Note 16. Equity

The following table provides a summary of changes to accumulated other comprehensive income by component for the three and six months ended June 30, 2014 and 2013.

Changes in Accumulated Other Comprehensive Income by Component


	Three Months Ended June 30, 2014				Three Months Ended June 30, 2013
(In Thousands)	Net unrealized gains on available-for-sale securities		Net unrealized losses on interest rate agreements accounted for as cash flow hedges		Net unrealized gains on available-for-sale securities		Net unrealized losses on interest rate agreements accounted for as cash flow hedges
Balance at beginning of period	$	185,275	$	(24,623)	$	183,603	$	(40,720)
Other comprehensive income (loss) before reclassifications		12,721		(5,401)		(38,012)		13,585
Amounts reclassified from other accumulated comprehensive income		(454)		39		(242)		69


Net current-period other comprehensive (loss) income		12,267		(5,362)		(38,254)		13,654

Balance at End of Period	$	197,542	$	(29,985)	$	145,349	$	(27,066)


	Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
(In Thousands)	Net unrealized gains on available-for-sale securities		Net unrealized losses on interest rate agreements accounted for as cash flow hedges		Net unrealized gains on available-for-sale securities		Net unrealized losses on interest rate agreements accounted for as cash flow hedges
Balance at beginning of period	$	164,654	$	(15,888)	$	186,580	$	(48,248)
Other comprehensive income (loss) before reclassifications		33,229		(14,196)		(28,982)		21,025
Amounts reclassified from other accumulated comprehensive income		(341)		99		(12,249)		157

Net current-period other comprehensive (loss) income		32,888		(14,097)		(41,231)		21,182

Balance at End of Period	$	197,542	$	(29,985)	$	145,349	$	(27,066)

The following table provides a summary of reclassifications out of accumulated other comprehensive income for three and six months ended June 30, 2014 and 2013.

Reclassifications Out of Accumulated Other Comprehensive Income


	Affected Line Item in the Income Statement	Amount reclassified from accumulated other comprehensive income Three Months Ended June 30,
(In Thousands)	Affected Line Item in the Income Statement	2014		2013
Net realized gains (losses) on AFS securities
Other than temporary impairment	Other market valuations, net	$	264	$	(133)
Gain on sale of AFS securities	Realized gains, net		(718)		(109)

		$	(454)	$	(242)


Net realized gains on interest rate agreements designated as cash flow hedges
Amortization of deferred loss	Interest expense	$	39	$	69

		$	39	$	69


	Affected Line Item in the Income Statement	Amount reclassified from accumulated other comprehensive income Six Months Ended June 30,
(In Thousands)	Affected Line Item in the Income Statement	2014		2013
Net realized gains (losses) on AFS securities
Other than temporary impairment	Other market valuations, net	$	377	$	(124)
Gain on sale of AFS securities	Realized gains, net		(718)		(12,125)

		$	(341)	$	(12,249)


Net realized gains on interest rate agreements designated as cash flow hedges
Amortization of deferred loss	Interest expense	$	99	$	157

		$	99	$	157

Earnings Per Common Share

The following table provides the basic and diluted earnings per common share computations for the three and six months ended June 30, 2014 and 2013.

Basic and Diluted Earnings Per Common Share


	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands, Except Share Data)	2014		2013		2014		2013
Basic Earnings Per Common Share:
Net income attributable to Redwood	$	16,017	$	65,573	$	28,350	$	126,183
Less: Dividends and undistributed earnings allocated to participating securities		(537)		(1,830)		(1,239)		(3,819)

Net income allocated to common shareholders	$	15,480	$	63,743	$	27,111	$	122,364

Basic weighted average common shares outstanding		82,740,012		82,123,823		82,575,636		81,729,014
Basic Earnings Per Common Share	$	0.19	$	0.78	$	0.33	$	1.50

Diluted Earnings Per Common Share:
Net income attributable to Redwood	$	16,017	$	65,573	$	28,350	$	126,183
Less: Dividends and undistributed earnings allocated to participating securities		(537)		(1,175)		(1,239)		(2,527)
Add back: Interest expense on convertible notes		-		3,856		-		4,933

Net income allocated to common shareholders	$	15,480	$	68,254	$	27,111	$	128,589


Weighted average common shares outstanding		82,740,012		82,123,823		82,575,636		81,729,014
Net effect of dilutive equity awards		2,292,986		2,222,440		2,418,685		2,274,311
Net effect of assumed convertible notes conversion to common shares		-		11,825,450		-		7,644,075

Diluted weighted average common shares outstanding		85,032,998		96,171,713		84,994,321		91,647,400


Diluted Earnings Per Common Share	$	0.18	$	0.71	$	0.32	$	1.40

For the three and six months ended June 30, 2014, there were 2,292,986 and 2,418,685 of dilutive equity awards, respectively, determined under the two-class method. For the three and six months ended June 30, 2013, there were 2,222,440 and 2,274,311 of dilutive equity awards, respectively, determined under the two-class method. We included participating securities in the calculation of diluted earnings per common share as we determined that the two-class method was more dilutive than the alternative treasury stock method. Dividends and undistributed earnings allocated to participating securities under the basic and diluted earnings per share calculations require specific shares to be included that may differ in certain circumstances. For the three and six months ended June 30, 2013, common shares related to the assumed conversion of the convertible notes, totaling 11,825,450 and 7,644,075, respectively, were included in the calculation of diluted earnings per share.

For the three and six months ended June 30, 2014, 11,825,450 common shares related to the assumed conversion of the convertible notes were antidilutive and were excluded in the calculation of diluted earnings per share. For the three months ended June 30, 2014 and 2013, the number of outstanding equity awards that were antidilutive totaled 61,580 and 255,529 respectively, under the two-class method. For the six months ended June 30, 2014 and 2013, the number of outstanding equity awards that were antidilutive totaled 70,508 and 271,392 respectively, under the two-class method. There were no other participating securities during these periods.

Stock Repurchases

We announced a stock repurchase authorization in November 2007 for the repurchase of up to 5,000,000 common shares. This plan replaced all previous share repurchase plans and has no expiration date. During the six months ended June 30, 2014, there were no shares acquired under the plan. At June 30, 2014, there remained 4,005,985 shares available for repurchase under this plan.