Redwood Trust (RWT) 10-K 2012 FY Annual report

EXHIBIT 12

STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES⁽¹⁾

Our ratio of earnings to fixed charges for the each of the years ended December 31, 2012, 2011, 2010, 2009, and 2008 were as follows:

	Year Ended December 31,
(In Thousands, Except Ratios)	2012		2011		2010		2009		2008
Net income (loss) before provision for income taxes	$	133,060	$	25,238	$	111,482	$	34,844	$	(449,532)
Interest expense on asset-backed securities		101,821		88,492		76,319		126,218		407,076
Interest expense on long-term debt		9,583		9,514		8,264		5,785		9,275
Earnings available to cover fixed charges	$	244,464	$	123,244	$	196,065	$	166,847	$	(33,181)
Fixed charges:
Interest expense on asset-backed securities	$	101,821	$	88,492	$	76,319	$	126,218	$	407,076
Interest expense on long-term debt		9,583		9,514		8,264		5,785		9,275
Total fixed charges	$	111,404	$	98,006	$	84,583	$	132,003	$	416,351
Ratio of earnings to fixed charges		2.19		1.26		2.32		1.26		(0.08)	(2)

(1) The ratio of earnings to fixed charges represents the number of times “fixed charges” are covered by “earnings.” “Fixed charges” consist of interest on outstanding asset backed securities issued and debt and amortization of debt discount and expense. The proportion deemed representative of the interest factor of operating lease expense has not been deducted as the total operating lease expense in itself was de minimis and did not affect the ratios in a material way. “Earnings” consist of consolidated income before income taxes and fixed charges.

(2) For the year ended December 31, 2008, consolidated income before income taxes was insufficient to cover fixed charges by approximately $450 million.