The amortized cost, approximate fair value and allowance for credit losses of investment securities at fair value as of September 30, 2024 and December 31, 2023 are summarized as follows:


	September 30, 2024 (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	$	40,179	$	(307)	$	—	$	(2,202)	$	37,670

Agency-guaranteed residential mortgage-backed securities	216,821		—		4,357		—		221,178

Agency-guaranteed residential collateralized mortgage obligations	201,529		—		1,277		(7,933)		194,873
Agency-guaranteed commercial collateralized mortgage obligations	96,200		—		1,361		(618)		96,943
Collateralized loan obligations	315,096		—		100		(4,767)		310,429
Commercial mortgage-backed securities	78,711		—		—		(1,637)		77,074
Corporate notes	660,626		(4,332)		646		(61,969)		594,971
Private label collateralized mortgage obligations	879,555		—		1,573		(36,533)		844,595


Available for sale debt securities	$	2,488,717	$	(4,639)	$	9,314	$	(115,659)	2,377,733

Equity securities (2)									34,336
Total investment securities, at fair value									$	2,412,069


	December 31, 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	$	97,359	$	(483)	$	15	$	(4,262)	$	92,629



Agency-guaranteed residential collateralized mortgage obligations	129,589		—		—		(12,681)		116,908

Collateralized loan obligations	500,109		—		1		(11,018)		489,092
Commercial mortgage-backed securities	125,885		—		—		(4,249)		121,636
Corporate notes	636,880		(3,469)		79		(50,456)		583,034
Private label collateralized mortgage obligations	1,034,841		—		1,201		(62,481)		973,561

Available for sale debt securities	$	2,524,663	$	(3,952)	$	1,296	$	(145,147)	2,376,860

Equity securities (2)									28,780
Total investment securities, at fair value									$	2,405,640

(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, 2024 and December 31, 2023. 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 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 $0.1 million and $240.8 million for the three and nine months ended September 30, 2024, respectively. Proceeds from the sale of AFS debt securities were $4.1 million for the three and nine months ended September 30, 2023. 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, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
(amounts in thousands)	2024		2023		2024		2023
Gross realized gains	$	—	$	—	$	176	$	—
Gross realized losses	—		(429)		(925)		(429)
Net realized gains (losses) on sale of available for sale debt securities	$	—	$	(429)	$	(749)	$	(429)

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, 2024
(amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	41,523	$	29,940
Due after one year through five years	531,379		484,726
Due after five years through ten years	87,724		80,305

Asset-backed securities	40,179		37,670
Agency-guaranteed residential mortgage-backed securities	216,821		221,178

Agency-guaranteed residential collateralized mortgage obligations	201,529		194,873
Agency-guaranteed commercial collateralized mortgage obligations	96,200		96,943
Collateralized loan obligations	315,096		310,429
Commercial mortgage-backed securities	78,711		77,074
Private label collateralized mortgage obligations	879,555		844,595


Total available for sale debt securities	$	2,488,717	$	2,377,733

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, 2024 and December 31, 2023 were as follows:


	September 30, 2024
	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	$	—	$	—	$	30,960	$	(1,241)	$	30,960	$	(1,241)


Agency-guaranteed residential collateralized mortgage obligations	—		—		109,456		(7,933)		109,456		(7,933)
Agency-guaranteed commercial collateralized mortgage obligations	45,080		(618)		—		—		45,080		(618)
Collateralized loan obligations	37,164		(284)		250,635		(4,483)		287,799		(4,767)
Commercial mortgage-backed securities	—		—		77,074		(1,637)		77,074		(1,637)
Corporate notes	59,408		(766)		319,371		(26,637)		378,779		(27,403)
Private label collateralized mortgage obligations	175,651		(3,367)		586,700		(33,166)		762,351		(36,533)


Total	$	317,303	$	(5,035)	$	1,374,196	$	(75,097)	$	1,691,499	$	(80,132)


	December 31, 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	$	—	$	—	$	64,029	$	(4,027)	$	64,029	$	(4,027)


Agency-guaranteed residential collateralized mortgage obligations	—		—		116,908		(12,681)		116,908		(12,681)

Collateralized loan obligations	29,241		(392)		438,551		(10,626)		467,792		(11,018)
Commercial mortgage-backed securities	—		—		121,636		(4,249)		121,636		(4,249)
Corporate notes	23,243		(1,147)		424,768		(33,764)		448,011		(34,911)
Private label collateralized mortgage obligations	303,750		(11,243)		613,007		(51,417)		916,757		(62,660)


Total	$	356,234	$	(12,782)	$	1,778,899	$	(116,764)	$	2,135,133	$	(129,546)

At September 30, 2024, there were 21 AFS debt securities with unrealized losses in the less-than-twelve-months category and 92 AFS debt securities with unrealized losses in the twelve-months-or-more category. Except for two asset-backed securities and 20 corporate notes where there was a change 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 expected to be recovered when market prices recover or at maturity. Customers does not intend to sell any of the 113 securities, and it is not more likely than not that Customers will be required to sell any of the 113 securities before recovery of the amortized cost basis. At December 31, 2023, there were 119 AFS debt securities in an unrealized loss position.

Customers recorded an allowance for credit losses on two asset-backed securities and 20 corporate notes where there was a change in future estimated cash flows during the three and nine months ended September 30, 2024 and on four asset-backed securities and twelve corporate notes during the three and nine months ended September 30, 2023. 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,
	2024						2023
(amounts in thousands)	Asset-backed securities		Corporate notes		Total		Asset-backed securities		Corporate notes		Total
Balance at July 1	$	367	$	4,972	$	5,339	$	1,563	$	1,876	$	3,439
Credit losses on securities for which credit losses were not previously recorded	24		—		24		—		564		564
Credit losses on previously impaired securities	—		12		12		442		69		511
Decrease in allowance for credit losses on previously impaired securities	(84)		(652)		(736)		(250)		(24)		(274)
Reduction due to sales	—		—		—		—		(391)		(391)
Balance at September 30	$	307	$	4,332	$	4,639	$	1,755	$	2,094	$	3,849


	Nine Months Ended September 30,
	2024						2023
(amounts in thousands)	Asset-backed securities		Corporate notes		Total		Asset-backed securities		Corporate notes		Total
Balance at January 1	$	483	$	3,469	$	3,952	$	578	$	—	$	578
Credit losses on securities for which credit losses were not previously recorded	24		635		659		—		2,485		2,485
Credit losses on previously impaired securities	—		613		613		1,488		—		1,488
Decrease in allowance for credit losses on previously impaired securities	(200)		(385)		(585)		(311)		—		(311)
Reduction due to sales	—		—		—		—		(391)		(391)
Balance at September 30	$	307	$	4,332	$	4,639	$	1,755	$	2,094	$	3,849


	September 30, 2024 (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	$	538,832	$	—	$	538,832	$	1,628	$	(184)	$	540,276

Agency-guaranteed residential mortgage-backed securities	6,920		—		6,920		—		(522)		6,398
Agency-guaranteed commercial mortgage-backed securities	1,790		—		1,790		—		(271)		1,519
Agency-guaranteed residential collateralized mortgage obligations	174,098		—		174,098		—		(11,221)		162,877
Agency-guaranteed commercial collateralized mortgage obligations	159,050		—		159,050		—		(19,426)		139,624



Private label collateralized mortgage obligations	183,747		—		183,747		789		(7,716)		176,820

Total held to maturity debt securities	$	1,064,437	$	—	$	1,064,437	$	2,417	$	(39,340)	$	1,027,514


	December 31, 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	$	575,990	$	—	$	575,990	$	202	$	(2,064)	$	574,128

Agency-guaranteed residential mortgage-backed securities	7,039		—		7,039		—		(649)		6,390
Agency-guaranteed commercial mortgage-backed securities	1,850		—		1,850		—		(134)		1,716
Agency-guaranteed residential collateralized mortgage obligations	186,636		—		186,636		—		(19,049)		167,587
Agency-guaranteed commercial collateralized mortgage obligations	146,765		—		146,765		—		(23,178)		123,587



Private label collateralized mortgage obligations	184,890		—		184,890		—		(11,859)		173,031

Total held to maturity debt securities	$	1,103,170	$	—	$	1,103,170	$	202	$	(56,933)	$	1,046,439

During the three and nine months ended September 30, 2024, Customers sold consumer installment loans that were classified as held for sale with a carrying value of $202.5 million, inclusive of $53.0 million of personal installment loans transferred from held for investment to held for sale, accrued interest and unamortized deferred loan origination costs, to two third party sponsored VIEs. As part of the sales, Customers recognized a loss on sale of $0.3 million, inclusive of transaction costs, in net gain (loss) on sale of loans and leases within non-interest income in the consolidated statement of income. Customers provided financing to the purchasers for a portion of the sale price in the form of $160.0 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 to the VIEs, and will receive servicing fees. Customers recognized servicing assets of $2.1 million upon sale.

During the nine months ended September 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, 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 net gain (loss) on sale of loans and leases within non-interest income in the consolidated statement of income. 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 tables above, collateralized by the sold loans. Customers acts as the servicer for the sold consumer installment loans to one of the VIEs, and receives 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, 2024 and December 31, 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. The 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 agreements between Customers and the VIEs for a portion of the sold consumer loans provide that the VIEs have 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. Customers is not the servicer for the sold consumer loans to some of the VIEs and therefore does not have the power to direct the activities that most significantly impact the economic performance of these VIEs. 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, 2024
(amounts in thousands)	Amortized Cost		Fair Value




Asset-backed securities	$	538,832	$	540,276


Agency-guaranteed residential mortgage-backed securities	6,920		6,398
Agency-guaranteed commercial mortgage-backed securities	1,790		1,519
Agency-guaranteed residential collateralized mortgage obligations	174,098		162,877
Agency-guaranteed commercial collateralized mortgage obligations	159,050		139,624
Private label collateralized mortgage obligations	183,747		176,820
Total held to maturity debt securities	$	1,064,437	$	1,027,514

Customers recorded no allowance for credit losses on investment securities classified as held to maturity at September 30, 2024 and December 31, 2023. 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 that are highly rated with sufficient overcollateralization 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, 2024 and December 31, 2023. 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, 2024 and December 31, 2023. 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, 2024
(amounts in thousands)	AAA		AA		Not Rated		Total
Held to maturity debt securities:
Asset-backed securities	$	—	$	—	$	538,832	$	538,832

Agency-guaranteed residential mortgage-backed securities	—		—		6,920		6,920
Agency-guaranteed commercial mortgage-backed securities	—		—		1,790		1,790
Agency-guaranteed residential collateralized mortgage obligations	—		—		174,098		174,098
Agency-guaranteed commercial collateralized mortgage obligations	—		—		159,050		159,050



Private label collateralized mortgage obligations	100,287		9,301		74,159		183,747

Total held to maturity debt securities	$	100,287	$	9,301	$	954,849	$	1,064,437