Exhibit 11.1

Redwood Trust, Inc.
Computation of Per Share Earnings

                 
    Three Months   Three Months
    Ended   Ended
    March 31, 2004
   March 31, 2003
Basic:
                
Average common shares outstanding
     19,427,373       16,412,867  
 
    
 		      
 		  
Total
     19,427,373       16,412,867  
 
    
 		      
 		  
Net Income
   $ 50,790,699     $ 14,931,689  
 
    
 		      
 		  
Per Share Amount
   $ 2.61     $ 0.91  
 
    
 		      
 		  
Diluted:
                
Average common shares outstanding
     19,427,373       16,412,867  
Net effect of dilutive stock options outstanding during the period — based on the treasury stock method
     971,271       570,646  
 
    
 		      
 		  
Total
     20,398,644       16,983,513  
 
    
 		      
 		  
Net Income
   $ 50,790,699     $ 14,931,689  
 
    
 		      
 		  
Per Share Amount
   $ 2.49     $ 0.88