XML 35 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Equity
3 Months Ended
Mar. 31, 2018
Equity [Abstract]  
Equity
Equity
The following table provides a summary of changes to accumulated other comprehensive income by component for the three months ended March 31, 2018 and 2017.
Table 15.1 – Changes in Accumulated Other Comprehensive Income by Component
 
 
Three Months Ended March 31, 2018
 
Three Months Ended March 31, 2017
(In Thousands)
 
Net Unrealized Gains on Available-for-Sale Securities
 
Net Unrealized Losses on Interest Rate Agreements Accounted for as Cash Flow Hedges
 
Net Unrealized Gains on Available-for-Sale Securities
 
Net Unrealized Losses on Interest Rate Agreements Accounted for as Cash Flow Hedges
Balance at beginning of period
 
$
128,201

 
$
(42,953
)
 
$
115,873

 
$
(44,020
)
Other comprehensive (loss) income
before reclassifications (1)
 
(4,237
)
 
8,431

 
2,930

 
1,733

Amounts reclassified from other
accumulated comprehensive income
 
(9,387
)
 

 
(3,928
)
 
14

Net current-period other comprehensive (loss) income
 
(13,624
)
 
8,431

 
(998
)
 
1,747

Balance at End of Period
 
$
114,577

 
$
(34,522
)
 
$
114,875

 
$
(42,273
)
(1)
Amounts presented for net unrealized gains on available-for-sale securities are net of tax provision of $0.1 million for both the three months ended March 31, 2018 and 2017.
The following table provides a summary of reclassifications out of accumulated other comprehensive income for three months ended March 31, 2018 and 2017.
Table 15.2 – Reclassifications Out of Accumulated Other Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
Amount Reclassified From Accumulated Other Comprehensive Income
 
 
Affected Line Item in the
 
Three Months Ended March 31,
(In Thousands)
 
Income Statement
 
2018
 
2017
Net Realized (Gain) Loss on AFS Securities
 
 
 
 
 
 
Other than temporary impairment (1)
 
Investment fair value changes, net
 
$

 
$
117

Gain on sale of AFS securities
 
Realized gains, net
 
(9,387
)
 
(4,045
)
 
 
 
 
$
(9,387
)
 
$
(3,928
)
Net Realized Loss on Interest Rate
Agreements Designated as Cash Flow Hedges
 
 
 
 
 
 
Amortization of deferred loss
 
Interest expense
 
$

 
$
14

 
 
 
 
$

 
$
14


(1)
For the three months ended March 31, 2018, there were no other-than-temporary impairments. For the three months ended March 31, 2017, other-than-temporary impairments were $0.2 million, of which $0.1 million were recognized through our consolidated statements of income and $0.1 million were recognized in Accumulated other comprehensive income, a component of our consolidated balance sheet.
Earnings per Common Share
The following table provides the basic and diluted earnings per common share computations for the three months ended March 31, 2018 and 2017.
Table 15.3 – Basic and Diluted Earnings per Common Share
 
 
Three Months Ended March 31,
(In Thousands, except Share Data)
 
2018
 
2017
Basic Earnings per Common Share:
 
 
 
 
Net income attributable to Redwood
 
$
46,845

 
$
36,969

Less: Dividends and undistributed earnings allocated to participating securities
 
(1,433
)
 
(968
)
Net income allocated to common shareholders
 
$
45,412

 
$
36,001

Basic weighted average common shares outstanding
 
75,396,649

 
76,738,202

Basic Earnings per Common Share
 
$
0.60

 
$
0.47

Diluted Earnings per Common Share:
 
 
 
 
Net income attributable to Redwood
 
$
46,845

 
$
36,969

Less: Dividends and undistributed earnings allocated to participating securities
 
(1,394
)
 
(1,005
)
Add back: Interest expense on convertible notes for the period, net of tax
 
8,641

 
5,870

Net income allocated to common shareholders
 
$
54,092

 
$
41,834

Weighted average common shares outstanding
 
75,396,649

 
76,738,202

Net effect of dilutive equity awards
 
34,827

 
111,197

Net effect of assumed convertible notes conversion to common shares
 
32,763,121

 
21,096,738

Diluted weighted average common shares outstanding
 
108,194,597

 
97,946,137

Diluted Earnings per Common Share
 
$
0.50

 
$
0.43


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 months ended March 31, 2018 and 2017, 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 months ended March 31, 2018 and 2017, the number of outstanding equity awards that were antidilutive totaled 6,838 and 5,826, respectively.
Stock Repurchases
In February 2016, our Board of Directors approved an authorization for the repurchase of up to $100 million of our common stock and also authorized the repurchase of outstanding debt securities, including convertible and exchangeable debt. This authorization replaced all previous share repurchase plans and has no expiration date. During the year ended December 31, 2017, we repurchased 610,342 shares of common stock pursuant to this authorization for $9 million. At December 31, 2017, approximately $77 million of this current authorization remained available for the repurchase of shares of our common stock. During January 2018, we repurchased 1,040,829 shares of our common stock pursuant to this authorization for $16 million.
In February 2018, our Board of Directors approved an authorization for the repurchase of an additional $39 million of our common stock, increasing the total amount authorized for repurchases of common stock to $100 million, and also authorized the repurchase of outstanding debt securities, including convertible and exchangeable debt. As noted above, this authorization increased the previous share repurchase authorization approved in February 2016 and has no expiration date. This repurchase authorization does not obligate us to acquire any specific number of shares or securities. Under this authorization, shares or securities may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. At March 31, 2018, $100 million of the current authorization remained available for the repurchase of shares of our common stock.