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Equity | 9 Months Ended
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Sep. 30, 2022
Equity [Abstract] |
Equity | Equity The following table provides a summary of changes to accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2022 and 2021. Table 18.1 – Changes in Accumulated Other Comprehensive Income (Loss) by Component
|  | Three Months Ended September 30, 2022 |  | Three Months Ended September 30, 2021
(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 |  | $ | 16,595 |  |  | $ | (74,383) |  |  | $ | 88,251 |  |  | $ | (78,511) |
Other comprehensive (loss) income before reclassifications |  | (8,731) |  |  | — |  |  | (2,658) |  |  | — |
Amounts reclassified from other accumulated comprehensive (income) loss |  | 544 |  |  | 1,040 |  |  | (6,200) |  |  | 1,041 |
Net current-period other comprehensive (loss) income |  | (8,187) |  |  | 1,040 |  |  | (8,858) |  |  | 1,041 |
Balance at End of Period |  | $ | 8,408 |  |  | $ | (73,343) |  |  | $ | 79,393 |  |  | $ | (77,470) |
|  | Nine Months Ended September 30, 2022 |  | Nine Months Ended September 30, 2021
(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 |  | $ | 67,503 |  |  | $ | (76,430) |  |  | $ | 76,336 |  |  | $ | (80,557) |
Other comprehensive (loss) income before reclassifications |  | (60,013) |  |  | — |  |  | 19,552 |  |  | — |
Amounts reclassified from other accumulated comprehensive (income) loss |  | 918 |  |  | 3,087 |  |  | (16,495) |  |  | 3,087 |
Net current-period other comprehensive (loss) income |  | (59,095) |  |  | 3,087 |  |  | 3,057 |  |  | 3,087 |
Balance at End of Period |  | $ | 8,408 |  |  | $ | (73,343) |  |  | $ | 79,393 |  |  | $ | (77,470) |
The following table provides a summary of reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021. Table 18.2 – Reclassifications Out of Accumulated Other Comprehensive Income (Loss)
|  |  |  | Amount Reclassified From Accumulated Other Comprehensive (Loss)
|  | Affected Line Item in the |  | Three Months Ended September 30,
(In Thousands) |  | Income Statement |  | 2022 |  | 2021
Net Realized (Gain) Loss on AFS Securities |  |  |  |  |  |
Increase (decrease) in allowance for credit losses on AFS securities |  | Investment fair value changes, net |  | $ | 544 |  |  | $ | — |
Gain on sale of AFS securities |  | Realized gains, net |  | — |  |  | (6,200) |
|  |  |  | $ | 544 |  |  | $ | (6,200) |
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges |  |  |  |  |  |
Amortization of deferred loss |  | Interest expense |  | $ | 1,040 |  |  | $ | 1,041 |
|  |  |  | $ | 1,040 |  |  | $ | 1,041 |
|  |  |  | Amount Reclassified From Accumulated Other Comprehensive (Loss)
|  | Affected Line Item in the |  | Nine Months Ended September 30,
(In Thousands) |  | Income Statement |  | 2022 |  | 2021
Net Realized (Gain) Loss on AFS Securities |  |  |  |  |  |
Increase (decrease) in allowance for credit losses on AFS securities |  | Investment fair value changes, net |  | $ | 2,315 |  |  | $ | (388) |
Gain on sale of AFS securities |  | Realized gains, net |  | (1,397) |  |  | (16,107) |
|  |  |  | $ | 918 |  |  | $ | (16,495) |
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges |  |  |  |  |  |
Amortization of deferred loss |  | Interest expense |  | $ | 3,087 |  |  | $ | 3,087 |
|  |  |  | $ | 3,087 |  |  | $ | 3,087 |
Issuance of Common Stock We have an established program to sell common stock from time to time in at-the-market ("ATM") offerings. During the nine months ended September 30, 2022, we issued 5.2 million common shares for net proceeds of $67 million under this program. During the three months ended March 31, 2022, we increased the capacity of this program to $175 million, all of which remained outstanding for future offerings under this program as of September 30, 2022. Direct Stock Purchase and Dividend Reinvestment Plan During the nine months ended September 30, 2022, we did not issue any shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan. At September 30, 2022, approximately 6 million shares remained outstanding for future offerings under this plan. Earnings per Common Share The following table provides the basic and diluted (loss) earnings per common share computations for the three and nine months ended September 30, 2022 and 2021. Table 18.3 – Basic and Diluted Earnings per Common Share
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In Thousands, except Share Data) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Basic Earnings per Common Share: |  |  |  |  |  |  |  |
Net (loss) income attributable to Redwood |  | $ | (50,411) |  |  | $ | 88,286 |  |  | $ | (119,462) |  |  | $ | 275,568 |
Less: Dividends and undistributed earnings allocated to participating securities |  | (1,158) |  |  | (2,984) |  |  | (3,445) |  |  | (8,979) |
Net (loss) income allocated to common shareholders |  | $ | (51,569) |  |  | $ | 85,302 |  |  | $ | (122,907) |  |  | $ | 266,589 |
Basic weighted average common shares outstanding |  | 116,087,890 |  |  | 112,995,847 |  |  | 118,530,172 |  |  | 112,754,691 |
Basic (Loss) Earnings per Common Share |  | $ | (0.44) |  |  | $ | 0.75 |  |  | $ | (1.04) |  |  | $ | 2.36 |
Diluted Earnings per Common Share: |  |  |  |  |  |  |  |
Net (loss) income attributable to Redwood |  | $ | (50,411) |  |  | $ | 88,286 |  |  | $ | (119,462) |  |  | $ | 275,568 |
Less: Dividends and undistributed earnings allocated to participating securities |  | (1,158) |  |  | (2,747) |  |  | (3,445) |  |  | (8,151) |
Add back: Interest expense on convertible notes for the period, net of tax |  | — |  |  | 6,870 |  |  | — |  |  | 20,585 |
Net (loss) income allocated to common shareholders |  | $ | (51,569) |  |  | $ | 92,409 |  |  | $ | (122,907) |  |  | $ | 288,002 |
Weighted average common shares outstanding |  | 116,087,890 |  |  | 112,995,847 |  |  | 118,530,172 |  |  | 112,754,691 |
Net effect of dilutive equity awards |  | — |  |  | 292,749 |  |  | — |  |  | 253,819 |
Net effect of assumed convertible notes conversion to common shares |  | — |  |  | 28,566,875 |  |  | — |  |  | 28,566,875 |
Diluted weighted average common shares outstanding |  | 116,087,890 |  |  | 141,855,471 |  |  | 118,530,172 |  |  | 141,575,385 |
Diluted (Loss) Earnings per Common Share |  | $ | (0.44) |  |  | $ | 0.65 |  |  | $ | (1.04) |  |  | $ | 2.03 |
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 and nine months ended September 30, 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 and nine months ended September 30, 2022, 49,137,808 and 37,307,705 of common shares, respectively, 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 and nine months ended September 30, 2022, the number of outstanding equity awards that were antidilutive totaled 249,178 and 268,737, respectively. For the three and nine months ended September 30, 2021, the number of outstanding equity awards that were antidilutive totaled 22,102 and 18,736, respectively. Stock RepurchasesIn July 2022, our Board of Directors approved an authorization for the repurchase of up to $125 million of our common stock, and also authorized the repurchase of outstanding debt securities, including convertible and exchangeable debt. This authorization replaced our previous $100 million stock repurchase authorization. This authorization has no expiration date and does not obligate us to acquire any specific number of shares or securities. During the three months ended September 30, 2022, we repurchased 3.4 million shares of our common stock for a total cost of $24 million. At September 30, 2022, $101 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. During the nine months ended September 30, 2022, we repurchased 7.1 million shares of our common stock for a total cost of $56 million under our current and previously-approved Board of Director authorizations.

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