PAULA FINANCIAL REPORTS NET INCOME FOR 3Q 2004:

Pasadena, Calif.-based PAULA Financial reported net income for the first nine months of 2004 of $915,000 or $0.14 per share compared to $885,000 or $0.14 per share for the 2003 period. Total revenue for the first nine months of 2004 was $14.4 million compared to $14.1 million for the 2003 period. Expenses continue to be well controlled with payroll as a percentage of total revenue through the third quarter of 2004 of 54 percent compared to 53 percent a year ago. Net income for the third quarter of 2004 was $0.02 per share compared to $0.07 per shares for the 2003 period. Total revenue for the third quarter of 2004 was $4.6 million compared to $5.2 million for the 2003 period. Jeff Snider, chairman and CEO, said, “Total revenues for the third quarter were down–in part due to Florida hurricanes and their impact on profit sharing arrangements with crop insurance underwriters. It has been the company’s practice to recognize changes to profit share arrangements when they are reasonably estimable–without the hurricanes we would have recognized an additional $145,000 of revenue and increased our third quarter net income by more than 50 percent. The Company has no downside underwriting exposure in Florida, but its agency agreement provides for profit share payments when it delivers superior underwriting outcomes to its risk partners.”