Equity

3 Months Ended

Mar. 31, 2021

The following table provides a summary of changes to accumulated other comprehensive income by component for the three months ended March 31, 2021 and 2020.

Table 17.1 – Changes in Accumulated Other Comprehensive Income (Loss) by Component


	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
(In Thousands)	Available-for-Sale Securities		Interest Rate Agreements Accounted for as Cash Flow Hedges		Available-for-Sale Securities		Interest Rate Agreements Accounted for as Cash Flow Hedges
Balance at beginning of period	$	76,336	$	(80,557)	$	92,452	$	(50,939)
Other comprehensive income (loss) before reclassifications	10,986		—		(80,519)		(32,806)
Amounts reclassified from other accumulated comprehensive income (loss)	(2,795)		1,018		(13,798)		79
Net current-period other comprehensive income (loss)	8,191		1,018		(94,317)		(32,727)
Balance at End of Period	$	84,527	$	(79,539)	$	(1,865)	$	(83,666)

The following table provides a summary of reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2021 and 2020.

Table 17.2 – Reclassifications Out of Accumulated Other Comprehensive Income (Loss)



		Amount Reclassified From Accumulated Other Comprehensive Income
	Affected Line Item in the	Three Months Ended March 31,
(In Thousands)	Income Statement	2021		2020
Net Realized (Gain) Loss on AFS Securities
Credit loss expense on AFS securities	Investment fair value changes, net	$	(374)	$	1,525
Gain on sale of AFS securities	Realized gains, net	(2,421)		(15,323)

		$	(2,795)	$	(13,798)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	1,018	$	79
		$	1,018	$	79

Issuance of Common Stock

We have an established program to sell up to an aggregate of $175 million of common stock from time to time in at-the-market ("ATM") offerings, with $110 million of remaining capacity available at March 31, 2021. During the three months ended March 31, 2021, we did not issue any shares under this program.

Direct Stock Purchase and Dividend Reinvestment Plan

During both the three months ended March 31, 2021 and 2020, we did not issue any shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan.

Earnings (Loss) per Common Share

The following table provides the basic and diluted earnings (loss) per common share computations for the three months ended March 31, 2021 and 2020.

Table 17.3 – Basic and Diluted Earnings (Loss) per Common Share


	Three Months Ended March 31,
(In Thousands, except Share Data)	2021		2020
Basic Earnings (Loss) per Common Share:
Net income (loss) attributable to Redwood	$	97,257	$	(943,398)
Less: Dividends and undistributed earnings allocated to participating securities	(3,294)		(1,209)
Net income (loss) allocated to common shareholders	$	93,963	$	(944,607)
Basic weighted average common shares outstanding	112,276,842		114,076,568
Basic Earnings (Loss) per Common Share	$	0.84	$	(8.28)
Diluted Earnings (Loss) per Common Share:
Net income (loss) attributable to Redwood	$	97,257	$	(943,398)
Less: Dividends and undistributed earnings allocated to participating securities	(2,951)		(1,209)
Add back: Interest expense on convertible notes for the period, net of tax	7,007		—
Net income (loss) allocated to common shareholders	$	101,313	$	(944,607)
Weighted average common shares outstanding	112,276,842		114,076,568
Net effect of dilutive equity awards	195,568		—
Net effect of assumed convertible notes conversion to common shares	28,566,875		—
Diluted weighted average common shares outstanding	141,039,285		114,076,568
Diluted Earnings (Loss) per Common Share	$	0.72	$	(8.28)

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, 2021, 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 three months ended March 31, 2020, 35.4 million of common shares related to the assumed conversion of our convertible notes were antidilutive and were excluded in the calculation of diluted earnings per share. For the three months ended March 31, 2021 and 2020, the number of outstanding equity awards that were antidilutive totaled 15,460 and 21,249, 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. During the three months ended March 31, 2021, we did not repurchase any shares. At March 31, 2021, $78 million of the current authorization remained available for the repurchase of shares of our common stock and we also continued to be authorized to repurchase outstanding debt securities.