Equity

The following table provides a summary of changes to accumulated other comprehensive income by component for the three months ended March 31, 2017 and 2016.

Table 15.1 – Changes in Accumulated Other Comprehensive Income by Component




	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016
(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	$	115,873		$	(44,020	)	$	139,356		$	(47,363	)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	2,930			1,733			(10,103		)	(14,243		)
Amounts reclassified from other accumulated comprehensive income	(3,928		)	14			(10,953		)	18
Net current-period other comprehensive income (loss)	(998		)	1,747			(21,056		)	(14,225		)
Balance at End of Period	$	114,875		$	(42,273	)	$	118,300		$	(61,588	)


(1)	Amounts presented for net unrealized gains on available-for-sale securities are net of tax (provision) benefit of $(0.1) million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively.

The following table provides a summary of reclassifications out of accumulated other comprehensive income for three months ended March 31, 2017 and 2016.

Table 15.2 – Reclassifications Out of Accumulated Other Comprehensive Income




		Amount Reclassified From Accumulated Other Comprehensive Income
	Affected Line Item in the	Three Months Ended March 31,
(In Thousands)	Income Statement	2017			2016
Net Realized (Gain) Loss on AFS Securities
Other than temporary impairment ⁽¹⁾	Investment fair value changes, net	$	117		$	—
Gain on sale of AFS securities	Realized gains, net	(4,045		)	(10,953		)
		$	(3,928	)	$	(10,953	)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	14		$	18
		$	14		$	18


(1)	For the three months ended March 31, 2017, other-than-temporary impairments were $0.2 million, of which $0.1 million were recognized through the consolidated statements of income and $0.1 million were recognized in Accumulated other comprehensive income, a component of our consolidated balance sheet. For the three months ended March 31, 2016, there were no other-than-temporary impairments.

Earnings per Common Share

The following table provides the basic and diluted earnings per common share computations for the three months ended March 31, 2017 and 2016.

Table 15.3 – Basic and Diluted Earnings per Common Share



	Three Months Ended March 31,
(In Thousands, except Share Data)	2017			2016
Basic Earnings per Common Share:
Net income attributable to Redwood	$	36,969		$	12,063
Less: Dividends and undistributed earnings allocated to participating securities	(968		)	(701		)
Net income allocated to common shareholders	$	36,001		$	11,362
Basic weighted average common shares outstanding	76,738,202			77,137,682
Basic Earnings per Common Share	$	0.47		$	0.15
Diluted Earnings per Common Share:
Net income attributable to Redwood	$	36,969		$	12,063
Less: Dividends and undistributed earnings allocated to participating securities	(1,005		)	(701		)
Add back: Interest expense on convertible notes for the period, net of tax	5,870			—
Net income allocated to common shareholders	$	41,834		$	11,362
Weighted average common shares outstanding	76,738,202			77,137,682
Net effect of dilutive equity awards	111,197			—
Net effect of assumed convertible notes conversion to common shares	21,096,738			—
Diluted weighted average common shares outstanding	97,946,137			77,137,682
Diluted Earnings per Common Share	$	0.43		$	0.15

We included participating securities, which are certain equity awards that have non-forfeitable dividend participation rights, in the calculations of basic and 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 months ended March 31, 2017, our 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 months ended March 31, 2016, 21,245,028 common shares related to the assumed conversion of our convertible notes were antidilutive and excluded in the calculation of diluted earnings per share. For the three months ended March 31, 2017 and 2016, the number of outstanding equity awards that were antidilutive totaled 5,826 and 6,950, respectively.

Stock Repurchases

In February 2016, our Board of Directors approved an 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 authorization replaced all previous share repurchase plans and has no expiration date. This repurchase authorization does not obligate us to acquire any specific number of shares or securities. Under this 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.

During the three months ended March 31, 2017, there were no shares acquired under this authorization. At March 31, 2017, approximately $86 million of this current authorization remained available for the repurchase of shares of our common stock.