Equity

6 Months Ended

Jun. 30, 2011

Equity

Note 15. Equity

The following table provides a summary of changes to stockholders’ equity for the three and six months ended June 30, 2011.

Stockholders’ Equity

(In Thousands)	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
Balance at beginning of period	$	1,074,811		$	1,064,753
Other changes in equity, net		1,987			4,231
Unrealized gains on securities and derivatives, net		(41,491	)		(31,718	)
Distributions to shareholders		(20,236	)		(40,360	)
Net income attributable to Redwood Trust, Inc.		9,439			27,604
Balance at End of Period	$	1,024,510		$	1,024,510

Accumulated Other Comprehensive Income

The following table provides a summary of the components of accumulated other comprehensive income at June 30, 2011 and December 31, 2010.

(In Thousands)	June 30, 2011			December 31, 2010
Net unrealized gains on real estate securities	$	109,190		$	137,360
Less: Unrealized losses attributable to noncontrolling interest		—			(4,164	)
Net unrealized gains on real estate securities recognized in equity		109,190			141,524
Net unrealized losses on interest rate agreements accounted for as cash flow hedges		(28,569	)		(29,185	)
Total Accumulated Other Comprehensive Income	$	80,621		$	112,339

Noncontrolling Interest

Of the total equity recorded on our consolidated balance sheet at June 30, 2011, and December 31, 2010, $2 million and $11 million, respectively, is noncontrolling interest. Noncontrolling interest represents the aggregate limited partnership (LP) interests in the Fund held by third-parties. Income allocated to the noncontrolling interest is based on the 48% third-party LP ownership percentage. The ownership percentage is determined by dividing the number of units held by third-party LP investors by the total units outstanding.

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, 2011 and 2010.

Basic and Diluted Earnings Per Common Share

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands, Except Share Data)	2011		2010		2011		2010
Basic Earnings Per Common Share:
Net income attributable to Redwood	$	9,439	$	28,601	$	27,604	$	75,444
Less: Dividends and undistributed earnings allocated to participating securities		192		795		729		2,111
Net income allocated to common shareholders	$	9,247	$	27,806	$	26,875	$	73,333
Basic weighted average common shares outstanding		78,324,057		77,800,642		78,176,767		77,739,279
Basic Earnings Per Common Share	$	0.12	$	0.36	$	0.34	$	0.94
Diluted Earnings Per Common Share:
Net income attributable to Redwood	$	9,439	$	28,601	$	27,604	$	75,444
Less: Dividends and undistributed earnings allocated to participating securities		343		685		922		1,710
Net income allocated to common shareholders	$	9,096	$	27,916	$	26,682	$	73,734
Basic weighted average common shares outstanding		78,324,057		77,800,642		78,176,767		77,739,279
Net effect of dilutive equity awards		1,153,447		1,051,617		1,248,593		922,363
Diluted weighted average common shares outstanding		79,477,504		78,852,259		79,425,360		78,661,642
Diluted Earnings Per Common Share	$	0.11	$	0.35	$	0.34	$	0.94

For the three and six months ended June 30, 2011, there were 1,153,447 and 1,248,593, respectively, of dilutive equity awards determined under the two-class method. For the three and six months ended June 30, 2010, there were 1,051,617 and 922,363, respectively, of dilutive equity awards determined under the two-class method. We included participating securities in the calculation of diluted earnings per common share as we determined that the two-class method was more dilutive than the alternative treasury stock method. For the three and six months ended June 30, 2011, the number of outstanding equity awards that were antidilutive totaled 686,037 and 675,529, respectively, under the two-class method. For the three and six months ended June 30, 2010, the number of outstanding equity awards that were antidilutive totaled 681,705 and 582,582, respectively, under the two-class method. There were no other participating securities during these periods.

Stock Repurchases

We announced a stock repurchase authorization in November 2007 for the repurchase of up to 5,000,000 common shares. This plan replaced all previous share repurchase plans and has no expiration date. During the six months ended June 30, 2011 and 2010, there were no shares acquired under the plan. At June 30, 2011, there remained 4,658,071 shares available for repurchase under this plan.