Equity (Tables)

9 Months Ended

Sep. 30, 2020

Changes to Accumulated Other Comprehensive Income by Component

The following table provides a summary of changes to accumulated other comprehensive income by component for the three and nine months ended September 30, 2020 and 2019. During the three and nine months ended September 30, 2020, we recognized net unrealized gains (losses) on our Level 3 AFS securities which we owned as of September 30, 2020 of $8 million and negative $16 million, respectively.

Table 17.1 – Changes in Accumulated Other Comprehensive Income by Component


	Three Months Ended September 30, 2020				Three Months Ended September 30, 2019
(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	$	53,246	$	(82,637)	$	98,307	$	(49,384)
Other comprehensive income (loss) before reclassifications	8,236		—		4,484		(11,791)
Amounts reclassified from other accumulated comprehensive income	(445)		1,040		(3,492)		—
Net current-period other comprehensive income (loss)	7,791		1,040		992		(11,791)
Balance at End of Period	$	61,037	$	(81,597)	$	99,299	$	(61,175)


	Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2019
(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	$	92,452	$	(50,939)	$	95,342	$	(34,045)
Other comprehensive income (loss) before reclassifications	(19,890)		(32,806)		19,764		(27,130)
Amounts reclassified from other accumulated comprehensive income	(11,525)		2,148		(15,807)		—
Net current-period other comprehensive income (loss)	(31,415)		(30,658)		3,957		(27,130)
Balance at End of Period	$	61,037	$	(81,597)	$	99,299	$	(61,175)

Reclassifications out of Accumulated Other Comprehensive Income

The following table provides a summary of reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, 2020 and 2019.

Table 17.2 – Reclassifications Out of Accumulated Other Comprehensive Income



		Amount Reclassified From Accumulated Other Comprehensive Income
	Affected Line Item in the	Three Months Ended September 30,
(In Thousands)	Income Statement	2020		2019
Net Realized (Gain) Loss on AFS Securities
Credit loss recovery on AFS securities	Investment fair value changes, net	$	(444)	$	—
Gain on sale of AFS securities	Realized gains, net	—		(3,492)

		$	(444)	$	(3,492)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	1,040	$	—
		$	1,040	$	—



		Amount Reclassified From Accumulated Other Comprehensive Income
	Affected Line Item in the	Nine Months Ended September 30,
(In Thousands)	Income Statement	2020		2019
Net Realized (Gain) Loss on AFS Securities
Credit loss expense on AFS securities	Investment fair value changes, net	$	1,027	$	—
Gain on sale of AFS securities	Realized gains, net	(12,552)		(15,807)

		$	(11,525)	$	(15,807)
Net Realized Loss on Interest Rate Agreements Designated as Cash Flow Hedges
Amortization of deferred loss	Interest expense	$	2,148	$	—
		$	2,148	$	—

Basic and Diluted Earnings Per Common Share

The following table provides the basic and diluted earnings (loss) per common share computations for the three and nine months ended September 30, 2020 and 2019.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In Thousands, except Share Data)	2020		2019		2020		2019
Basic Earnings (Loss) per Common Share:
Net income (loss) attributable to Redwood	$	141,812	$	34,310	$	(636,142)	$	120,040
Less: Dividends and undistributed earnings allocated to participating securities	(4,067)		(856)		(1,427)		(3,260)
Net income (loss) allocated to common shareholders	$	137,745	$	33,454	$	(637,569)	$	116,780
Basic weighted average common shares outstanding	113,403,102		101,872,126		113,952,308		97,214,064
Basic Earnings (Loss) per Common Share	$	1.21	$	0.33	$	(5.60)	$	1.20
Diluted Earnings (Loss) per Common Share:
Net income (loss) attributable to Redwood	$	141,812	$	34,310	$	(636,142)	$	120,040
Less: Dividends and undistributed earnings allocated to participating securities	(3,512)		(1,036)		(1,427)		(3,625)
Adjust for interest expense and gain on extinguishment of convertible notes for the period, net of tax	6,990		8,887		—		26,271
Net income (loss) allocated to common shareholders	$	145,290	$	42,161	$	(637,569)	$	142,686
Weighted average common shares outstanding	113,403,102		101,872,126		113,952,308		97,214,064
Net effect of dilutive equity awards	—		362,743		—		261,155
Net effect of assumed convertible notes conversion to common shares	28,566,875		34,287,840		—		33,727,470
Diluted weighted average common shares outstanding	141,969,977		136,522,709		113,952,308		131,202,689
Diluted Earnings (Loss) per Common Share	$	1.02	$	0.31	$	(5.60)	$	1.09