Exhibit 11.1

Redwood Trust, Inc.
Computation of Per Share Earnings

                 
    Three Months     Three Months  
    Ended     Ended  
    March 31, 2005     March 31, 2004  
Basic:
                
Average common shares outstanding
     24,357,225       19,427,373  
 
            
Total
     24,357,225       19,427,373  
 
            
Net Income
   $ 60,561,979     $ 50,790,699  
 
            
Per Share Amount
   $ 2.49     $ 2.61  
 
            
 
                
Diluted:
                
Average common shares outstanding
     24,357,225       19,427,373  
Net effect of dilutive stock options outstanding during the period — based on the treasury stock method
     663,707       971,387  
 
            
Total
     25,020,932       20,398,760  
 
            
Net Income
   $ 60,561,979     $ 50,790,699  
 
            
Per Share Amount
   $ 2.42     $ 2.49