**Exhibit 11**

 

**PAULAFINANCIAL AND SUBSIDIARIESComputation of Basic and Diluted Earnings Per Share**(In thousands, except per share data)

 
|                                                                                |   | **Three  Months Ended  September 30,** |   | **Nine  Months Ended  September 30,** |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                |   | **2003**                                    |   | **2002**                                   |   | **2003** |   | **2002** |   |
|                                                                                |   |                                        |   |                                       |   |   |   |   |   |
| Net income                                                                          |   | $                                           | 476    |                                       | $      | 106 |   | $ | 885 |   | $ | 369 |   |
|                                                                                |   |                                        |   |                                       |   |   |   |   |   |
| Weighted average shares outstanding for  calculating  basic earnings per share |   | 6,239,879                                   |   | 6,089,879                                  |   | 6,217,682 |   | 6,091,397 |   |
|                                                                                |   |                                        |   |                                       |   |   |   |   |   |
| Options                                                                             |   | 245,333                                     |   | 35,461                                     |   | 225,698 |   | 21,864 |   |
|                                                                                |   |                                        |   |                                       |   |   |   |   |   |
| Total shares for calculating diluted  earnings  per share                      |   | 6,485,212                                   |   | 6,125,340                                  |   | 6,443,380 |   | 6,113,261 |   |
|                                                                                |   |                                        |   |                                       |   |   |   |   |   |
| Basic earnings per share                                                            |   | $                                           | 0.08   |                                       | $      | 0.02 |   | $ | 0.14 |   | $ | 0.06 |   |
|                                                                                |   |                                        |   |                                       |   |   |   |   |   |
| Diluted earnings per share                                                          |   | $                                           | 0.07   |                                       | $      | 0.02 |   | $ | 0.14 |   | $ | 0.06 |   |

 

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