January 30, 2013

Nicholas Financial Reports 3rd Quarter Results

Clearwater, Florida, - January 30, 2013 - Nicholas Financial, Inc. (NASDAQ: NICK), announced that for the three months ended December 31, 2012 net earnings decreased 15% to $4,566,000 as compared to $5,363,000 for the three months ended December 31, 2011. Per share diluted net earnings decreased 18% to $0.37 as compared to $0.45 for the three months ended December 31, 2011. Revenue increased 4% to $17,889,000 for the three months ended December 31, 2012 as compared to $17,140,000 for the three months ended December 31, 2011.

For the nine months ended December 31, 2012, net earnings decreased 7% to $15,101,000 as compared to $16,186,000 for the nine months ended December 31, 2011. Per share diluted net earnings decreased 9% to $1.24 as compared to $1.35 for the nine months ended December 31, 2011. Revenue increased 4% to $52,940,000 for the nine months ended December 31, 2012 as compared to $50,985,000 for the nine months ended December 31, 2011.

“During the three months ended December 31, 2012, our results were affected by an increase in the net charge-off rate and an after-tax charge of $747,000 or $0.06 per share, which is related to a 5% withholding tax associated with the one-time special cash dividend of $2.00 per share paid in December 2012. The withholding is required under the Canada-United States Income Tax Convention. While competition remains fierce, we are committed to maintaining our conservative underwriting principles. We will continue to develop additional markets and expect to continue our branch network expansion”, stated Peter L. Vosotas, Chairman and CEO.

Nicholas Financial, Inc. is one of the largest publically traded specialty consumer finance companies in North America. The Company operates branch locations in both the Southeastern and the Midwestern states. The Company has approximately 12,100,000 shares of common stock outstanding. For an index of Nicholas Financial, Inc. news releases and public filings please visit our web site at www.nicholasfinancial.com.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties including general economic conditions, access to bank financing, and other risks detailed from time to time in the Company’s filings and reports with the Securities and Exchange Commission including the Company’s Annual Report on Form 10-K for the year ended March 31, 2012. Such statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially. All forward looking statements and cautionary statements included in this document are made as of the date hereby based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward looking statement or cautionary statement.

NICHOLAS FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, Dollars in Thousands, Except Per Share Amounts)
         
  Three months ended      
December 31,          		 Nine months ended      
December 31,          
  2012      2011      2012      2011     
Revenue
  Interest and fee income on finance receivables $17,879  $17,127  $52,911  $50,950 
  Sales 10  13  29  35 
  17,889  17,140  52,940  50,985 
Expenses
  Operating 7,120  6,695  21,453  20,109 
  Dividend Tax 1,287  60  1,419  120 
  Provision for credit losses 819  455 1,138  712 
  Interest Expense 1,275  1,237  3,717  3,703 
  Change in fair value of interest rate swaps (37) - 646  -
  10,464  8,447  28,373  24,644 
 
Operating income before income taxes 7,425  8,693  24,567  26,341 
  Income tax expense 2,859  3,330  9,466  10,155 
    Net income $4,566  $5,363  $15,101  $16,186 
 
Earnings Per share:
    Basic $  0.38  $  0.46  $  1.26  $  1.38 
    Diluted $  0.37  $  0.45  $  1.24  $  1.35 
 
Weighted average shares 11,982,000  11,783,000  11,962,000  11,733,000 
 
Weighted average shares 12,193,000  12,050,000  12,192,000  12,015,000 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)
     
  December 31,
2012      		 March 31, 
2012     
Cash $   4,667  $   2,803 
Finance receivables, net 246,343  242,349 
Other assets 12,455  12,084 
     
  Total assets $263,465  $257,236 
     
Line of credit $130,500  $112,000 
Other Liabilities 9,025  9,297 
 
  Total Liabilities 139,525  121,297 
 
Shareholders' equity 123,940  135,939 
 
Total Liabilities and shareholders' equity $263,465   $257,236  
 

Portfolio Summary Three months ended
December 31,		 Nine months ended
December 31,
  2012      2011      2012      2011     
Average finance receivables, net of unearned interest (1) $281,553,866  $274,595,968  $281,242,951  $272,213,775 
Average indebtedness (2) $114,131,239  $116,000,000   $111,293,746  $116,668,640 
Interest and fee income on finance receivables (3) $  17,878,745  $  17,126,855  $  52,910,831  $  50,950,173 
Interest Expense 1,275,015  1,236,866  3,717,386  3,702,737 
Net Interest and fee income on finance receivables $16,603,730  $15,889,989  $49,193,445  $47,247,436 
Weighted average contractual rate (4) 23.34%  23.79%  23.55%  23.87% 
Average cost of borrowed funds (2) 4.47%  4.27%  4.45%  4.23% 
Gross portfolio yield (5) 25.40%  24.95%  25.08%  24.96% 
Interest expense as a percentage of average finance
   receivables, net of unearned interest		 1.81 %  1.80 %  1.76%  1.81% 
Provision for credit losses as a percentage of average
   finance receivables, net of unearned interest		 1.16%  0.66%  0.54%  0.35% 
Net portfolio yield (5) 22.43%  22.49%  22.78%  22.80% 
Marketing, salaries, employee benefits, depreciation
  and administrative expenses as a percentage of
  average finance receivables, net of unearned interest (6)		 11.86%  9.76%  10.76%  9.82% 
Pre-tax yield as a percentage of average finance
  receivables, net of unearned interest (7)		 10.57%  12.73%  12.02%  12.98% 
Write-off to liquidation (8) 7.94%  7.16%  6.82%  5.96% 
Net charge-off percentage (9) 6.75%  5.70%  5.74%  4.69% 
 
Note:  All three and nine month key performance indicators expressed as percentages have been annualized.
(1)     Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned
           interest throughout the period.
(2)     Average indebtedness represents the average outstanding borrowings under the Line. Average cost of borrowed funds
           represents interest expense as a percentage of average indebtedness.
(3)     Interest & fee income on finance receivables does not include revenue generated by Nicholas Data Services, Inc. ("NDS") the
            wholly-owned software subsidiary of Nicholas Financial, Inc.
(4)     Weighted average contractual rate represents the weighted average annual percentage rate ("APR") of all automobile finance installment
           contracts purchased and direct consumer loans originated during the period.
(5)     Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables,
            net of unearned interest. Net portfolio yield represents interest and fee income on finance receivables minus (a) interest expense
           and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest.
(6)     Administrative expenses included in the calculation above are net of administrative expenses associated with NDS which
           approximated $54,000 and $51,000 during the three-month periods ended December 31, 2012 and 2011, respectively, and $172,000
           and $167,000 during the nine-month periods ended December 31, 2012 and 2011, respectively. Administrative expenses for the three
           and nine months include a tax associated with cash dividends. In December 2012, this amount was substantial due to a $2.00 special cash
           dividend. Operating expenses as a percentage of average finance receivables would have been 10.03% and 10.08% for the three and nine
           months ended December 31, 2012 absent the dividend tax. Operating expenses as a percentage of average finance receivables would have
           been 9.67% and 9.76% for the three and nine months ended December 31, 2011 absent the dividend tax.
(7)     Pre-tax yield represents net portfolio yield minus operating expenses as a percentage of average finance receivables, net of
            unearned interest.
(8)     Write-off to liquidation percentage is defined as net charge-offs divided by liquidation. Liquidation is defined as beginning
           receivable balance plus current period purchases minus voids and refinances minus ending receivable balance.
(9)     Net charge-off percentage represents net charge-offs divided by average finance receivables, net of unearned interest,
            outstanding during the period.
 

The following tables present certain information regarding the delinquency rates experienced by the Company with respect to automobile finance installment contracts ("Contracts") and direct consumer loans ("Direct Loans"):
 
  Delinquencies
Contracts  Gross Balance
Outstanding		 31 - 60 days 61 - 90 days Over 90 days Total
December 31, 2012 $ 380,519,395 $ 17,287,813 $ 4,529,766 $ 2,254,123 $ 24,071,702
    4.54% 1.19% 0.59% 6.32%
   
December 31, 2011 $ 375,306,050 $ 13,643.453 $ 3,129,675 $ 1,125,631 $ 17,898,759
    3.64% 0.83% 0.30% 4.77%
Direct Loans  Gross Balance
Outstanding		 31 - 60 days 61 - 90 days Over 90 days Total
December 31, 2012 $ 8,861,098 $ 116,251 $ 29,295 $ 22,501 $ 168,047
    1.31% 0.33% 0.25% 1.89%
   
December 31, 2011 $ 6,481,305 $ 98,826 $ 11,716 $ 5,662 $ 116,204
    1.53% 0.18% 0.09% 1.80%
           

The following table presents selected information on Contracts purchased by the Company, net of unearned interest:
         
  Three months ended      
December 31,          		 Nine months ended       
December 31,           
  2012      2011      2012      2011     
Purchases $31,417,597  $32,476,531  $107,893,539 $104,032,460 
Weighted APR 23.10%  23.62%  23.37%  23.75% 
Average Discount 7.92%  8.41%  7.85%  8.46% 
Weighted average term (months) 50  49  49  49 
Average Loan $  10,459  $    9,990  $   10,228  $    9,928 
Number of contracts 3,004  3,251  10,549  10,479