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Redwood Trust, Inc. Increases Its Regular Dividend Rate to $0.67 Per Share Per Quarter and Declares a Special Dividend for the First Quarter of 2004

Friday, March 05, 2004

MILL VALLEY, Calif.--(BUSINESS WIRE)--March 5, 2004--Redwood Trust, Inc. (NYSE:RWT), a financial institution that invests in real estate loans, today announced that its Board of Directors declared a regular cash dividend of $0.67 per share for the first quarter of 2004. This is a 3% increase in Redwood's regular dividend rate.

"We believe our new $0.67 per share regular quarterly dividend rate is sustainable," said George Bull, Redwood's Chairman and CEO.

Redwood's Board of Directors also declared a special cash dividend of $0.50 per share for the first quarter of 2004.

Bull added, "We paid a special dividend of $4.75 per share in November 2003 based on our estimate of Redwood's 2003 taxable income. Due to positive events during November and December 2003, actual taxable income for 2003 exceeded our original estimate and Redwood has a larger dividend distribution requirement under the REIT rules than we originally anticipated. We are declaring a special dividend for the first quarter of 2004 to help meet that requirement.

"We expect to complete our required distributions of 2003 taxable income with our first three regular quarterly dividends of 2004 plus this first quarter 2004 special dividend," Bull continued. "We expect to commence distribution of 2004 taxable income with our fourth quarter 2004 regular dividend. If we have strong taxable income results during 2004, we may declare another special dividend during the fourth quarter of 2004. We do not currently anticipate declaring any additional special dividends prior to the fourth quarter."

The first quarter 2004 regular and special dividends are payable on April 21, 2004 to shareholders of record on March 31, 2004. These dividends are taxable to our shareholders in 2004.

Redwood also announced that the Board of Directors has set May 6, 2004 as the date for the annual meeting of shareholders. The meeting will be held at 11:00 a.m. in Mill Valley, California. Shareholders of record as of March 31, 2004 will be entitled to vote at that meeting.

For more information about Redwood Trust, Inc., please visit

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the federal securities laws that inherently include certain risks and uncertainties. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, among other things, changes in interest rates on our mortgage assets and borrowings, changes in prepayment rates on our mortgage assets, general economic conditions, particularly as they affect the price of mortgage assets and the credit status of borrowers, and the level of liquidity in the capital markets, as it affects our ability to finance our mortgage asset portfolio, and other risk factors outlined in the Company's 2002 Annual Report on Form 10-K (available on the Company's Web site or by request to the Contacts listed above). Other factors not presently identified may also cause actual results to differ. No one should assume that results or trends projected in or contemplated by the forward-looking statements included above will prove to be accurate in the future. We will revise our outlook from time to time and frequently will not disclose such revisions publicly.

    CONTACT: Redwood Trust, Inc.
             Harold Zagunis/Nicole Klock, 415-389-7373

    SOURCE: Redwood Trust, Inc.

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