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Equity | 6 Months Ended
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Jun. 30, 2023
Equity [Abstract] |
Equity | Equity The following table provides a summary of changes to Accumulated other comprehensive income (loss) by component for the three and six months ended June 30, 2023 and 2022. Table 18.1 – Changes in Accumulated Other Comprehensive Income (Loss) by Component
|  | Three Months Ended June 30, 2023 |  | Three Months Ended June 30, 2022
(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 |  | $ | 8,249 |  |  | $ | (71,285) |  |  | $ | 48,938 |  |  | $ | (75,412) |
Other comprehensive loss before reclassifications |  | (688) |  |  | — |  |  | (33,409) |  |  | — |
Amounts reclassified from other accumulated comprehensive income (loss) |  | 604 |  |  | 1,029 |  |  | 1,066 |  |  | 1,029 |
Net current-period other comprehensive income (loss) |  | (84) |  |  | 1,029 |  |  | (32,343) |  |  | 1,029 |
Balance at End of Period |  | $ | 8,165 |  |  | $ | (70,256) |  |  | $ | 16,595 |  |  | $ | (74,383) |
|  | Six Months Ended June 30, 2023 |  | Six Months Ended June 30, 2022
(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 |  | $ | 3,435 |  |  | $ | (72,303) |  |  | $ | 67,503 |  |  | $ | (76,430) |
Other comprehensive income (loss) before reclassifications |  | 4,319 |  |  | — |  |  | (51,282) |  |  | — |
Amounts reclassified from other accumulated comprehensive income (loss) |  | 411 |  |  | 2,047 |  |  | 374 |  |  | 2,047 |
Net current-period other comprehensive income (loss) |  | 4,730 |  |  | 2,047 |  |  | (50,908) |  |  | 2,047 |
Balance at End of Period |  | $ | 8,165 |  |  | $ | (70,256) |  |  | $ | 16,595 |  |  | $ | (74,383) |
The following table provides a summary of reclassifications out of Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022. 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 June 30,
(In Thousands) |  | Income Statement |  | 2023 |  | 2022
Net Realized Loss on AFS Securities |  |  |  |  |  |
Increase in allowance for credit losses on AFS securities |  | Investment fair value changes, net |  | $ | 71 |  |  | $ | 1,066 |
Loss on sale of AFS securities |  | Realized gains, net |  | 533 |  |  | — |
|  |  |  | $ | 604 |  |  | $ | 1,066 |
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges |  |  |  |  |  |
Amortization of deferred loss |  | Interest expense |  | $ | 1,029 |  |  | $ | 1,029 |
|  |  |  | $ | 1,029 |  |  | $ | 1,029 |
|  |  |  | Amount Reclassified From Accumulated Other Comprehensive (Loss)
|  | Affected Line Item in the |  | Six Months Ended June 30,
(In Thousands) |  | Income Statement |  | 2023 |  | 2022
Net Realized (Gain) Loss on AFS Securities |  |  |  |  |  |
Increase in allowance for credit losses on AFS securities |  | Investment fair value changes, net |  | $ | 99 |  |  | $ | 1,771 |
Loss (gain) on sale of AFS securities |  | Realized gains, net |  | 312 |  |  | (1,397) |
|  |  |  | $ | 411 |  |  | $ | 374 |
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges |  |  |  |  |  |
Amortization of deferred loss |  | Interest expense |  | $ | 2,047 |  |  | $ | 2,047 |
|  |  |  | $ | 2,047 |  |  | $ | 2,047 |
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 six months ended June 30, 2023, we did not issue any common shares under this program. At June 30, 2023, the share issuance capacity under this program was $175 million. Issuance of Preferred Stock In January 2023, Redwood issued 2,800,000 shares of 10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock ("Series A Preferred Stock") for gross proceeds of $70 million and net proceeds of approximately $67 million after deducting the underwriting discount and other estimated expenses. The Series A Preferred Stock will pay quarterly cumulative cash dividends beginning April 15, 2023 to January 15, 2028 at a fixed annual rate of 10%, based on the stated liquidation preference of $25.00 per share, in arrears, when authorized by Redwood's Board of Directors and declared by the Company. Starting April 15, 2028, the annual dividend rate will reset to the five-year U.S. Treasury Rate plus a spread of 6.278%. The Series A Preferred Stock ranks senior to Redwood's common stock with respect to rights to the payment of dividends and the distribution of assets upon any liquidation, dissolution or winding up of the Company. During the three and six months ended June 30, 2023, the Company declared preferred stock dividends of $0.625 and $1.22917 per share, respectively. At June 30, 2023, preferred dividends payable totaling $1 million for the second quarter 2023 dividend were included in Accrued expenses and other liabilities and were payable on July 17, 2023 to stockholders of record on June 30, 2023. Direct Stock Purchase and Dividend Reinvestment Plan During the six months ended June 30, 2023, we did not issue any shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan. At June 30, 2023, approximately 6 million shares remained outstanding for future offerings under this plan. Earnings per Common Share The following table provides the basic and diluted earnings per common share computations for the three and six months ended June 30, 2023 and 2022. Table 18.3 – Basic and Diluted Earnings per Common Share
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(In Thousands, except Share Data) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Basic Earnings per Common Share: |  |  |  |  |  |  |  |
Net income available to common stockholders |  | $ | 1,115 |  |  | $ | (99,966) |  |  | $ | 4,316 |  |  | $ | (69,051) |
Less: Dividends and undistributed earnings allocated to participating securities |  | (876) |  |  | (1,159) |  |  | (2,280) |  |  | (2,286) |
Net income allocated to common stockholders |  | $ | 239 |  |  | $ | (101,125) |  |  | $ | 2,036 |  |  | $ | (71,337) |
Basic weighted average common shares outstanding |  | 114,051,017 |  |  | 119,660,173 |  |  | 113,830,347 |  |  | 119,771,554 |
Basic Earnings per Common Share |  | $ | — |  |  | $ | (0.85) |  |  | $ | 0.02 |  |  | $ | (0.60) |
Diluted Earnings per Common Share: |  |  |  |  |  |  |  |
Net income available to common stockholders |  | $ | 1,115 |  |  | $ | (99,966) |  |  | $ | 4,316 |  |  | $ | (69,051) |
Less: Dividends and undistributed earnings allocated to participating securities |  | (876) |  |  | (1,159) |  |  | (2,280) |  |  | (2,286) |
Add back: Interest expense on convertible notes for the period, net of tax |  | — |  |  | — |  |  | — |  |  | — |
Net income allocated to common stockholders |  | $ | 239 |  |  | $ | (101,125) |  |  | $ | 2,036 |  |  | $ | (71,337) |
Weighted average common shares outstanding |  | 114,051,017 |  |  | 119,660,173 |  |  | 113,830,347 |  |  | 119,771,554 |
Net effect of dilutive equity awards |  | 394,245 |  |  | — |  |  | 424,945 |  |  | — |
Net effect of assumed convertible notes conversion to common shares |  | — |  |  | — |  |  | — |  |  | — |
Diluted weighted average common shares outstanding |  | 114,445,262 |  |  | 119,660,173 |  |  | 114,255,292 |  |  | 119,771,554 |
Diluted Earnings per Common Share |  | $ | — |  |  | $ | (0.85) |  |  | $ | 0.02 |  |  | $ | (0.60) |
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 three and six months ended June 30, 2023 and 2022, none of our convertible notes were determined to be dilutive and were not 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 six months ended June 30, 2023, 44,712,499 and 45,509,857 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 six months ended June 30, 2022, 33,992,377 and 31,294,614 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 six months ended June 30, 2023, the number of outstanding equity awards that were antidilutive totaled 27,408 and 55,882, respectively. For the three and six months ended June 30, 2022, the number of outstanding equity awards that were antidilutive totaled 249,224 and 278,604, respectively. Stock Repurchases In 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 has no expiration date and does not obligate us to acquire any specific number of shares or securities. During the three months ended June 30, 2023, we did not repurchase any shares of our common stock under this program. At June 30, 2023, $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.

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