XML 44 R27.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Equity
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Equity Equity
The following tables provide a summary of changes to Accumulated other comprehensive income (loss) by component for three and six months ended June 30, 2024 and 2023.
Table 19.1 – Changes in Accumulated Other Comprehensive Income (Loss) by Component
Three Months Ended June 30, 2024Three Months Ended June 30, 2023
(In Thousands)Available-for-Sale SecuritiesInterest Rate Agreements Accounted for as Cash Flow HedgesAvailable-for-Sale SecuritiesInterest Rate Agreements Accounted for as Cash Flow Hedges
Balance at beginning of period$18,246 $(67,147)$8,249 $(71,285)
Other comprehensive income
before reclassifications
1,054 — (688)— 
Amounts reclassified from other
accumulated comprehensive income (loss)		(514)1,029 604 1,029 
Net current-period other comprehensive income (loss)540 1,029 (84)1,029 
Balance at End of Period$18,786 $(66,118)$8,165 $(70,256)

Six Months Ended June 30, 2024Six Months Ended June 30, 2023
(In Thousands)Available-for-Sale SecuritiesInterest Rate Agreements Accounted for as Cash Flow HedgesAvailable-for-Sale SecuritiesInterest Rate Agreements Accounted for as Cash Flow Hedges
Balance at beginning of period$10,219 $(68,176)$3,435 $(72,303)
Other comprehensive income (loss)
before reclassifications 		9,710 — 4,319 — 
Amounts reclassified from other
accumulated comprehensive income (loss)		(1,143)2,058 411 2,047 
Net current-period other comprehensive income (loss)8,567 2,058 4,730 2,047 
Balance at End of Period$18,786 $(66,118)$8,165 $(70,256)
The following tables provide a summary of reclassifications out of Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023.
Table 19.2 – Reclassifications Out of Accumulated Other Comprehensive Loss
Amount Reclassified From
Accumulated Other Comprehensive Loss
Affected Line Item in theThree Months Ended June 30,
(In Thousands)Income Statement20242023
Net Realized Loss on AFS Securities
(Decrease) increase in allowance for credit losses on AFS securitiesInvestment fair value changes, net$(514)$71 
Loss (gain) on sale of AFS securitiesRealized gains, net— 533 
$(514)$604 
Net Realized Loss on Interest Rate
  Agreements Designated as Cash Flow Hedges
Amortization of deferred lossInterest expense$1,029 $1,029 
$1,029 $1,029 
Amount Reclassified From
Accumulated Other Comprehensive Loss
Affected Line Item in theSix Months Ended June 30,
(In Thousands)Income Statement20242023
Net Realized (Gain) Loss on AFS Securities
(Decrease) increase in allowance for credit losses on AFS securitiesInvestment fair value changes, net$(1,143)$99 
Loss (gain) on sale of AFS securitiesRealized gains, net— 312 
$(1,143)$411 
Net Realized Loss on Interest Rate
  Agreements Designated as Cash Flow Hedges
Amortization of deferred lossInterest expense$2,058 $2,047 
$2,058 $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, 2024, we did not issue any shares of common stock under this program. At June 30, 2024, the remaining share issuance capacity under this program was approximately $50 million.
Preferred Stock
In January 2023, Redwood issued 2.8 million 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 pays quarterly cumulative cash dividends through 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, 2024, the Company declared preferred stock dividends of $0.625 and $1.2500 per preferred share, respectively. At June 30, 2024, preferred dividends payable totaling $1 million for the second quarter 2024 dividend were included in Accrued expenses and other liabilities and were payable on July 15, 2024 to preferred stockholders of record on July 1, 2024.
Direct Stock Purchase and Dividend Reinvestment Plan
During the three months ended June 30, 2024, we did not not issue any shares of common stock through our Direct Stock Purchase and Dividend Reinvestment Plan. At June 30, 2024, approximately six million shares remained outstanding for future offerings under this plan.
Common Stock Warrants
In conjunction with establishing the joint venture with CPP Investments in March 2024, we issued warrants exercisable for 1,974,905 shares of our common stock (the “First Tranche Warrants”); and (ii) warrants exercisable for 4,608,112 shares of our common stock (the “Second Tranche Warrants” and together with the First Tranche Warrants, the “Warrants”). The First Tranche Warrants are exercisable from March 18, 2025 to March 18, 2029. The Second Tranche Warrants will vest upon achievement of specified deployment thresholds related to our joint venture with CPP Investments and, if vested, will be exercisable from the date the Second Tranche Warrants vest to March 18, 2029. The initial strike price of the Warrants is $7.76. The Warrants also contain a mandatory exercise provision, exercisable at Redwood’s option upon satisfaction of specified conditions, including the trading price of Redwood’s common stock exceeding a specified premium to the exercise price. Exercises of any Warrants will be settled on a net basis.
The Warrants met the criteria for equity classification under ASC 815, Derivatives and Hedging, and are recorded as a component of Additional paid-in-capital in Equity on our Consolidated Balance Sheets. The Warrants were valued at $0.8 million on the issuance date and are not subject to subsequent remeasurement. See Note 20 for discussion on the impact of the Warrants on earnings per common share.
For additional information related to our equity, see Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.