Equity

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

Table 15.1 – Changes in Accumulated Other Comprehensive Income by Component



	Years Ended December 31,
	2017						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⁾	22,864			1,022			(2,316		)	3,271
Amounts reclassified from other accumulated comprehensive income	(10,536		)	45			(21,167		)	72
Net current-period other comprehensive income (loss)	12,328			1,067			(23,483		)	3,343
Balance at End of Period	$	128,201		$	(42,953	)	$	115,873		$	(44,020	)


(1)	Amounts presented for net unrealized gains (losses) on available-for-sale securities are net of tax benefit (provision) of zero and $1 million for the years ended December 31, 2017 and 2016, respectively.

The following table provides a summary of reclassifications out of accumulated other comprehensive income for the years ended December 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	Years Ended December 31,
(In Thousands)	Income Statement	2017			2016
Net Realized (Gain) Loss on AFS Securities
Other than temporary impairment ⁽¹⁾	Investment fair value changes, net	$	1,012		$	368
Gain on sale of AFS securities	Realized gains, net	(11,548		)	(21,535		)
		$	(10,536	)	$	(21,167	)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	45		$	72
		$	45		$	72

(1)

For the year ended December 31, 2017, other-than-temporary impairments were $1 million, of which $1 million were recognized through our consolidated statements of income and $0.4 million were recognized in Accumulated other comprehensive income, a component of our consolidated balance sheet. For the year ended December 31, 2016, other-than-temporary impairments were $3 million, of which $0.4 million were recognized through our consolidated statements of income, and $3 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 years ended December 31, 2017, 2016, and 2015.

Table 15.3 – Basic and Diluted Earnings per Common Share



	Years Ended December 31,
(In Thousands, except Share Data)	2017			2016			2015
Basic Earnings per Common Share:
Net income attributable to Redwood	$	140,406		$	131,252		$	102,088
Less: Dividends and undistributed earnings allocated to participating securities	(3,632		)	(3,742		)	(2,806		)
Net income allocated to common shareholders	$	136,774		$	127,510		$	99,282
Basic weighted average common shares outstanding	76,792,957			76,747,047			82,945,103
Basic Earnings per Common Share	$	1.78		$	1.66		$	1.20
Diluted Earnings per Common Share:
Net income attributable to Redwood	$	140,406		$	131,252		$	102,088
Less: Dividends and undistributed earnings allocated to participating securities	(3,836		)	(4,035		)	(2,677		)
Add back: Interest expense on convertible notes for the period, net of tax	26,898			23,862			—
Net income allocated to common shareholders	$	163,468		$	151,079		$	99,411
Weighted average common shares outstanding	76,792,957			76,747,047			82,945,103
Net effect of dilutive equity awards	185,383			28,435			1,573,292
Net effect of assumed convertible notes conversion to common shares	24,996,668			21,133,608			—
Diluted weighted average common shares outstanding	101,975,008			97,909,090			84,518,395
Diluted Earnings per Common Share	$	1.60		$	1.54		$	1.18

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 year ended December 31, 2017, certain of 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 weighted average 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 years ended December 31, 2017 and 2016, no common shares related to the assumed conversion of our convertible notes were antidilutive and excluded from the calculation of diluted earnings per share. For the year ended December 31, 2015, 21,292,309 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 years ended December 31, 2017, 2016, and 2015, the number of outstanding equity awards that were antidilutive totaled 5,843, zero, and 103,253, 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. During the year ended December 31, 2017, we repurchased 610,342 shares of common stock pursuant to this authorization for $9 million. At December 31, 2017, approximately $77 million of this current authorization remained available for the repurchase of shares of our common stock. During the period between December 31, 2017 and February 26, 2018, we repurchased 1,040,829 shares of our common stock pursuant to this authorization for $16 million.

In February 2018, our Board of Directors approved an authorization for the repurchase of an additional $39 million of our common stock, increasing the total amount authorized for repurchases of common stock to $100 million, and also authorized the repurchase of outstanding debt securities, including convertible and exchangeable debt. As noted above, this authorization increased the previous share repurchase authorization approved in February 2016 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. At February 26, 2018, approximately $100 million of this current authorization remained available for repurchases of shares of our common stock. Like other investments we may make, any repurchases of our common stock or debt securities under this authorization would reduce our available capital described above.