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

(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.

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 when Customers only invests in securities issued by the VIE and was not involved in the design of the VIE or when 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 $4.1 million for the three and nine months ended September 30, 2023. 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. 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)

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

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)

At September 30, 2023, there were 25 AFS debt securities with unrealized losses in the less-than-twelve-months category and 155 AFS debt securities with unrealized losses in the twelve-months-or-more category. Except for four asset-backed securities and twelve corporate notes 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 and credit spreads 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 180 securities, and it is not more likely than not that Customers will be required to sell any of the 180 securities before recovery of the amortized cost basis. At December 31, 2022, there were 156 AFS debt securities in an unrealized loss position.

Customers recorded an allowance for credit losses on four asset-backed securities and twelve corporate notes where there was a deterioration in future estimated cash flows during the three and nine months ended September 30, 2023 and on four asset-backed securities during the three and 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:


	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


	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

On June 30, 2023, Customers sold consumer installment loans that were classified as held for sale with a carrying value of $556.7 million, inclusive of $154.0 million of other installment loans transferred from held for investment to held for sale during the three months ended June 30, 2023, accrued interest and unamortized deferred loan origination costs, to two third-party sponsored VIEs. As part of these sales, Customers recognized a loss on sale of $1.2 million, inclusive of transaction costs, in gain (loss) on sale of SBA and other loans within non-interest income included in the consolidated statement of income for the nine months ended September 30, 2023. Customers provided financing to the purchasers for a portion of the sale price in the form of $436.8 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 to one of the VIEs, and will receive a servicing fee. Customers recognized a servicing asset of $3.8 million upon sale.

At the time of the sale, and at each subsequent reporting period, Customers is required to evaluate its involvement with the VIEs to determine if it holds a variable interest in the VIEs and, if so, if Customers is the primary beneficiary of the VIEs. If Customers is both a variable interest holder and the primary beneficiary of the VIEs, it would be required to consolidate the VIEs. As of September 30, 2023, Customers concluded that its investments in asset-backed securities as well as the servicing fees are considered variable interests in the VIEs as there is a possibility, even if remote, that would result in Customers' interests in the asset-backed securities or the servicing fees absorbing some of the losses of the VIEs.

After concluding that Customers has one or more variable interests in the VIEs, Customers must determine if it is the primary beneficiary of the VIEs. 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 VIEs. Based on a review of the VIEs' 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 VIEs. This conclusion is based upon review of the historical performance of the types of consumer installment loans sold to the VIEs, 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 for a portion of the sold consumer loans provide 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 VIEs' substantive kick-out rights. As discussed above, Customers is not the servicer for the sold consumer loans to one of the VIEs and therefore does not have the power to direct the activities that most significantly impact the economic performance of this VIE. As the activities which most significantly affect the performance of the VIEs are not controlled by Customers, Customers has concluded that it is therefore not the primary beneficiary and does not consolidate the VIEs. Customers accounted for its investments in the asset-backed securities as HTM debt securities on the consolidated balance sheet.

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

Customers recorded no allowance for credit losses on investment securities classified as held to maturity at September 30, 2023 and December 31, 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, are estimated to have no expected credit losses. Customers recorded no allowance for its investments in the asset-backed securities. Customers considered the seniority of its beneficial interests, which include overcollateralization of these asset-backed securities in the estimate of the ACL at September 30, 2023 and December 31, 2022. The unrealized losses on HTM debt securities with no ACL were primarily 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 and a private label collateralized mortgage obligation, 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, 2023 and December 31, 2022. The asset-backed securities and a private label collateralized mortgage obligation are not rated by rating agencies. Customers monitors the credit quality of these asset-backed securities and a private label collateralized mortgage obligation by evaluating the performance of the sold consumer installment loans and other underlying loans against the overcollateralization available for these securities.


	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