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, 2016 and 2015.

Table 16.1 – Changes in Accumulated Other Comprehensive Income by Component




	Three Months Ended June 30, 2016						Three Months Ended June 30, 2015
(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	$	118,300		$	(61,588	)	$	190,100		$	(54,460	)
Other comprehensive income (loss) before reclassifications	6,260			(8,949		)	(5,080		)	15,469
Amounts reclassified from other accumulated comprehensive income	(7,711		)	19			(5,361		)	26
Net current-period other comprehensive income (loss)	(1,451		)	(8,930		)	(10,441		)	15,495
Balance at End of Period	$	116,849		$	(70,518	)	$	179,659		$	(38,965	)



	Six Months Ended June 30, 2016						Six Months Ended June 30, 2015
(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	$	139,356		$	(47,363	)	$	186,737		$	(46,049	)
Other comprehensive income (loss) before reclassifications	(3,843		)	(23,192		)	(28		)	7,026
Amounts reclassified from other accumulated comprehensive income	(18,664		)	37			(7,050		)	58
Net current-period other comprehensive income (loss)	(22,507		)	(23,155		)	(7,078		)	7,084
Balance at End of Period	$	116,849		$	(70,518	)	$	179,659		$	(38,965	)

The following table provides a summary of reclassifications out of accumulated other comprehensive income for three and six months ended June 30, 2016 and 2015.

Table 16.2 – Reclassifications Out of Accumulated Other Comprehensive Income




		Amount Reclassified From Accumulated Other Comprehensive Income
	Affected Line Item in the	Three Months Ended June 30,
(In Thousands)	Income Statement	2016			2015
Net Realized (Gain) Loss on AFS Securities
Other than temporary impairment ⁽¹⁾	Investment fair value changes, net	$	305		$	—
Gain on sale of AFS securities	Realized gains, net	(8,016		)	(5,361		)
		$	(7,711	)	$	(5,361	)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	19		$	26
		$	19		$	26



		Amount Reclassified From Accumulated Other Comprehensive Income
	Affected Line Item in the	Six Months Ended June 30,
(In Thousands)	Income Statement	2016			2015
Net Realized (Gain) Loss on AFS Securities
Other than temporary impairment ⁽¹⁾	Investment fair value changes, net	$	305		$	—
Gain on sale of AFS securities	Realized gains, net	(18,969		)	(7,050		)
		$	(18,664	)	$	(7,050	)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	37		$	58
		$	37		$	58


(1)	For both the three and six months ended June 30, 2016, other-than-temporary impairments were $3 million, of which $0.3 million were recognized through our consolidated statements of income and $2 million were recognized in Accumulated other comprehensive income, a component of our consolidated balance sheet.

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, 2016 and 2015.

Table 16.3 – Basic and Diluted Earnings per Common Share



	Three Months Ended June 30,						Six Months Ended June 30,
(In Thousands, except Share Data)	2016			2015			2016			2015
Basic Earnings per Common Share:
Net income attributable to Redwood	$	41,281		$	27,064		$	53,344		$	41,865
Less: Dividends and undistributed earnings allocated to participating securities	(1,089		)	(642		)	(1,494		)	(1,375		)
Net income allocated to common shareholders	$	40,192		$	26,422		$	51,850		$	40,490
Basic weighted average common shares outstanding	76,664,829			83,936,844			76,901,255			83,650,170
Basic Earnings per Common Share	$	0.52		$	0.31		$	0.67		$	0.48
Diluted Earnings per Common Share:
Net income attributable to Redwood	$	41,281		$	27,064		$	53,344		$	41,865
Less: Dividends and undistributed earnings allocated to participating securities	(1,134		)	(619		)	(1,668		)	(1,375		)
Add back: Interest expense on convertible notes for the period, net of tax	7,015			2,789			7,637			—
Net income allocated to common shareholders	$	47,162		$	29,234		$	59,313		$	40,490
Weighted average common shares outstanding	76,664,829			83,936,844			76,901,255			83,650,170
Net effect of dilutive equity awards	369			1,546,038			1,675			1,823,735
Net effect of assumed convertible notes conversion to common shares	21,096,738			9,466,859			11,825,450			—
Diluted weighted average common shares outstanding	97,761,936			94,949,741			88,728,380			85,473,905
Diluted Earnings per Common Share	$	0.48		$	0.31		$	0.67		$	0.47

For the three and six months ended June 30, 2016 and 2015, we determined certain equity awards outstanding during each of these periods qualified as participating securities. We included participating securities in the calculation of basic earnings per common share as well as diluted earnings per common share as we determined that the two-class method was more dilutive than the alternative treasury stock method for these shares. 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.

During the three and six months ended June 30, 2016 and 2015, certain convertible notes were determined to be dilutive and were included in the calculation of diluted EPS under the "if-converted" method. Under this method, the periodic interest expense (net of applicable taxes) for dilutive notes is added back to the numerator and the number of shares that the notes are entitled to (if converted, regardless of whether they are in or out of the money) are included in the denominator.

For the three and six months ended June 30, 2016, zero and 9,345,433, respectively, of 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 and six months ended June 30, 2015, 11,825,450 and 21,292,309, respectively, of 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 both the three and six months ended June 30, 2016, the number of outstanding equity awards that were antidilutive totaled 129,070. For the three and six months ended June 30, 2015, the number of outstanding equity awards that were antidilutive totaled 286,075 and 299,491, respectively.

Stock Repurchases

In August 2015, our Board of Directors authorized the repurchase of up to $100 million of our common stock. During the six months ended June 30, 2016, we repurchased 839,130 common shares for $11 million, utilizing the remaining availability under this authorization.

In February 2016, our Board of Directors approved an additional authorization for the repurchase of up to $100 million of our common stock and also authorized the repurchase of outstanding debt securities, including convertible and exchangeable debt. This current authorization replaced all previous share repurchase plans and has no expiration date. This current repurchase authorization does not obligate us to acquire any specific number of shares or securities. Under this current authorization, shares or securities may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Under this authorization, during the three and six months ended June 30, 2016, we repurchased 49,683 shares and 819,738 shares, respectively, pursuant to this authorization for $1 million and $10 million, respectively. During the three and six months ended June 30, 2015, there were no shares acquired under then-existing share repurchase authorization. At June 30, 2016, approximately $90 million of this current authorization remained available for the repurchase of shares of our common stock.