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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Summary of Amortized Cost and Approximate Fair Value of Investment Securities and Held to Maturity Securities

The amortized cost, approximate fair value and allowance for credit losses of investment securities at fair value as of September 30, 2023 and December 31, 2022 are summarized as follows:

			September 30, 2023 (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			$	111,915					$	(1,755)					$	4					$	(5,448)					$	104,716
Agency-guaranteed residential collateralized mortgage obligations			133,425						—						—						(14,956)						118,469
Collateralized loan obligations			826,764						—						817						(11,725)						815,856
Commercial mortgage-backed securities			136,111						—						—						(4,923)						131,188
Corporate notes			638,230						(2,094)						86						(57,325)						578,897
Private label collateralized mortgage obligations			1,064,789						—						687						(67,874)						997,602
Available for sale debt securities			$	2,911,234					$	(3,849)					$	1,594					$	(162,251)					2,746,728
Equity securities (2)																											26,479
Total investment securities, at fair value																											$	2,773,207

			December 31, 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			$	169,170					$	(578)					$	—					$	(8,050)					$	160,542
Agency-guaranteed residential collateralized mortgage obligations			147,481						—						—						(13,617)						133,864
Collateralized loan obligations			896,992						—						88						(24,342)						872,738
Commercial mortgage-backed securities			142,222						—						1						(5,866)						136,357
Corporate notes			657,086						—						45						(61,878)						595,253
Private label collateralized mortgage obligations			1,125,583						—						308						(63,630)						1,062,261
Available for sale debt securities			$	3,138,534					$	(578)					$	442					$	(177,383)					2,961,015
Equity securities (2)																											26,485
Total investment securities, at fair value																											$	2,987,500

(1)Accrued interest on AFS debt securities totaled $19.7 million and $16.7 million at September 30, 2023 and December 31, 2022, respectively, and is included in accrued interest receivable on the consolidated balance sheet.

(2)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, 2023 and December 31, 2022. No impairments or measurement adjustments have been recorded on the equity securities without a readily determinable fair value since acquisition.

The amortized cost, approximate fair value and allowance for credit losses of investment securities held to maturity as of September 30, 2023 and December 31, 2022 are summarized as follows:

			September 30, 2023 (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			$	645,362					$	—					$	645,362					$	—					$	(5,174)					$	640,188
Agency-guaranteed residential mortgage-backed securities			7,077						—						7,077						—						(1,027)						6,050
Agency-guaranteed commercial mortgage-backed securities			1,870						—						1,870						—						(139)						1,731
Agency-guaranteed residential collateralized mortgage obligations			191,469						—						191,469						—						(23,331)						168,138
Agency-guaranteed commercial collateralized mortgage obligations			147,414						—						147,414						—						(15,848)						131,566
Private label collateralized mortgage obligations			185,178						—						185,178						—						(17,275)						167,903
Total held to maturity debt securities			$	1,178,370					$	—					$	1,178,370					$	—					$	(62,794)					$	1,115,576

			December 31, 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			$	361,107					$	—					$	361,107					$	—					$	(4,974)					$	356,133
Agency-guaranteed residential mortgage-backed securities			7,189						—						7,189						—						(563)						6,626
Agency-guaranteed commercial mortgage-backed securities			1,928						—						1,928						—						(104)						1,824
Agency-guaranteed residential collateralized mortgage obligations			204,495						—						204,495						—						(18,376)						186,119
Agency-guaranteed commercial collateralized mortgage obligations			151,711						—						151,711						—						(9,435)						142,276
Private label collateralized mortgage obligations			113,829						—						113,829						—						(12,994)						100,835
Total held to maturity debt securities			$	840,259					$	—					$	840,259					$	—					$	(46,446)					$	793,813

(1)Accrued interest on HTM debt securities totaled $2.7 million and $1.0 million at September 30, 2023 and December 31, 2022, respectively, and is included in accrued interest receivable on the consolidated balance sheet.

Gain (Loss) on Securities

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, 2023 and 2022:

			Three Months Ended September 30,												Nine Months Ended September 30,
(amounts in thousands)			2023						2022						2023						2022
Gross realized gains			$	—					$	—					$	—					$	2,563
Gross realized losses			(429)						(2,135)						(429)						(8,790)
Net realized gains (losses) on sale of available for sale debt securities			$	(429)					$	(2,135)					$	(429)					$	(6,227)

Summary of Available-for-Sale and Held to Maturity Debt Securities by Stated Maturity

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, 2023
(amounts in thousands)			Amortized Cost						Fair Value
Due in one year or less			$	7,500					$	7,444
Due after one year through five years			532,269						488,929
Due after five years through ten years			98,461						82,524
Asset-backed securities			111,915						104,716
Agency-guaranteed residential collateralized mortgage obligations			133,425						118,469
Collateralized loan obligations			826,764						815,856
Commercial mortgage-backed securities			136,111						131,188
Private label collateralized mortgage obligations			1,064,789						997,602
Total available for sale debt securities			$	2,911,234					$	2,746,728

The following table presents HTM debt securities by stated maturity, including debt securities backed by mortgages and other assets with expected maturities that differ from contractual maturities because borrowers have the right to call or prepay and, therefore, are classified separately with no specific maturity date:

			September 30, 2023
(amounts in thousands)			Amortized Cost						Fair Value
Asset-backed securities			$	645,362					$	640,188
Agency-guaranteed residential mortgage-backed securities			7,077						6,050
Agency-guaranteed commercial mortgage-backed securities			1,870						1,731
Agency-guaranteed residential collateralized mortgage obligations			191,469						168,138
Agency-guaranteed commercial collateralized mortgage obligations			147,414						131,566
Private label collateralized mortgage obligations			185,178						167,903
Total held to maturity debt securities			$	1,178,370					$	1,115,576

Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value

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, 2023 and December 31, 2022 were as follows:

			September 30, 2023
			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			$	—					$	—					$	42,932					$	(2,547)					$	42,932					$	(2,547)
Agency-guaranteed residential collateralized mortgage obligations			—						—						133,425						(14,956)						133,425						(14,956)
Collateralized loan obligations			46,333						(1,472)						614,978						(10,253)						661,311						(11,725)
Commercial mortgage-backed securities			—						—						134,866						(4,923)						134,866						(4,923)
Corporate notes			84,827						(3,106)						469,187						(45,202)						554,014						(48,308)
Private label collateralized mortgage obligations			154,078						(10,605)						674,943						(57,269)						829,021						(67,874)
Total			$	285,238					$	(15,183)					$	2,070,331					$	(135,150)					$	2,355,569					$	(150,333)

			December 31, 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			$	160,542					$	(8,050)					$	—					$	—					$	160,542					$	(8,050)
Agency-guaranteed residential collateralized mortgage obligations			133,864						(13,617)						—						—						133,864						(13,617)
Collateralized loan obligations			386,701						(13,516)						315,270						(10,826)						701,971						(24,342)
Commercial mortgage-backed securities			39,828						(1,410)						93,005						(4,456)						132,833						(5,866)
Corporate notes			386,464						(36,119)						178,955						(25,759)						565,419						(61,878)
Private label collateralized mortgage obligations			478,096						(29,364)						314,332						(34,266)						792,428						(63,630)
Total			$	1,585,495					$	(102,076)					$	901,562					$	(75,307)					$	2,487,057					$	(177,383)

Debt Securities, Available-for-sale, Allowance for Credit Loss

The following tables present the activity in the allowance for credit losses on AFS debt securities, by major security type, for the periods presented:

			Three Months Ended September 30,
			2023																		2022
(amounts in thousands)			Asset-backed securities						Corporate notes						Total						Asset-backed securities						Corporate notes						Total
Balance at July 1			$	1,563					$	1,876					$	3,439					$	411					$	—					$	411
Credit losses on securities for which credit losses were not previously recorded			—						564						564						—						—						—
Credit losses on previously impaired securities			442						69						511						—						—						—
Decrease in allowance for credit losses on previously impaired securities			(250)						(24)						(274)						(158)						—						(158)
Reduction due to sales			—						(391)						(391)						—						—						—
Balance at September 30			$	1,755					$	2,094					$	3,849					$	253					$	—					$	253

			Nine Months Ended September 30,
			2023																		2022
(amounts in thousands)			Asset-backed securities						Corporate notes						Total						Asset-backed securities						Corporate notes						Total
Balance at January 1			$	578					$	—					$	578					$	—					$	—					$	—
Credit losses on securities for which credit losses were not previously recorded			—						2,485						2,485						253						—						253
Credit losses on previously impaired securities			1,488						—						1,488						—						—						—
Decrease in allowance for credit losses on previously impaired securities			(311)						—						(311)						—						—						—
Reduction due to sales			—						(391)						(391)						—						—						—
Balance at September 30			$	1,755					$	2,094					$	3,849					$	253					$	—					$	253

Debt Securities, Held-to-Maturity, Credit Quality Indicator

The following table presents the amortized cost of HTM debt securities based on their lowest credit rating available:

			September 30, 2023
(amounts in thousands)			AAA						AA						A																																										Not Rated						Total
Held to maturity debt securities:
Asset-backed securities			$	—					$	—					$	—																																									$	645,362					$	645,362
Agency-guaranteed residential mortgage-backed securities			—						—						—																																										7,077						7,077
Agency-guaranteed commercial mortgage-backed securities			—						—						—																																										1,870						1,870
Agency-guaranteed residential collateralized mortgage obligations			—						—						—																																										191,469						191,469
Agency-guaranteed commercial collateralized mortgage obligations			—						—						—																																										147,414						147,414
Private label collateralized mortgage obligations			67,528						18,234						25,920																																										73,496						185,178
Total held to maturity debt securities			$	67,528					$	18,234					$	25,920																																									$	1,066,688					$	1,178,370

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