Investment Securities

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities as of December 31, 2019 and 2018 are summarized as follows:


	December 31, 2019
(amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale debt securities
Agency-guaranteed residential mortgage-backed securities	$	273,252	$	5,069	$	—	$	278,321

Corporate notes ⁽¹⁾	284,639		14,238		—		298,877
Available for sale debt securities	$	557,891	$	19,307	$	—	577,198
Interest-only GNMA securities ⁽²⁾							16,272
Equity securities ⁽³⁾							2,406
Total investment securities, at fair value							$	595,876


	December 31, 2018
(amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities
Agency-guaranteed residential mortgage-backed securities	$	311,267	$	—	$	(5,893)	$	305,374

Corporate notes ⁽¹⁾	381,407		920		(24,407)		357,920
Available for sale debt securities	$	692,674	$	920	$	(30,300)	663,294
Equity securities ⁽³⁾							1,718
Total investment securities, at fair value							$	665,012

(1)At December 31, 2019, includes corporate securities issued by domestic bank holding companies. At December 31, 2018, includes corporate securities issued by other domestic and foreign bank holding companies.

(2)Reported at fair value with fair value changes recorded in non-interest income based on fair value option election.

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

On June 28, 2019, Customers obtained ownership of certain interest-only GNMA securities that served as the primary collateral for loans made to one commercial mortgage warehouse customer through a Uniform Commercial Code private sale transaction. In connection with the acquisition of the interest-only GNMA securities, Customers recognized a pre-tax loss of $7.5 million for the year ended December 31, 2019 for the shortfall in the fair value of the interest-only GNMA securities compared to its credit exposure to this commercial mortgage warehouse customer. Upon acquisition, Customers elected the fair value option for these interest-only GNMA securities. The fair value of these securities at December 31, 2019 was $16.3 million.

During the year ended December 31, 2019, Customers recognized unrealized gains of $1.3 million on its interest-only GNMA securities and equity securities. During the year ended December 31, 2018, Customers recognized unrealized losses of $1.6 million 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.

The following table presents proceeds from the sale of available for sale debt securities and gross gains and gross losses realized on those sales:


	For the Years Ended December 31,
(amounts in thousands)	2019		2018		2017

Proceeds from sale of available for sale debt securities	$	97,555	$	476,182	$	769,203
Gross gains	$	1,931	$	—	$	8,808
Gross losses	(930)		(18,659)		(8)
Net gains (losses)	$	1,001	$	(18,659)	$	8,800

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 presents debt securities by stated maturity. Debt securities backed by mortgages and interest-only GNMA securities 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:


	December 31, 2019
(amounts in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	15,000		15,206
Due after five years through ten years	267,639		281,607
Due after ten years	2,000		2,064
Agency-guaranteed residential mortgage-backed securities	273,252		278,321

Interest-only classes of agency-guaranteed home equity conversion mortgage-backed securities	—		16,272
Total debt securities	$	557,891	$	593,470

At December 31, 2019, there were no available for sale debt securities in an unrealized loss position. Gross unrealized losses and fair value of Customers' available for sale debt securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2018 were as follows:


	December 31, 2018
	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
Agency-guaranteed residential mortgage-backed securities	$	305,374	$	(5,893)	$	—	$	—	$	305,374	$	(5,893)

Corporate notes	310,036		(24,407)		—		—		310,036		(24,407)

Total	$	615,410	$	(30,300)	$	—	$	—	$	615,410	$	(30,300)

At December 31, 2019 and 2018, Customers Bank had pledged investment securities aggregating $20.4 million and $23.0 million in fair value, respectively, as collateral against its borrowings primarily with the FHLB and an unused line of credit with another financial institution. These counterparties do not have the ability to sell or repledge these securities.

At December 31, 2019 and 2018, no securities holdings of any one issuer, other than the U.S. Government and its agencies, amounted to greater than 10% of shareholders' equity.