Exhibit 99.1

EXHIBIT 99.1


		SUPPLEMENTAL FINANCIAL INFORMATION QUARTER ENDED JUNE 30, 2003

Financial Results


Table 1											GAAP
Earnings											Earnings /			Core
($ in thousands, except per share data)											Average			Earnings /
					Average						GAAP			Average
					Diluted						Common			Common
	GAAP		Core		Shares		GAAP		Core		Equity			Core Equity
	Earnings		Earnings		Outstanding		EPS		EPS		(Annualized)			(Annualized)

Q1: 2002	$	11,219	$	10,887		14,077,405	$	0.80	$	0.77		14.2	%		14.2	%
Q2: 2002		13,802		12,546		15,747,048		0.88		0.80		15.4	%		14.5	%
Q3: 2002		14,306		12,831		16,240,194		0.88		0.79		14.1	%		14.3	%
Q4: 2002		14,566		13,183		16,529,075		0.88		0.80		13.7	%		14.2	%
2002		53,893		49,447		15,658,623		3.44		3.16		14.3	%		14.3	%
Q1: 2003		14,932		14,962		16,983,513		0.88		0.88		12.9	%		15.4	%
Q2: 2003		22,212		20,761		18,433,165		1.21		1.13		17.6	%		19.4	%

See Tables 5 & 6 for a description of core earnings and core equity and a related reconciliation of GAAP earnings to core earnings and GAAP equity to core equity.


Table 2
Net Interest Income																			Net			Net
($ in thousands)																			Interest			Interest
																			Income/			Income/
	Total		Total		Net		Earning			Cost			Interest			Interest			Average			Average
	Interest		Interest		Interest		Asset			Of			Rate			Rate			GAAP			Core
	Income		Expense		Income		Yield			Funds			Spread			Margin			Equity			Equity

Q1: 2002	$	30,716	$	15,602	$	15,114		4.92	%		2.82	%		2.10	%		2.36	%		17.69	%		18.13	%
Q2: 2002		36,252		18,489		17,763		4.71	%		2.69	%		2.02	%		2.25	%		18.41	%		19.12	%
Q3: 2002		42,093		24,291		17,802		4.07	%		2.57	%		1.50	%		1.68	%		16.47	%		18.51	%
Q4: 2002		54,155		33,323		20,832		3.59	%		2.35	%		1.24	%		1.35	%		18.50	%		20.92	%
2002		163,216		91,705		71,511		4.13	%		2.54	%		1.59	%		1.77	%		17.75	%		19.21	%
Q1: 2003		61,125		36,933		24,192		3.31	%		2.10	%		1.21	%		1.28	%		19.79	%		23.33	%
Q2: 2003		71,426		41,802		29,624		3.35	%		2.05	%		1.30	%		1.36	%		23.45	%		27.63	%


Table 3
Interest Expense
($ in thousands)

	Average				Debt			Average		Long Term		Long Term			Average		Short Term		Short Term
	Total		Interest		Cost Of			Long Term		Interest		Debt Cost			Short Term		Interest		Debt Cost
	Debt		Expense		Funds			Debt		Expense		Of Funds			Debt		Expense		Of Funds

Q1: 2002	$	2,211,927	$	15,602		2.82	%	$	1,280,503	$	10,661		3.33	%	$	931,424	$	4,941		2.12	%
Q2: 2002		2,752,215		18,489		2.69	%		1,806,884		12,894		2.85	%		945,331		5,595		2.37	%
Q3: 2002		3,781,717		24,291		2.57	%		2,893,682		18,893		2.61	%		888,035		5,398		2.43	%
Q4: 2002		5,680,238		33,323		2.35	%		5,018,353		28,945		2.31	%		661,885		4,378		2.65	%
2002		3,616,506		91,705		2.54	%		2,760,490		71,393		2.59	%		856,016		20,312		2.37	%
Q1: 2003		7,036,183		36,933		2.10	%		6,637,053		34,993		2.11	%		399,130		1,940		1.94	%
Q2: 2003		8,160,393		41,802		2.05	%		7,861,252		40,163		2.04	%		299,141		1,639		2.19	%

Table 4
Net Interest Income on an “At Risk” Assets and Recourse Debt Basis
($ in thousands)


																			Net
	Interest		Interest		Net								"At Risk"			"At Risk"			Interest
	Income		Expense		Interest					Recourse			Asset			Asset			Income/
	On		On		Income on		"At Risk"			Cost			Interest			Interest			Average
	"At Risk"		Recourse		"At Risk"		Asset			Of			Rate			Rate			Core
	Assets		Debt		Basis		Yield			Funds			Spread			Margin			Equity

Q1: 2002	$	20,055	$	4,941	$	15,114		6.30	%		2.12	%		4.18	%		4.75	%		18.13	%
Q2: 2002		23,358		5,595		17,763		7.02	%		2.37	%		4.65	%		5.34	%		19.12	%
Q3: 2002		23,200		5,398		17,802		7.03	%		2.43	%		4.60	%		5.39	%		18.51	%
Q4: 2002		25,210		4,378		20,832		9.07	%		2.65	%		6.42	%		7.49	%		20.92	%
2002		91,823		20,312		71,511		7.29	%		2.37	%		4.92	%		5.68	%		19.21	%
Q1: 2003		26,132		1,940		24,192		11.77	%		1.94	%		9.83	%		10.89	%		23.33	%
Q2: 2003		31,263		1,639		29,624		15.54	%		2.19	%		13.35	%		14.73	%		27.63	%

See Table 7 for a reconciliation of GAAP interest income to net interest income on an “at risk” basis and GAAP interest expense to recourse cost of funds. See Table 8 for a description of recourse assets and recourse debt and a related reconciliation to reported GAAP assets and reported GAAP debt.

Financial Results (continued)


Table 5
Core Earnings (1)			Less: Net
($ in thousands)			Realized &		Less:
			Unrealized		Variable
			Market		Stock
			Value		Option
	GAAP		Gains/		Valuation			Core
	Earnings		(Losses)		Adjustments			Earnings

Q1: 2002	$	11,219	$	875	$	(543	)	$	10,887
Q2: 2002		13,802		2,045		(789	)		12,546
Q3: 2002		14,306		730		745			12,831
Q4: 2002		14,566		1,461		(78	)		13,183
2002		53,893		5,111		(665	)		49,447
Q1: 2003		14,932		918		(948	)		14,962
Q2: 2003		22,212		2,941		(1,490	)		20,761

(1) Core earnings is not a measure of earnings in accordance with GAAP. Core earnings is calculated as GAAP earnings from ongoing operations less mark-to-market adjustments (which include realized and unrealized gains and losses on certain assets, interest rate agreements, and variable stock options). We believe that core earnings provides relevant and useful information regarding our results of operations in addition to GAAP measures of performance. This is, in part, because market valuation adjustments on only a portion of our assets and stock options and none of our liabilities are recognized through our Consolidated Statements of Income under GAAP, and thus GAAP valuation adjustments may not be fully indicative of changes in market values on our balance sheet as a whole or a reliable guide to our current operating performance. Furthermore, gains or losses realized upon sales of assets vary based on portfolio management decisions; a sale of an asset for a gain or a loss may or may not affect our ongoing earnings from operations. Because all companies and analysts do not calculate non-GAAP measures such as core earnings in the same fashion, core earnings as calculated by us may not be comparable to similarly titled measures reported by other companies.


Table 6
Core Equity (2)
($ in thousands)									Average
			Balance						Balance								Average
	Total		Sheet				Average		Sheet		Average		Average		Average		Common
	GAAP		Mark-to-Mkt		Core		GAAP		Mark-to-Mkt		Core		Preferred		Common		Core
	Equity		Adjustments		Equity		Equity		Adjustments		Equity		Equity		Equity		Equity

Q1: 2002	$	364,444	$	11,015	$	353,429	$	341,766	$	8,360	$	333,406	$	26,517	$	315,249	$	306,889
Q2: 2002		417,930		35,826		382,104		385,887		14,213		371,674		26,517		359,370		345,157
Q3: 2002		445,728		54,148		391,580		432,310		47,705		384,605		26,517		405,793		358,088
Q4: 2002		473,033		69,146		403,887		450,464		52,200		398,264		26,517		423,947		371,747
2002		473,033		69,146		403,887		402,986		30,786		372,200		26,517		376,469		345,683
Q1: 2003		485,402		68,077		417,325		489,086		74,231		414,855		26,517		462,569		388,338
Q2: 2003		547,176		108,409		438,767		505,373		76,477		428,896		—		505,373		428,896

(2) Core equity is calculated as GAAP equity less unrealized gains and losses on certain assets and interest rate agreements. We believe measurements based on core equity provide relevant useful information regarding our results of operations in addition to GAAP measures of performance. This is, in part, because market valuation adjustments reflected in GAAP equity represent unrealized gains and losses on a portion of the balance sheet only and may not be reflective of the equity available to invest in operations. Because all companies and analysts do not calculate non-GAAP measures in the same fashion, core equity and ratios using core equity as calculated by the us may not be comparable to similarly titled measures reported by other companies. Average Common Equity measures are calculated by excluding Average Preferred Equity.

Table 7
Reconciliation of GAAP Interest Income and Interest Expense to Interest Income on “At Risk” Assets and
Interest Expense on Recourse Debt
($ in thousands)


			Interest		Interest				Interest		Interest
			Income		Income				Expense		Expense
	Total		On Non-		On		Total		On Non-		On
	Interest		Recourse		"At Risk"		Interest		Recourse		Recourse
	Income		Assets		Assets		Expense		Debt		Debt

Q1: 2002	$	30,716	$	10,661	$	20,055	$	15,602	$	10,661	$	4,941
Q2: 2002		36,252		12,894		23,358		18,489		12,894		5,595
Q3: 2002		42,093		18,893		23,200		24,291		18,893		5,398
Q4: 2002		54,155		28,945		25,210		33,323		28,945		4,378
2002		163,216		71,393		91,823		91,705		71,393		20,312
Q1: 2003		61,125		34,993		26,132		36,933		34,993		1,940
Q2: 2003		71,426		40,163		31,263		41,802		40,163		1,639

Financial Results (continued)

Table 8
Leverage Ratios
Equity to Assets and Debt to Equity
($ in thousands)


							GAAP			GAAP									Reported		Recourse
			Non-		(3)		Equity to			Equity to					Non-		(3)		Debt to		Debt to
	Reported		Recourse		Recourse		Reported			Recourse			Reported		Recourse		Recourse		GAAP		GAAP
	Assets		Assets		Assets		Assets			Assets			Debt		Debt		Debt		Equity		Equity

Q1: 2002	$	2,739,838	$	1,252,881	$	1,486,957		13	%		25	%	$	2,356,972	$	1,234,459	$	1,122,513		6.5		3.1
Q2: 2002		3,689,782		2,266,849		1,422,933		11	%		29	%		3,246,603		2,241,600		1,005,003		7.8		2.4
Q3: 2002		5,674,302		4,394,493		1,279,809		8	%		35	%		5,199,362		4,365,281		834,081		11.7		1.9
Q4: 2002		7,007,772		6,435,025		572,747		7	%		83	%		6,496,734		6,397,020		99,714		13.7		0.2
2002		7,007,772		6,435,025		572,747		7	%		83	%		6,496,734		6,397,020		99,714		13.7		0.2
Q1: 2003		8,172,063		7,210,944		961,119		6	%		51	%		7,646,408		7,170,691		475,717		15.8		1.0
Q2: 2003		10,356,052		9,591,192		764,860		5	%		72	%		9,760,315		9,542,631		217,684		17.8		0.4

(3) Assets that have been sold to non-recourse securitization trusts and long-term debt that is non-recourse to Redwood are reported on our balance sheet. Only our net investments in the equity of these trusts constitute “at-risk” assets to us. If we had used different terms or forms of securitization these transactions may have been accounted for as sales. With sales accounting, our reported balance sheet (both assets and liabilities) would be substantially smaller (although the economics of the transaction and our exposure to risks would be unchanged). If we structured the securitizations differently and therefore accounted for them as sales rather than financings, our asset-based margins would have been different and, in some respects, reported on a basis that is more comparable to some other financial institutions. Our interest rate spread and our interest rate margin would have been higher and would show a positive trend in recent quarters. Our reported debt-to-equity ratio would have been substantially lower. Table 4 above presents our interest income and interest expense as if we had structured our securitizations to obtain sales accounting treatment rather than financing accounting treatment; effectively, on an “at-risk” basis for assets and on a recourse basis for liabilities.

Table 9
Reconciliation of Average Reported Assets to Average “At Risk” Assets and
Average Reported Debt to Average Recourse Debt
($ in thousands)


			Average						Average
	Average		Non-		Average		Average		Non-		Average
	Reported		Recourse		"At Risk"		Reported		Recourse		Recourse
	Assets		Assets		Assets		Debt		Debt		Debt

Q1: 2002	$	2,564,847	$	1,291,657	$	1,273,190	$	2,211,927	$	1,280,503	$	931,424
Q2: 2002		3,158,751		1,827,533		1,331,218		2,752,215		1,806,884		945,331
Q3: 2002		4,234,477		2,914,133		1,320,344		3,781,717		2,893,682		888,035
Q4: 2002		6,158,898		5,046,549		1,112,349		5,680,238		5,018,353		661,885
2002		4,039,652		2,780,650		1,259,002		3,616,506		2,760,490		856,016
Q1: 2003		7,553,727		6,665,511		888,216		7,036,183		6,637,053		399,130
Q2: 2003		8,687,371		7,882,857		804,514		8,160,393		7,861,252		299,141

Portfolios


Table 10
Balances & Yields		At period end													For period ended
($ in thousands)
				Unamortized						Unrealized			Net
		Current		Premium/			Credit			Gain/			Book		Average		Interest
		Face		(Discount)			Reserve			(loss)			Value		Balance*		Income		Yield

Total Earning Assets
	Q1: 2002	$	2,912,217	$	(10,332	)	$	(200,037	)	$	11,016			2,712,864	$	2,498,565		30,716		4.92	%
	Q2: 2002		3,854,545		(14,318	)		(212,296	)		35,827			3,663,758		3,080,165		36,252		4.71	%
	Q3: 2002		5,829,188		(6,941	)		(227,346	)		54,148			5,649,049		4,131,870		42,093		4.07	%
	Q4: 2002		7,158,374		(25,644	)		(233,162	)		72,226			6,971,794		6,042,042		54,155		3.59	%
	2002		7,158,374		(25,644	)		(233,162	)		72,226			6,971,794		3,948,399		163,216		4.13	%
	Q1: 2003		8,356,918		(50,540	)		(244,056	)		72,282			8,134,604		7,393,566		61,125		3.31	%
	Q2: 2003		10,471,190		(62,790	)		(216,834	)		115,903			10,307,469		8,523,925		71,426		3.35	%
Residential Real Estate Loans
	Q1: 2002	$	1,790,239	$	9,502		$	(5,481	)	$	—			1,794,260	$	1,544,924		14,125		3.66	%
	Q2: 2002		2,795,628		13,881			(5,953	)		—			2,803,556		2,201,384		19,601		3.56	%
	Q3: 2002		4,736,645		31,859			(6,611	)		—			4,761,893		3,262,462		24,447		3.00	%
	Q4: 2002		6,190,674		32,776			(8,271	)		—			6,215,179		5,318,910		37,264		2.80	%
	2002		6,190,674		32,776			(8,271	)		—			6,215,179		3,092,755		95,437		3.09	%
	Q1: 2003		7,297,515		33,520			(9,996	)		—			7,321,039		6,625,539		42,314		2.55	%
	Q2: 2003		9,206,987		52,592			(12,159	)		—			9,247,420		7,670,484		47,299		2.47	%
Residential Loan Credit-Enhancement Securities
	Q1: 2002	$	460,035	$	(28,058	)	$	(194,556	)	$	12,411			249,832	$	201,540		6,695		13.29	%
	Q2: 2002		492,642		(35,745	)		(206,343	)		34,205			284,759		238,282		9,006		15.12	%
	Q3: 2002		542,669		(49,360	)		(220,735	)		51,556			324,130		257,844		10,443		16.20	%
	Q4: 2002		559,186		(58,578	)		(224,891	)		76,762			352,479		271,016		11,283		16.65	%
	2002		559,186		(58,578	)		(224,891	)		76,762			352,479		242,404		37,427		15.44	%
	Q1: 2003		614,111		(84,648	)		(234,060	)		77,759			373,162		278,339		13,693		19.68	%
	Q2: 2003		598,134		(113,358	)		(204,675	)		113,310			393,411		279,010		17,977		25.77	%
Commercial Real Estate Loans
	Q1: 2002	$	50,057	$	(677	)	$	—		$	—			49,380	$	50,170		1,274		10.16	%
	Q2: 2002		50,436		(638	)		—			—			49,798		49,369		1,233		9.99	%
	Q3: 2002		51,318		(654	)		—			—			50,664		50,102		1,280		10.22	%
	Q4: 2002		30,250		(980	)		—			—			29,270		47,935		1,213		10.12	%
	2002		30,250		(980	)		—			—			29,270		49,390		5,000		10.12	%
	Q1: 2003		32,223		(1,009	)		—			—			31,214		30,888		816		10.57	%
	Q2: 2003		42,492		(7,970	)		—			—			34,522		33,138		960		11.59	%
Securities Portfolio
	Q1: 2002	$	601,926	$	8,901		$	—		$	(1,395	)		609,432	$	676,692		8,514		5.03	%
	Q2: 2002		502,684		8,184			—			1,622			512,490		529,843		6,222		4.70	%
	Q3: 2002		477,950		11,214			—			2,592			491,756		493,997		5,719		4.63	%
	Q4: 2002		339,095		1,138			—			(4,536	)		335,697		320,154		3,949		4.93	%
	2002		339,095		1,138			—			(4,536	)		335,697		504,401		24,404		4.84	%
	Q1: 2003		370,187		1,597			—			(5,477	)		366,307		360,084		4,192		4.66	%
	Q2: 2003		587,038		5,946			—			2,593			595,577		453,546		5,057		4.46	%
Cash & Cash Equivalents
	Q1: 2002	$	9,960	$	—		$	—		$	—			9,960				108
	Q2: 2002		13,155		—			—			—			13,155				190
	Q3: 2002		20,606		—			—			—			20,606				204
	Q4: 2002		39,169		—			—			—			39,169				446
	2002		39,169		—			—			—			39,169				948
	Q1: 2003		42,882		—			—			—			42,882				110
	Q2: 2003		36,539											36,539				133

* Average excludes unrealized gains (losses) from mark-to-market adjustments.

Portfolios (continued)


Table 11
Portfolio Activity										Discount/						Net		Net			Net
($ in thousands)							Principal			(Premium)			Credit			Charge-offs/		Mark-to-Mkt			Increase/
		Acquisitions		Sales			Payments			Amortization			Provision			(Recoveries)		Adjustment			(Decrease)

Residential Real Estate Loans
	Q1: 2002	$	417,276	$	—		$	(95,924	)	$	(1,672	)	$	(282	)	$	—	$	—		$	319,398
	Q2: 2002		1,146,621		(46,683	)		(89,582	)		(1,060	)		(472	)		—		472			1,009,296
	Q3: 2002		2,075,296		(2,960	)		(109,896	)		(3,502	)		(894	)		236		57			1,958,337
	Q4: 2002		1,616,400		—			(155,915	)		(5,754	)		(1,660	)		—		215			1,453,286
	2002		5,255,593		(49,643	)		(451,317	)		(11,988	)		(3,308	)		236		744			4,740,317
	Q1: 2003		1,338,920		(73,137	)		(152,768	)		(6,156	)		(1,756	)		31		726			1,105,860
	Q2: 2003		2,168,181		—			(234,582	)		(5,055	)		(2,163	)		—		—			1,926,381
Residential Loan Credit-Enhancement Securities
	Q1: 2002	$	59,157	$	(5,037	)	$	(4,270	)	$	366		$	—		$	—	$	8,803		$	59,019
	Q2: 2002		25,849		(898	)		(15,801	)		1,767			—			—		24,010			34,927
	Q3: 2002		28,983		—			(9,437	)		2,722			—			—		17,103			39,371
	Q4: 2002		13,442					(13,573	)		3,275			—			—		25,205			28,349
	2002		127,431		(5,935	)		(43,081	)		8,130			—			—		75,121			161,666
	Q1: 2003		37,077		—			(23,212	)		5,545			—			—		1,273			20,683
	Q2: 2003		11,265		(1,248	)		(38,773	)		10,024			—			—		38,981			20,249
Commercial Real Estate Loans
	Q1: 2002	$	140	$	—		$	(1,873	)	$	28		$	—		$	—	$	1		$	(1,704	)
	Q2: 2002		470		—			(53	)		—			—			—		1			418
	Q3: 2002		919		—			(54	)		—			—			—		1			866
	Q4: 2002		—		—			(21,068	)		24			—			—		(350	)		(21,394	)
	2002		1,529		—			(23,048	)		52			—			—		(347	)		(21,814	)
	Q1: 2003		2,011		—			(68	)		—			—			—		1			1,944
	Q2: 2003		3,408		—			(34	)		(67	)		—			—		1			3,308
Securities Portfolio
	Q1: 2002	$	76,701	$	(89,395	)	$	(60,040	)	$	(1,701	)	$	—		$	—	$	385		$	(74,050	)
	Q2: 2002		23,026		(56,802	)		(65,617	)		(1,249	)		—			—		3,700			(96,942	)
	Q3: 2002		6,811		—			(31,830	)		(1,052	)		—			—		5,337			(20,734	)
	Q4: 2002		196,279		(315,308	)		(31,009	)		(24	)		—			—		(5,997	)		(156,059	)
	2002		302,817		(461,505	)		(188,496	)		(4,026	)		—			—		3,425			(347,785	)
	Q1: 2003		42,955		—			(11,329	)		3			—			—		(1,019	)		30,610
	Q2: 2003		237,516		(4,051	)		(12,126	)		(111	)		—			—		8,042			229,270


Table 12
Residential Credit Results
($ in thousands)										Total										Losses To
				Internally-				(4)		Credit										Securities		Redwood's			Total Credit
		Face Value		Designated		External		Total		Protection								Total		Junior to		Share of Net			Losses As %
		Underlying		Credit		Credit		Credit		As % of			Delinquent		Delinquent			Credit		Redwood's		Charge Offs			of Loans
		Loans		Reserves		Enhancement		Protection		Loans			Loans		Loan %			Losses		Interest		(Recoveries)			(Annualized)

Total Residential Portfolio
	Q1: 2002	$	66,616,844	$	200,037	$	79,924	$	279,961		0.42	%	$	134,775		0.20	%	$	452	$	618	$	(166	)		0.01	%
	Q2: 2002		68,856,787		212,296		65,102		277,398		0.40	%		153,217		0.22	%		115		189		(74	)		0.01	%
	Q3: 2002		73,220,004		227,346		64,147		291,493		0.40	%		152,894		0.21	%		386		103		283			0.01	%
	Q4: 2002		64,849,784		233,162		63,179		296,341		0.46	%		150,353		0.23	%		377		163		214			0.01	%
	2002		64,849,784		233,162		63,179		296,341		0.46	%		150,353		0.23	%		1,330		1,073		257			0.01	%
	Q1: 2003		68,045,731		244,056		61,814		305,870		0.45	%		162,657		0.24	%		1,171		456		715			0.01	%
	Q2: 2003		61,031,486		216,834		58,296		275,130		0.45	%		163,894		0.27	%		384		152		232			0.01	%
Residential Real Estate Loans
	Q1: 2002	$	1,790,239	$	5,481	$	—	$	5,481		0.31	%	$	4,926		0.28	%	$	—	$	—	$	—			0.00	%
	Q2: 2002		2,795,628		5,953		—		5,953		0.21	%		3,257		0.12	%		—		—		—			0.00	%
	Q3: 2002		4,736,645		6,611		—		6,611		0.14	%		1,387		0.03	%		236		—		236			0.01	%
	Q4: 2002		6,190,674		8,271		—		8,271		0.13	%		4,127		0.07	%		—		—		—			0.00	%
	2002		6,190,674		8,271		—		8,271		0.13	%		4,127		0.07	%		236		—		236			0.01	%
	Q1: 2003		7,297,515		9,996		—		9,996		0.14	%		1,159		0.02	%		31		—		31			0.01	%
	Q2: 2003		9,206,987		12,159		—		12,159		0.13	%		3,895		0.04	%		—		—		—			0.00	%
Residential Loan Credit-Enhancement Securities
	Q1: 2002	$	64,826,605	$	194,556	$	79,924	$	274,480		0.42	%	$	129,849		0.20	%	$	452	$	618	$	(166	)		0.01	%
	Q2: 2002		66,061,159		206,343		65,102		271,445		0.41	%		149,960		0.23	%		115		189		(74	)		0.01	%
	Q3: 2002		68,483,359		220,735		64,147		284,882		0.42	%		151,507		0.22	%		150		103		47			0.01	%
	Q4: 2002		58,659,110		224,891		63,179		288,070		0.49	%		146,226		0.25	%		377		163		214			0.01	%
	2002		58,659,110		224,891		63,179		288,070		0.49	%		146,226		0.25	%		1,094		1,073		21			0.01	%
	Q1: 2003		60,748,216		234,060		61,814		295,874		0.49	%		161,498		0.27	%		1,140		456		684			0.01	%
	Q2: 2003		51,824,499		204,675		58,296		262,971		0.51	%		159,999		0.31	%		384		152		232			0.01	%

(4) The credit reserve on residential real estate loans owned is only available to absorb losses on the residential real estate loan portfolio. The internally- designated credit reserves on loans credit enhanced and the external credit enhancement on loans credit enhanced are only available to absorb losses on the residential loan credit-enhancement portfolio.

Loan Characteristics


Table 13
Residential Real Estate Loan Characteristics
(at period end, all dollars in thousands)
	Jun. 2003			Mar. 2003			Dec. 2002			Sep. 2002			Jun. 2002			Mar. 2002

Retained Residential Loans	$	9,247,420		$	7,321,039		$	6,215,179		$	4,761,893		$	2,803,556		$	1,794,260
Number of loans		24,988			19,805			16,669			12,580			7,394			4,914
Average loan size	$	370		$	370		$	373		$	379		$	379		$	365
Adjustable %		99	%		99	%		99	%		98	%		96	%		100	%
Hybrid %		1	%		1	%		1	%		2	%		4	%		0	%
Fixed %		0	%		0	%		0	%		0	%		0	%		0	%
Northern California		13	%		13	%		12	%		12	%		13	%		12	%
Southern California		12	%		12	%		12	%		12	%		12	%		11	%
Florida		12	%		12	%		12	%		11	%		13	%		12	%
Georgia		6	%		7	%		8	%		8	%		9	%		7	%
New York		5	%		5	%		6	%		6	%		6	%		7	%
New Jersey		4	%		5	%		5	%		5	%		5	%		5	%
Illinois		4	%		4	%		4	%		4	%		4	%		3	%
Texas		3	%		3	%		3	%		3	%		3	%		3	%
Arizona		3	%		3	%		3	%		3	%		2	%		3	%
Colorado		3	%		3	%		3	%		3	%		3	%		3	%
North Carolina		3	%		3	%		3	%		3	%		2	%		2	%
Other states (none greater than 3%)		32	%		30	%		29	%		30	%		28	%		32	%
Year 2003 origination		40	%		11	%		0	%		0	%		0	%		0	%
Year 2002 origination		49	%		72	%		78	%		70	%		47	%		17	%
Year 2001 origination		6	%		11	%		13	%		18	%		31	%		42	%
Year 2000 origination		0	%		0	%		0	%		0	%		0	%		0	%
Year 1999 origination		1	%		2	%		2	%		3	%		5	%		9	%
Year 1998 origination or earlier		4	%		4	%		7	%		9	%		17	%		32	%
% balance in loans > $1mm per loan		15	%		14	%		14	%		15	%		15	%		16	%


Table 14
Residential Loan Credit-Enhancement Securities – Underlying Collateral Characteristics
($ in thousands)
	Jun. 2003			Mar. 2003			Dec. 2002			Sep. 2002			Jun. 2002			Mar. 2002

First loss position, principal value	$	233,787		$	236,122		$	215,046		$	206,062		$	181,179		$	173,990
Second loss position, principal value		168,524			176,864			163,428			152,433			139,290			127,930
Third loss position, principal value		195,823			201,125			180,712			184,174			172,173			158,115

Total principal value	$	598,134		$	614,111		$	559,186		$	542,669		$	492,642		$	460,035
First loss position, reported value	$	74,470		$	63,675		$	65,292		$	52,595		$	46,979		$	42,760
Second loss position, reported value		139,788			130,415			121,491			104,928			90,878			79,969
Third loss position, reported value		179,153			179,072			165,696			166,607			146,902			127,103

Total reported value	$	393,411		$	373,162		$	352,479		$	324,130		$	284,759		$	249,832
Internally-Designated Credit Reserves	$	204,675		$	234,060		$	224,891		$	220,735		$	206,343		$	194,556
External Credit Enhancement		58,296			61,814			63,179			64,147			65,102			79,924

Total Credit Protection	$	262,971		$	295,874		$	288,070		$	284,882		$	271,445		$	274,480
As % of Total Portfolio		0.51	%		0.49	%		0.49	%		0.42	%		0.41	%		0.42	%
Underlying Residential Real Estate Loans	$	51,824,499		$	60,748,216		$	58,659,110		$	68,483,359		$	66,061,159		$	64,826,605
Number of credit-enhanced loans		116,730			138,327			135,196			160,695			165,515			162,502
Average loan size	$	444		$	439		$	434		$	426		$	399		$	398
Adjustable %		36	%		27	%		20	%		20	%		19	%		19	%
Hybrid %		36	%		39	%		37	%		28	%		20	%		14	%
Fixed %		28	%		34	%		43	%		52	%		61	%		67	%
Northern California		26	%		26	%		27	%		27	%		25	%		25	%
Southern California		24	%		24	%		25	%		24	%		24	%		25	%
New York		6	%		5	%		5	%		4	%		5	%		5	%
Florida		4	%		4	%		3	%		3	%		3	%		3	%
Texas		3	%		3	%		3	%		3	%		4	%		4	%
Massachusetts		3	%		3	%		3	%		3	%		3	%		3	%
New Jersey		3	%		3	%		3	%		3	%		3	%		3	%
Other states (none greater than 3%)		31	%		32	%		31	%		33	%		33	%		32	%
Year 2003 origination		12	%		2	%		0	%		0	%		0	%		0	%
Year 2002 origination		42	%		41	%		28	%		25	%		11	%		1	%
Year 2001 origination		24	%		31	%		40	%		43	%		49	%		55	%
Year 2000 origination		4	%		4	%		5	%		5	%		6	%		8	%
Year 1999 origination		7	%		9	%		11	%		11	%		16	%		17	%
Year 1998 or earlier origination		11	%		13	%		16	%		16	%		18	%		19	%
% balance in loans > $1mm per loan		10	%		10	%		8	%		6	%		5	%		4	%

Loan Characteristics (continued)

Table 15
Commercial Real Estate Loans — Characteristics
(at period end, all dollars in thousands)


	Jun. 2003			Mar. 2003			Dec. 2002			Sep. 2002			Jun. 2002			Mar. 2002

Commercial Mortgage Loans	$	34,522		$	31,214		$	29,270		$	50,664		$	49,978		$	49,380
Number of Loans		12			10			7			9			8			7
Average Loan Size	$	2,877		$	3,121		$	4,181		$	5,629		$	6,247		$	7,054
Serious Delinquency	$	650		$	650		$	650		$	—		$	—		$	—
Realized Credit losses		—			—			—			—			—			—
California %		46	%		40	%		36	%		62	%		61	%		61	%

Table 16
Securities Portfolio – Characteristics at June 30, 2003
($ in thousands)


			Rating:
	Total		AAA		AA		A		BBB		BB		B		Unrated

Commercial Real Estate	$	93,072	$	7,832	$	—	$	21,141	$	54,045	$	5,978	$	4,076	$	—
Residential Prime		158,912		34,511		72,369		19,984		32,048		—		—		—
Residential Subprime		153,165		—		17,321		100,802		35,042		—		—		—
Residential Second Lien		70,580		—		43,340		22,976		4,264		—		—		—
Manufactured Housing		15,338		2,990		5,620		6,728		—		—		—		—
Corporate REIT Debt		58,277		—		—		7,522		50,755		—		—		—
Real Estate CDOs		46,233		4,940		9,619		13,573		13,438		—		—		4,663
Total Securities Portfolio	$	595,577	$	50,273	$	148,269	$	192,726	$	189,592	$	5,978	$	4,076	$	4,663

Table 17
Asset / Liability Matching at June 30, 2003
($ in thousands)


			One-		Six-		One-				Non				Total
			Month		Month		Year		Fixed/		Interest				Liabilities
Asset	Asset		LIBOR		LIBOR		Treasury		Hybrid		Bearing				And
Type	Amount		Liabilities		Liabilities		Liabilities		Liabilities		Liabilities		Equity		Equity

Cash (unrestricted)	$	36,539	$	36,539	$	—	$	—	$	—	$	—	$	—	$	36,539
One-Month LIBOR		2,707,635		2,707,635		—		—		—		—		—		2,707,635
Six-Month LIBOR		6,849,546		4,249,407		2,264,658		126,598		—		—		208,883		6,849,546
Other ARM		17,541		—		—		17,541		—		—		—		17,541
One-Year Treasury		35,260		—		—		35,260		—		—		—		35,260
Fixed / Hybrid < 1yr*		79,847		—		—		—		—		—		79,847		79,847
Fixed > 1yr		387,890		—		—		—		221,191		—		166,699		387,890
Hybrid > 1yr		193,211		—		—		—		101,486		—		91,725		193,211
Non-Earning Assets		48,583		—		—		—		—		48,561		22		48,583

Total	$	10,356,052	$	6,993,581	$	2,264,658	$	179,399	$	322,677	$	48,561	$	547,176	$	10,356,052

Long-Term Debt Characteristics

Table 18
Long-Term Debt Characteristics — Residential Mortgage Loans (Sequoia)
($ in thousands)

Principal

Interest

Original

Estimated

Outstanding

Rate At

Debt

Issue

Stated

Callable

At June 30,

June 30,

Sequoia Long Term Debt Issue

Rating

Date

Amount

Index

Maturity

Date

2003

Sequoia 1 A1

AAA

07/29/97

334,347

1m LIBOR

02/15/28

Called

—

Sequoia 1 A2

AAA

07/29/97

200,000

Fed Funds

02/15/28

Called

—

Sequoia 2 A1

AAA

11/06/97

592,560

1y Treasury

03/30/29

6/26/05

179,399

2.67

Sequoia 2 A2

AAA

11/06/97

156,600

1m LIBOR

03/30/29

6/26/05

47,411

1.38

Sequoia 3 A1

AAA

06/26/98

225,459

Fixed to 12/02

05/31/28

Retired

—

Sequoia 3 A2

AAA

06/26/98

95,000

Fixed to 12/02

05/31/28

Retired

—

Sequoia 3 A3

AAA

06/26/98

164,200

Fixed to 12/02

05/31/28

Retired

—

Sequoia 3 A4

AAA

06/26/98

121,923

1m LIBOR

05/31/28

Called

—

Sequoia 3 M1

AA/AAA

06/26/98

16,127

1m LIBOR

05/31/28

Called

—

Sequoia 3 M2

A/AA

06/26/98

7,741

1m LIBOR

05/31/28

Called

—

Sequoia 3 M3

BBB/A

06/26/98

4,838

1m LIBOR

05/31/28

Called

—

Sequoia 1A A1

AAA

05/04/99

157,266

1m LIBOR

02/15/28

Called

—

Sequoia 4 A

AAA

03/21/00

377,119

1m LIBOR

08/31/24

6/28/05

186,187

1.42

Sequoia 5 A

AAA

10/29/01

496,667

1m LIBOR

10/29/26

6/30/05

408,068

1.44

Sequoia 5 B1

10/29/01

5,918

1m LIBOR

10/29/26

6/30/05

5,918

1.89

Sequoia 5 B2

10/29/01

5,146

1m LIBOR

10/29/26

6/30/05

5,146

1.89

Sequoia 5 B3

BBB

10/29/01

2,316

1m LIBOR

10/29/26

6/30/05

2,316

1.89

Sequoia 6A

AAA

04/26/02

496,378

1m LIBOR

04/26/27

6/30/05

433,037

1.38

Sequoia 6B1

04/26/02

5,915

1m LIBOR

04/26/27

6/30/05

5,915

1.76

Sequoia 7A

AAA

05/29/02

554,686

1m LIBOR

05/29/32

6/30/05

485,545

1.44

Sequoia 7B1

05/29/02

8,080

1m LIBOR

05/29/32

6/30/05

8,080

1.85

Sequoia 8 1A-1

AAA

07/30/02

50,000

1m LIBOR

08/20/32

6/30/05

—

Sequoia 8 1A-2

AAA

07/30/02

61,468

Fixed to 12/04

08/20/32

6/30/05

59,460

3.46

Sequoia 8 2A

AAA

07/30/02

463,097

1m LIBOR

08/20/32

6/30/05

420,931

1.40

Sequoia 8 3A

AAA

07/30/02

49,973

6m LIBOR

08/20/32

6/30/05

43,892

3.00

Sequoia 8 B1

07/30/02

9,069

1m LIBOR

08/20/32

6/30/05

9,069

1.78

Sequoia 9 1A

AAA

08/28/02

381,689

1m LIBOR

09/20/32

7/2/05

361,541

1.45

Sequoia 9 2A

AAA

08/28/02

168,875

1m LIBOR

09/20/32

7/2/05

139,106

2.99

Sequoia 9 B1

08/28/02

7,702

1m LIBOR

09/20/32

7/2/05

7,701

1.85

Sequoia 10 1A

AAA

09/26/02

822,375

1m LIBOR

10/20/27

7/2/05

772,130

1.50

Sequoia 10 2A-1

AAA

09/26/02

190,000

1m LIBOR

10/20/27

7/2/05

180,912

1.48

Sequoia 10 2A-2

AAA

09/26/02

3,500

1m LIBOR

10/20/27

7/2/05

3,500

1.78

Sequoia 10 B1

09/26/02

12,600

1m LIBOR

10/20/27

7/2/05

12,600

1.90

Sequoia 10 B2

09/26/02

8,400

1m LIBOR

10/20/27

7/2/05

8,400

1.90

Sequoia 10 B3

BBB

09/26/02

4,725

1m LIBOR

10/20/27

7/2/05

4,725

2.50

Sequoia 11 A

AAA

10/30/02

695,210

1m LIBOR

12/21/32

7/3/05

656,560

1.55

Sequoia 11 B1

10/30/02

9,726

1m LIBOR

12/21/32

7/3/05

9,726

2.07

Sequoia 12 A

AAA

12/19/02

1,080,076

1m LIBOR

01/21/33

7/3/05

1,037,855

1.55

Sequoia 12 B1

12/19/02

16,815

1m LIBOR

01/21/33

7/3/05

16,815

1.95

Sequoia 2003-1 1A

AAA

02/27/03

798,206

1m LIBOR

04/20/33

7/1/05

775,613

1.48

Sequoia 2003-1 2A

AAA

02/27/03

190,000

6m LIBOR

04/20/33

7/1/05

184,819

1.74

Sequoia 2003-1 B-1

02/27/03

15,905

1m LIBOR

04/20/33

7/1/05

15,905

1.98

Sequoia 2003-1 B-2

02/27/03

8,210

Pass Through

04/20/33

7/1/05

8,210

2.79

Sequoia 2003-2 A-1

AAA

04/29/03

500,000

1m LIBOR

06/01/33

7/1/05

494,603

1.43

Sequoia 2003-2 A-2

AAA

04/29/03

303,600

6m LIBOR

06/01/33

7/1/05

298,351

1.63

Sequoia 2003-2 M-1

04/29/03

11,480

1m LIBOR

06/01/33

7/1/05

11,480

1.75

Sequoia 2003-3 A-1

AAA

06/26/03

379,455

1m LIBOR

07/01/33

7/1/05

379,455

1.36

Sequoia 2003-3 A-2

AAA

06/26/03

149,922

6m LIBOR

07/01/33

7/1/05

149,922

1.34

Sequoia 2003-3 B-1

06/26/03

9,075

1m LIBOR

07/01/33

7/1/05

9,075

1.68

MLCC 2003-C A-1

AAA

06/26/03

773,795

1m LIBOR

06/01/28

7/3/05

773,795

1.36

MLCC 2003-C A-2

AAA

06/26/03

200,002

6m LIBOR

06/01/28

7/3/05

200,002

1.34

MLCC 2003-C B-1

06/26/03

10,553

1m LIBOR

06/01/28

7/3/05

10,553

1.68

Total Sequoia Issuance

11,413,788

8,823,728

1.54

Table 19
Long-Term Debt Characteristics — Commercial Real Estate Loans
($ in thousands)

Principal

Interest

Commercial

Original

Estimated

Outstanding

Rate At

Long Term Debt

Debt

Issue

Stated

Callable

At June 30,

June 30,

Issue

Rating

Date

Amount

Index

Maturity

Date

2003

Commercial 1

03/30/01

9,010

1m LIBOR

11/01/02

Paid Off

—

Commercial 2

03/30/01

8,320

1m LIBOR

10/01/03

Paid Off

—

Commercial 3

03/01/02

8,318

1m LIBOR

07/01/03

8,255

8.63

Total Commercial Issuance

25,648

8,255

8.63

Long-Term Debt Characteristics (continued)

Table 20
Long-Term Debt Characteristics
Collateralized Debt Obligations and Other Resecuritizations – Acacia and
SMFC
($ in thousands)

Principal

Interest

Resecuritizations

Original

Estimated

Outstanding

Rate At

Long Term Debt

Debt

Issue

Stated

Callable

At June 30,

June 30,

Resecuritizations Issue

Rating

Date

Amount

Index

Maturity

Date

2003

SMFC 2002A A1

AAA

04/30/02

64,761

1m LIBOR

04/30/30

6/30/05

36,446

1.17

SMFC 2002A A2

AAA

04/30/02

15,861

1m LIBOR

08/30/29

6/30/05

11,846

1.86

Acacia CDO 1 A

AAA

12/10/02

224,250

3m LIBOR

12/04/18

7/2/05

224,006

1.86

Acacia CDO 1 B

12/10/02

45,000

3m LIBOR

12/04/37

7/2/05

45,000

2.58

Acacia CDO 1 C

BBB

12/10/02

15,750

3m LIBOR

12/04/37

7/2/05

15,750

3.98

SMFC 2002B I A1

12/19/02

16,855

Fixed

08/28/31

6/28/05

16,084

5.43

SMFC 2002B I A2

12/19/02

18,274

Fixed

08/28/31

6/28/05

17,438

5.68

SMFC 2002B I A3

BBB

12/19/02

17,221

Fixed

08/28/31

6/28/05

16,433

6.38

SMFC 2002B I A4

12/19/02

25,133

Fixed

08/28/31

6/28/05

23,983

6.75

SMFC 2002B II A1

12/19/02

15,517

Fixed

12/29/39

6/28/05

8,667

4.82

SMFC 2002B II A2

12/19/02

18,345

Fixed

12/29/39

6/28/05

10,247

4.92

SMFC 2002B II A3

BBB

12/19/02

14,989

Fixed

12/29/39

6/28/05

8,372

5.35

SMFC 2002B II A4

12/19/02

8,347

Fixed

12/29/39

6/28/05

4,662

6.00

Acacia CDO 2 A

AAA

05/13/03

222,000

3m LIBOR

06/08/23

7/3/05

222,000

1.94

Acacia CDO 2 B

05/13/03

45,375

3m LIBOR

06/08/38

7/3/05

45,375

2.59

Acacia CDO 2 C

BBB

05/13/03

16,500

3m LIBOR

06/08/38

7/3/05

16,500

4.54

Total Resecuritizations

784,178

722,808

2.63

Other Supplemental Financial Data

Table 21
Shareholder Wealth (5)
(dollars per share)


	GAAP
	Book		Dividends				Cumulative		Cumulative
	Value		Declared				Reinvestment		Shareholder
	Per		During		Cumulative		Earnings on		Wealth
	Share		Period		Dividends		Dividends		Per Share

Sep. 1994	$	11.67	$	—	$	—	$	—	$	11.67
Dec. 1994		10.82		0.25		0.250		—		11.07
Dec. 1995		12.38		0.96		1.210		0.09		13.68
Dec. 1996		16.50		1.67		2.880		1.07		20.45
Dec. 1997		21.55		2.15		5.030		3.07		29.65
Dec. 1998		20.27		0.28		5.310		2.67		28.25
Dec. 1999		20.88		0.40		5.710		3.07		29.66
Dec. 2000		21.47		1.61		7.320		4.11		32.90
Dec. 2001		22.21		2.55		9.870		6.03		38.11
Dec. 2002		27.43		2.89		12.755		12.43		52.62
Jun. 2003		30.70		1.30		14.055		16.79		61.55

(5) In the nearly 9 years since the commencement of Redwood’s operations, cumulative shareholder wealth has grown at a compound rate of 20% per year. We define shareholder wealth as growth in tangible book value per share, plus dividends paid, plus reinvestment of dividends. In calculating shareholder wealth, we assume that dividends were reinvested through the purchase of additional shares at the prevailing book value per share. With this assumption, the shareholder wealth we created can be compared to book value per share growth at a non-REIT company that has retained its earnings and compounded book value within the company. This is a measure of management value-added, not a measure of actual shareholder returns.

Book value per share was $11.67 in September 1994 when we commenced operations. We increased reported book value to $30.70 per share at June 30, 2003 through the retention of cash by keeping dividends lower than cash flow, net positive changes in market values of assets, issuance of stock at prices above book value, and repurchases of stock at prices below book value. Since we mark-to-market many of our assets through our balance sheet, reported book value is a good approximation of tangible value in the company. Cumulative dividends paid during this period were $14.055 per share, and reinvestment earnings on those dividends were $16.79 per share. Thus, cumulatively, shareholder wealth has increased from $11.67 per share to $61.55 per share during this nearly nine-year period. A company that earned a 20% after-tax return on equity and retained all its earnings would have shown a similar amount of shareholder wealth growth during this period.

Table 22
Operating Expenses
($ in thousands)


																					Efficiency
			Less:									Fixed and			Fixed and						Ratio:
			Variable									Variable			Variable			Fixed			Fixed and
			Stock			Total				Variable		Operating			Operating			Operating			Variable
			Option			Fixed and				(Performance		Expenses/			Expenses/			Expenses/			Operating
	Total		Valuation			Variable		Fixed		Based)		Average			Average			Average			Expenses/
	Operating		Adjustments			Operating		Operating		Operating		GAAP			Core			Core			Net Interest
	Expenses		& Excise Tax			Expenses		Expenses		Expenses		Equity			Equity			Equity			Income

Q1: 2002	$	4,089	$	543		$	3,546	$	1,758	$	1,788		4.2	%		4.3	%		2.1	%		23	%
Q2: 2002		5,325		789			4,536		2,081		2,455		4.7	%		4.9	%		2.2	%		26	%
Q3: 2002		3,545		(745	)		4,290		2,101		2,189		4.0	%		4.5	%		2.2	%		24	%
Q4: 2002		7,046		1,037			6,009		2,230		3,779		5.3	%		6.0	%		2.2	%		29	%
2002		20,005		1,624			18,381		8,170		10,211		4.6	%		4.9	%		2.2	%		26	%
Q1: 2003		8,282		1,810			6,472		2,663		3,809		5.3	%		6.2	%		2.6	%		27	%
Q2: 2003		8,793		1,490			7,303		2,645		4,658		5.8	%		6.8	%		2.5	%		25	%

Table 23
Unamortized Premium and Discount Balances*
($ in thousands)


									Net
									Amortization
						Unamortized			(Expense)
	Unamortized		Unamortized			Net			Income
	Gross		Gross			Premium/			During
	Premium		Discount			(Discount)			Period

Q1: 2002	$	23,036		($32,053	)		($9,017	)		($3,201	)
Q2: 2002		31,155		(40,301	)		(9,146	)		(793	)
Q3: 2002		57,951		(58,397	)		(446	)		(2,148	)
Q4: 2002		60,478		(70,140	)		(9,662	)		(3,083	)
2002		60,478		(70,140	)		(9,662	)		(3,083	)
Q1: 2003		62,812		(96,131	)		(33,319	)		(2,098	)
Q2: 2003		95,644		(139,297	)		(43,653	)		3,269

* Includes deferred bond issuance costs and net premium on long-term debt.

Other Supplemental Financial Data (continued)

Table 24
Differences Between GAAP Income and Estimated REIT Taxable Income
($ in thousands)


	For the Six
	Months			For the
	Ended			Year Ended
	6/30/2003			12/31/2002

GAAP Income	$	37,144		$	53,893
(Earnings)/losses from taxable subsidiaries		(2,230	)		37
Amortization and credit expenses		12,912			21,740
Operating expenses		8,381			5,232
Provision for excise tax		862			959
Mark-to-market adjustments		1,774			(4,942	)

Estimated REIT taxable income for common shareholders	$	58,843		$	76,919

End