Investment Securities

3 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of March 31, 2021 and December 31, 2020 are summarized in the tables below:


	March 31, 2021 (1)
(amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale debt securities:
Asset-backed securities	$	381,525	$	5,717	$	(249)	$	386,993
U.S. government agencies securities	20,000		53		—		20,053
Agency-guaranteed mortgage-backed securities	37,933		9		(308)		37,634

Agency-guaranteed collateralized mortgage obligations	211,226		365		(487)		211,104
Collateralized loan obligations	162,998		139		(43)		163,094
Commercial mortgage-backed securities	13,059		—		—		13,059
Corporate notes (2)	255,126		3,422		(624)		257,924
Private label collateralized mortgage obligations	329,367		1,277		(1,955)		328,689
State and political subdivision debt securities (3)	18,481		46		—		18,527

Available for sale debt securities	$	1,429,715	$	11,028	$	(3,666)	1,437,077

Equity securities (4)							4,827
Total investment securities, at fair value							$	1,441,904


	December 31, 2020 (1)
(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 agencies 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 (2)	372,764		24,144		(164)		396,744
Private label collateralized mortgage obligations	136,943		423		(374)		136,992
State and political subdivision debt securities (3)	17,346		945		—		18,291
Available for sale debt securities	$	1,174,188	$	32,890	$	(647)	1,206,431

Equity securities (4)							3,854
Total investment securities, at fair value							$	1,210,285

(1)Accrued interest on AFS debt securities totaled $4.3 million and $4.2 million at March 31, 2021 and December 31, 2020, respectively, and is included in accrued interest receivable on the consolidated balance sheet.

(2)Includes corporate securities issued by domestic bank holding companies.

(3)Includes both taxable and non-taxable municipal securities.

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

During the three months ended March 31, 2021 and 2020, Customers recognized unrealized gains of $1.0 million and unrealized losses of $1.4 million, respectively, on its 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 securities were $353.9 million for the three months ended March 31, 2021. Proceeds from the sale of AFS securities during the three months ended March 31, 2020 were received in April 2020. Realized gains from the sale of AFS debt securities were $23.6 million and $4.0 million for the three months ended March 31, 2021 and 2020, respectively. 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 shows 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:


	March 31, 2021
(amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	140,681		141,641
Due after five years through ten years	142,991		144,893
Due after ten years	9,935		9,970
Asset-backed securities	381,525		386,993
Collateralized loan obligations	162,998		163,094
Commercial mortgage-backed securities	13,059		13,059
Agency-guaranteed mortgage-backed securities	37,933		37,634

Private label collateralized mortgage obligations	329,367		328,689

Agency-guaranteed collateralized mortgage obligations	211,226		211,104
Total debt securities	$	1,429,715	$	1,437,077

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 March 31, 2021 were as follows:



	March 31, 2021
	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	$	90,064	$	(249)	$	—	$	—	$	90,064	$	(249)
Agency-guaranteed mortgage-backed securities	10,377		(308)		—		—		10,377		(308)

Agency-guaranteed collateralized mortgage obligations	55,825		(487)		—		—		55,825		(487)
Collateralized loan obligations	55,703		(43)		—		—		55,703		(43)
Corporate notes	48,905		(624)		—		—		48,905		(624)
Private label collateralized mortgage obligations	108,417		(1,955)		—		—		108,417		(1,955)

Total	$	369,291	$	(3,666)	$	—	$	—	$	369,291	$	(3,666)

At March 31, 2021, there were thirty AFS debt securities with unrealized losses in the less-than-twelve-month category and no AFS debt securities with unrealized losses in the twelve-month-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 30 securities, and it is not more likely than not that Customers will be required to sell any of the 30 securities before recovery of the amortized cost basis. At December 31, 2020, there were sixteen AFS debt securities in an unrealized loss position.

At March 31, 2021 and December 31, 2020, Customers Bank had pledged investment securities aggregating $17.6 million and $18.8 million in fair value, respectively, as collateral primarily for an unused line of credit with another financial institution. These counterparties do not have the ability to sell or repledge these securities.

At March 31, 2021 and December 31, 2020, no securities holding of any one issuer, other than the U.S. government and its agencies, amounted to greater than 10% of shareholders' equity.