The amortized cost, approximate fair value and allowance for credit losses of investment securities as of September 30, 2022 and December 31, 2021 are summarized as follows:


	September 30, 2022 (1)
(amounts in thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale debt securities:
Asset-backed securities	$	200,171	$	(253)	$	—	$	(6,657)	$	193,261



Agency-guaranteed residential collateralized mortgage obligations	152,008		—		—		(13,786)		138,222

Collateralized loan obligations	855,959		—		10		(28,156)		827,813
Commercial mortgage-backed securities	138,972		—		—		(4,129)		134,843
Corporate notes	587,987		—		23		(55,355)		532,655
Private label collateralized mortgage obligations	1,141,340		—		—		(56,655)		1,084,685
State and political subdivision debt securities (2)	8,523		—				(1,172)		7,351

Available for sale debt securities	$	3,084,960	$	(253)	$	33	$	(165,910)	2,918,830

Equity securities (3)									24,864
Total investment securities, at fair value									$	2,943,694


	December 31, 2021 (1)
(amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale debt securities:
Asset-backed securities	$	297,291	$	253	$	(119)	$	297,425

Agency-guaranteed residential mortgage-backed securities	9,865		—		(312)		9,553
Agency-guaranteed commercial mortgage-backed securities	2,162		—		(10)		2,152
Agency-guaranteed residential collateralized mortgage obligations	199,091		154		(2,315)		196,930
Agency-guaranteed commercial collateralized mortgage obligations	242,668		53		(3,877)		238,844
Collateralized loan obligations	1,067,770		247		(1,215)		1,066,802
Commercial mortgage-backed securities	149,054		53		(180)		148,927
Corporate notes	575,273		6,334		(1,561)		580,046
Private label collateralized mortgage obligations	1,248,142		333		(6,010)		1,242,465
State and political subdivision debt securities (2)	8,535		—		(104)		8,431
Available for sale debt securities	$	3,799,851	$	7,427	$	(15,703)	3,791,575

Equity securities (3)							25,575
Total investment securities, at fair value							$	3,817,150

(3)Includes perpetual preferred stock issued by domestic banks and domestic bank holding companies and equity securities issued by fintech companies, without a readily determinable fair value, and CRA-qualified mutual fund shares at September 30, 2022 and December 31, 2021. No impairments or measurement adjustments have been recorded on the equity securities without a readily determinable fair value since acquisition.

In June 2021, Customers sold all of the outstanding shares in CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd., which held the equity securities issued by a foreign entity, for $3.8 million, and recognized $2.8 million in loss on sale of foreign subsidiaries within non-interest income on the consolidated statement of income. During the nine months ended September 30, 2021, Customers recognized unrealized gains of $2.7 million on its equity securities issued by a foreign entity that were held by CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd., prior to the sale of these foreign subsidiaries. These unrealized gains and losses were reported as unrealized gain (loss) on investment securities within non-interest income on the consolidated statements of income.

Customers' transactions with unconsolidated VIEs include sales of consumer installment loans and investments in the securities issued by the VIEs. Customers is not the primary beneficiary of the VIEs because Customers has no right to make decisions that will most significantly affect the economic performance of the VIEs. Customers' continuing involvement with the unconsolidated VIEs is not significant. Customers' continuing involvement is not considered to be significant where Customers only invests in securities issued by the VIE and was not involved in the design of the VIE or where Customers has transferred financial assets to the VIE for only cash consideration. Customers' investments in the securities issued by the VIEs are classified as AFS or HTM debt securities on the consolidated balance sheets, and represent Customers' maximum exposure to loss.

Proceeds from the sale of AFS debt securities were $126.6 million and $681.6 million for the three and nine months ended September 30, 2022, respectively. Proceeds from the sale of AFS debt securities were $258.4 million and $666.0 million for the three and nine months ended September 30, 2021, respectively. The following table presents gross realized gains and realized losses from the sale of AFS debt securities for the three and nine months ended September 30, 2022 and 2021:

The following table presents AFS 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:


	September 30, 2022
(amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	463,431		421,935
Due after five years through ten years	133,079		118,071

Asset-backed securities	200,171		193,261
Collateralized loan obligations	855,959		827,813
Commercial mortgage-backed securities	138,972		134,843


Agency-guaranteed residential collateralized mortgage obligations	152,008		138,222

Private label collateralized mortgage obligations	1,141,340		1,084,685


Total available for sale debt securities	$	3,084,960	$	2,918,830

Gross unrealized losses and fair value of Customers' AFS debt securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2022 and December 31, 2021 were as follows:



	September 30, 2022
	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	$	186,085	$	(5,811)	$	11,154	$	(846)	$	197,239	$	(6,657)


Agency-guaranteed residential collateralized mortgage obligations	138,222		(13,786)		—		—		138,222		(13,786)

Collateralized loan obligations	787,365		(27,078)		35,670		(1,078)		823,035		(28,156)
Commercial mortgage-backed securities	130,010		(4,027)		4,847		(102)		134,857		(4,129)
Corporate notes	454,386		(49,635)		55,850		(5,720)		510,236		(55,355)
Private label collateralized mortgage obligations	720,076		(45,150)		129,973		(11,505)		850,049		(56,655)
State and political subdivision debt securities	—		—		7,351		(1,172)		7,351		(1,172)

Total	$	2,416,144	$	(145,487)	$	244,845	$	(20,423)	$	2,660,989	$	(165,910)


	December 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	$	54,753	$	(119)	$	—	$	—	$	54,753	$	(119)
Agency-guaranteed residential mortgage-backed securities	9,554		(312)		—		—		9,554		(312)
Agency-guaranteed commercial mortgage-backed securities	2,152		(10)		—		—		2,152		(10)
Agency-guaranteed residential collateralized mortgage obligations	173,492		(2,315)		—		—		173,492		(2,315)
Agency-guaranteed commercial collateralized mortgage obligations	118,334		(3,877)		—		—		118,334		(3,877)
Collateralized loan obligations	715,250		(1,215)		—		—		715,250		(1,215)
Commercial mortgage-backed securities	122,597		(180)		—		—		122,597		(180)
Corporate notes	188,100		(1,561)		—		—		188,100		(1,561)
Private label collateralized mortgage obligations	632,091		(5,874)		6,818		(136)		638,909		(6,010)
State and political subdivision debt securities	8,430		(104)		—		—		8,430		(104)

Total	$	2,024,753	$	(15,567)	$	6,818	$	(136)	$	2,031,571	$	(15,703)

At September 30, 2022, there were 128 AFS debt securities with unrealized losses in the less-than-twelve-months category and 19 AFS debt securities with unrealized losses in the twelve-months-or-more category. Except for the four asset-backed securities where there was a deterioration in future estimated cash flows as further discussed below, the unrealized losses were principally due to changes in market interest rates that resulted in a negative impact on the respective securities' fair value and are expected to be recovered when market prices recover or at maturity. Customers does not intend to sell any of the 147 securities, and it is not more likely than not that Customers will be required to sell any of the 147 securities before recovery of the amortized cost basis. At December 31, 2021, there were 117 AFS debt securities in an unrealized loss position.

Customers recorded an allowance for credit losses on four asset-backed securities where there was a deterioration in future estimated cash flows during the nine months ended September 30, 2022. A discounted cash flow approach is used to determine the amount of the allowance. The cash flows expected to be collected, after considering expected prepayments, are discounted at the original effective interest rate. The amount of the allowance is limited to the difference between the amortized cost basis of the security and its estimated fair value. The following tables present the activity in the allowance for credit losses on AFS debt securities, by major security type, for the periods presented:


	September 30, 2022 (1)
(amounts in thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to maturity debt securities:
Asset-backed securities	$	400,001	$	—	$	400,001	$	—	$	—	$	400,001

Agency-guaranteed residential mortgage-backed securities	7,781		—		7,781				(702)		7,079
Agency-guaranteed commercial mortgage-backed securities	1,947		—		1,947		—		(96)		1,851
Agency-guaranteed residential collateralized mortgage obligations	209,519		—		209,519		—		(16,681)		192,838
Agency-guaranteed commercial collateralized mortgage obligations	152,794		—		152,794		—		(6,189)		146,605



Private label collateralized mortgage obligations	114,252		—		114,252		—		(7,889)		106,363

Total held to maturity debt securities	$	886,294	$	—	$	886,294	$	—	$	(31,557)	$	854,737

On September 30, 2022, Customers sold consumer installment loans with a carrying value of $521.8 million, inclusive of accrued interest and unamortized deferred loan origination costs, to a third-party sponsored VIE. As part of these sales, Customers recognized a loss on sale of $23.5 million in loss on sale of consumer installment loans within non-interest income in the consolidated statement of income. Customers provided financing to the purchaser for a portion of the sale price in the form of $400.0 million of asset-backed securities, presented in the table above, collateralized by the sold loans. Customers will act as the servicer for the sold consumer installment loans, and will receive a servicing fee.

At the time of the sale, and at each subsequent reporting period, Customers is required to evaluate its involvement with the VIE to determine if it holds a variable interest in the VIE and, if so, if Customers is the primary beneficiary of the VIE. If Customers is both a variable interest holder and the primary beneficiary of the VIE, it would be required to consolidate the VIE. As of September 30, 2022, Customers concluded that its investment in asset-backed securities as well as the servicing fee are considered variable interests in the VIE as there is a possibility, even if remote, that would result in Customers' interest in the asset-backed securities or the servicing fee absorbing some of the losses of the VIE.

After concluding that Customers has one or more variable interests in the VIE, Customers must determine if it is the primary beneficiary of the VIE. U.S. GAAP defines the primary beneficiary as the entity that has both an economic exposure to the VIE as well as the power to direct the activities that are determined to be most significant to the economic performance of the VIE. In order to make this determination, Customers needed to first establish which activities are the most significant to the economic performance of the VIE. Based on a review of the VIE activities, Customers concluded the servicing activities, specifically those performed for significantly delinquent loans contribute most significantly to the performance of the loans and thus the VIE. The conclusion is based upon review of the historical performance of the types of consumer installment loans sold to the VIE, as well as consideration of which activities performed by the owner or servicer of the loans contribute most significantly to the ultimate performance of the loans. The loan servicing agreement between Customers and the VIE provides that the VIE has substantive kick-out rights to replace Customers as the servicer with or without cause. Accordingly, as a holder of the asset-backed securities and the servicer of the loans, Customers does not have the power to direct the servicing of significantly delinquent loans given the VIE's substantive kick-out rights. As the activities which most significantly affect the performance of the VIE are not controlled by Customers, Customers has concluded that it is therefore not the primary beneficiary and does not consolidate the VIE. Customers accounted for its investment in the asset-backed securities as HTM debt securities on the consolidated balance sheet.

The following table presents HTM 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:


	September 30, 2022
(amounts in thousands)	Amortized Cost		Fair Value




Asset-backed securities	$	400,001	$	400,001


Agency-guaranteed residential mortgage-backed securities	7,781		7,079
Agency-guaranteed commercial mortgage-backed securities	1,947		1,851
Agency-guaranteed residential collateralized mortgage obligations	209,519		192,838
Agency-guaranteed commercial collateralized mortgage obligations	152,794		146,605
Private label collateralized mortgage obligations	114,252		106,363
Total held to maturity debt securities	$	886,294	$	854,737

Customers recorded no allowance for credit losses on investment securities classified as held to maturity at September 30, 2022. The U.S. government agency securities represent obligations issued by a U.S. government-sponsored enterprise or other federal government agency that are explicitly or implicitly guaranteed by the U.S. federal government and therefore, assumed to have zero credit losses. The private label collateralized mortgage obligations are highly rated with sufficient overcollateralization and therefore have zero expected credit losses. Customers recorded no allowance for its investment in the asset-backed securities related to the sale of consumer installment loans to a third-party sponsored VIE on September 30, 2022. Customers considered the seniority of its beneficial interest, which includes its overcollateralization of these securities in the estimate of the ACL at September 30, 2022. The unrealized losses on HTM debt securities with no ACL were due to changes in market interest rates that resulted in a negative impact on the respective securities' fair value and are expected to be recovered when market prices recover or at maturity.

Customers monitors the credit quality of HTM debt securities primarily through credit ratings provided by rating agencies. Investment grade debt securities are rated BBB- or higher by S&P Global Ratings, Baa3 or higher by Moody's Investors Service or equivalent ratings by other rating agencies, and are generally considered to be of low credit risk. Except for the asset-backed securities, all of the HTM debt securities held by Customers were investment grade or U.S. government agency guaranteed securities that were not rated at September 30, 2022. Customers purchased the asset-backed securities classified as HTM debt securities in connection with the sale of the consumer installment loans to a third-party sponsored VIE on September 30, 2022. These asset-backed securities are not rated by rating agencies. Customers will monitor the credit quality of these asset-backed securities by evaluating the performance of the sold consumer installment loans against the overcollateralization available for these asset-backed securities.


	September 30, 2022
(amounts in thousands)	AAA		AA		A		BBB		Not Rated		Total
Held to maturity debt securities:
Asset-backed securities	$	—	$	—	$	—	$	—	$	400,001	$	400,001

Agency-guaranteed residential mortgage-backed securities	—		—		—		—		7,781		7,781
Agency-guaranteed commercial mortgage-backed securities	—		—		—		—		1,947		1,947
Agency-guaranteed residential collateralized mortgage obligations	—		—		—		—		209,519		209,519
Agency-guaranteed commercial collateralized mortgage obligations	—		—		—		—		152,794		152,794



Private label collateralized mortgage obligations	63,767		7,077		34,189		9,219		—		114,252

Total held to maturity debt securities	$	63,767	$	7,077	$	34,189	$	9,219	$	772,042	$	886,294

Customers has elected to not estimate an ACL on accrued interest receivable on HTM debt securities, as it already has a policy in place to reverse or write-off accrued interest, through interest income, for debt securities in nonaccrual status in a timely manner. At September 30, 2022, there were no HTM debt securities past due under the terms of their agreements or in nonaccrual status.

At September 30, 2022 and December 31, 2021, Customers Bank had pledged investment securities, which were transferred from available for sale to held to maturity category in June 2022, aggregating $17.5 million and $11.3 million in fair value, respectively, as collateral primarily for unused lines of credit with another financial institution. The counterparty does not have the ability to sell or repledge these securities.