-only GNMA securities and equity securities. These unrealized gains and losses are reported as unrealized gain (loss) on investment securities within non-interest income on the consolidated statements of income.

Proceeds from the sale of AFS debt securities were $387.8 million, $97.6 million and $476.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. Realized gains from the sale of AFS debt securities were $20.1 million and $1.0 million for the years ended December 31, 2020 and 2019, respectively. Realized losses from the sale of AFS debt securities were $18.7 million for the year ended December 31, 2018. These gains (losses) were determined using the specific identification method and were reported as gain (loss) on sale of investment securities within non-interest income on the consolidated statements of income.

The following table presents debt securities by stated maturity. Debt securities backed by mortgages and other assets 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:


	December 31, 2020
(amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	93,111		94,169
Due after five years through ten years	295,653		318,588
Due after ten years	21,346		22,312
Asset-backed securities	372,640		377,145
Collateralized loan obligations	32,367		32,367
Agency-guaranteed mortgage-backed securities	61,178		63,091
Private label collateralized mortgage obligations	136,943		136,992
Agency-guaranteed collateralized mortgage obligations	160,950		161,767

Total debt securities	$	1,174,188	$	1,206,431

Gross unrealized losses and fair value of Customers' AFS debt securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2020 were as follows:


	December 31, 2020
	Less than 12 months				12 months or more				Total
(amounts in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale debt securities
Asset-backed Securities	$	42,588	$	(10)	$	—	$	—	$	42,588	$	(10)
Agency-guaranteed collateralized mortgage obligations	29,822		(99)		—		—		29,822		(99)

Corporate notes	50,620		(164)		—		—		50,620		(164)
Private label collateralized mortgage obligations	12,549		(374)		—		—		12,549		(374)

Total	$	135,579	$	(647)	$	—	$	—	$	135,579	$	(647)

At December 31, 2020, there were 16 AFS debt securities with unrealized losses in the less-than-twelve-month category and no AFS debt securities with unrealized losses in the twelve-months-or-more category. The unrealized losses were principally due to changes in market interest rates that resulted in a negative impact on the respective securities' fair value. All amounts related to these securities are expected to be recovered when market prices recover or at maturity. Customers does not intend to sell any of the 16 securities, and it is not more likely than not that Customers will be required to sell any of the 16 securities before recovery of the amortized cost basis. At December 31, 2019, there were no AFS debt securities in an unrealized loss position.

At December 31, 2020 and 2019, Customers Bank had pledged investment securities aggregating $18.8 million and $20.4 million in fair value, primarily as collateral against an unused line of credit with another financial institution. These counterparties do not have the ability to sell or repledge these securities.

At December 31, 2020 and 2019, no securities holdings of any one issuer, other than the U.S. government and its agencies, amounted to greater than 10% of shareholders' equity.