Exhibit 11.1

Redwood Trust, Inc.
Computation of Per Share Earnings

                   
      Three Months   Nine Months
      Ended   Ended
      September 30, 2003   September 30, 2003
     
 
Basic:
                
 
Average common shares outstanding
     18,130,085       17,404,892  
 
 
    
     
 
 
Total
     18,130,085       17,404,892  
 
 
    
     
 
 
Net Income
   $ 24,636,565     $ 61,780,305  
 
 
    
     
 
 
Per Share Amount
   $ 1.36     $ 3.55  
 
 
    
     
 
Diluted:
                
 
Average common shares outstanding
     18,130,085       17,404,892  
 
Net effect of dilutive stock options outstanding during the period — based on the treasury stock method
     888,402       760,062  
 
 
    
     
 
 
Total
     19,018,487       18,164,954  
 
 
    
     
 
 
Net Income
   $ 24,636,565     $ 61,780,305  
 
 
    
     
 
 
Per Share Amount
   $ 1.30     $ 3.40