Exhibit 11.1

Redwood Trust, Inc.
Computation of Per Share Earnings

                 
    Three Months   Six Months
    Ended   Ended
    June 30, 2004
   June 30, 2004
Basic:
                
Average common shares outstanding
     20,630,186       20,028,267  
 
    
 		      
 		  
Total
     20,630,186       20,028,267  
 
    
 		      
 		  
Net Income
   $ 55,088,536     $ 105,879,238  
 
    
 		      
 		  
Per Share Amount
   $ 2.67     $ 5.29  
 
    
 		      
 		  
Diluted:
                
Average common shares outstanding
     20,630,186       20,028,267  
Net effect of dilutive stock options outstanding during the period — based on the treasury stock method
     694,889       827,380  
 
    
 		      
 		  
Total
     21,325,075       20,855,647  
 
    
 		      
 		  
Net Income
   $ 55,088,536     $ 105,879,238  
 
    
 		      
 		  
Per Share Amount
   $ 2.58     $ 5.08