Equity

12 Months Ended

Dec. 31, 2019

The following table provides a summary of changes to accumulated other comprehensive income by component for the years ended December 31, 2019 and 2018.

Table 17.1 – Changes in Accumulated Other Comprehensive Income by Component



	Years Ended December 31,
	2019						2018
(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	$	95,342		$	(34,045	)	$	128,201		$	(42,953	)
Other comprehensive income (loss) before reclassifications	17,077			(16,894		)	(7,298		)	8,908
Amounts reclassified from other accumulated comprehensive income ⁽¹⁾	(19,967		)	—			(25,561		)	—
Net current-period other comprehensive income (loss)	(2,890		)	(16,894		)	(32,859		)	8,908
Balance at End of Period	$	92,452		$	(50,939	)	$	95,342		$	(34,045	)


(1)	Amount is presented net of tax provision of $2 million for the year ended December 31, 2018.

The following table provides a summary of reclassifications out of accumulated other comprehensive income for the years ended December 31, 2019 and 2018.

Table 17.2 – 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	2019			2018
Net Realized (Gain) Loss on AFS Securities
Other than temporary impairment ⁽¹⁾	Investment fair value changes, net	$	—		$	89
Gain on sale of AFS securities	Realized gains, net	(19,967		)	(27,178		)
Gain on sale of AFS securities	Provision for income taxes	—			1,528
		$	(19,967	)	$	(25,561	)


(1)	For the year ended December 31, 2019, there were no other-than-temporary impairments. For the year ended December 31, 2018, other-than-temporary impairments were $1 million, of which $0.1 million were recognized through our consolidated statements of income, and $1 million were recognized in Accumulated other comprehensive income, a component of our consolidated balance sheet.

Issuance of Common Stock

In 2018, we established a program to sell up to an aggregate of $150 million of common stock from time to time in at-the-market ("ATM") offerings. During the year ended December 31, 2019, we issued 2,259,758 common shares for net proceeds of approximately $36 million through ATM offerings. During the year ended December 31, 2018, we issued 1,550,819 common shares for net proceeds of approximately $25 million through ATM offerings. At December 31, 2019, approximately $88 million remained outstanding for future offerings under this program.

On January 29, 2019, we sold 11,500,000 shares of common stock in an underwritten public offering, resulting in net proceeds of approximately $177 million. On September 3, 2019, we sold 14,375,000 shares of common stock in an underwritten public offering, resulting in net proceeds of approximately $228 million. During the year ended December 31, 2018, we sold 7,187,500 shares of common stock in an underwritten public offering, resulting in net proceeds of approximately $117 million.

On October 15, 2019, we issued 588,260 shares of restricted common stock to members of CoreVest management at a grant date fair market value of $16.48 per share, as a component of total consideration paid for the acquisition of CoreVest. The grant date fair value of these restricted stock awards was $10 million, which will be recognized as compensation expense over the two-year vesting period in accordance with GAAP.

Direct Stock Purchase and Dividend Reinvestment Plan

During the year ended December 31, 2019, we issued 399,838 shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan, resulting in net proceeds of approximately $6 million.

Earnings per Common Share

The following table provides the basic and diluted earnings per common share computations for the years ended December 31, 2019, 2018, and 2017.

Table 17.3 – Basic and Diluted Earnings per Common Share



	Years Ended December 31,
(In Thousands, except Share Data)	2019			2018			2017
Basic Earnings per Common Share:
Net income attributable to Redwood	$	169,183		$	119,600		$	140,406
Less: Dividends and undistributed earnings allocated to participating securities	(4,797		)	(3,754		)	(3,632		)
Net income allocated to common shareholders	$	164,386		$	115,846		$	136,774
Basic weighted average common shares outstanding	101,120,744			78,724,912			76,792,957
Basic Earnings per Common Share	$	1.63		$	1.47		$	1.78
Diluted Earnings per Common Share:
Net income attributable to Redwood	$	169,183		$	119,600		$	140,406
Less: Dividends and undistributed earnings allocated to participating securities	(5,273		)	(4,283		)	(3,836		)
Add back: Interest expense on convertible notes for the period, net of tax	36,212			32,653			26,898
Net income allocated to common shareholders	$	200,122		$	147,970		$	163,468
Weighted average common shares outstanding	101,147,225			78,724,912			76,792,957
Net effect of dilutive equity awards	251,100			189,120			185,383
Net effect of assumed convertible notes conversion to common shares	35,382,269			31,113,738			24,996,668
Diluted weighted average common shares outstanding	136,780,594			110,027,770			101,975,008
Diluted Earnings per Common Share	$	1.46		$	1.34		$	1.60

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, 2019, 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, 2019, 2018, and 2017, 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 years ended December 31, 2019, 2018, and 2017, the number of outstanding equity awards that were antidilutive totaled 10,051, 7,230, and 5,843, respectively.

Stock Repurchases

In February 2018, our Board of Directors approved an authorization for the repurchase 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. 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 December 31, 2019, $100 million of the current authorization remained available for the repurchase of shares of our common stock.