May 4, 2010

Nicholas Financial Reports Results for the 4th Quarter & Year Ended March 31, 2010

Clearwater, Florida, - May 4, 2010 - Nicholas Financial, Inc. (NASDAQ: NICK), announced that for the three months ended March 31, 2010, net earnings, excluding change in fair value of interest rate swaps, increased 52% to $3,113,000 as compared to $2,048,000 for the three months ended March 31, 2009. Per share diluted net earnings, excluding change in fair value of interest rate swaps, increased 44% to $0.26 as compared to $0.18 for the three months ended March 31, 2009. See reconciliations of the Non-GAAP measures on page 2. Revenue increased 8% to $14,256,000 for the three months ended March 31, 2010 as compared to $13,224,000 for the three months ended March 31, 2009.

For the year ended March 31, 2010, net earnings, excluding change in fair value of interest rate swaps, increased 80% to $10,228,000 as compared to $5,673,000 for the year ended March 31, 2009. Per share diluted net earnings, excluding change in fair value of interest rate swaps, increased 74% to $0.87 for the year ended March 31, 2010 as compared to $0.50 for the year ended March 31, 2009. See reconciliations of the Non-GAAP measures on page 2. Revenue increased 6% to $56,472,000 for the year ended March 31, 2010 as compared to $53,102,000 for the year ended March 31, 2009.

According to Peter L. Vosotas, Chairman and CEO, “Our positive results for the fourth quarter and year were favorably impacted by a solid increase in revenues and a reduction in the net charge-off percentage of 41% and 26% for the three and twelve months ended March 31, 2010, respectively. We plan to open three to five new branch locations this year and will continue to evaluate additional markets for future branch locations.”

The Company will hold its Annual Shareholders Meeting at the Innisbrook Golf Resort in Palm Harbor, Florida on August 11th at 10:00am.

Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeastern states. The Company presently operates out of 52 branch locations in both the Southeast and the Mid-Western states. The Company has approximately 11,716,000 shares of common stock outstanding. For an index of Nicholas Financial, Inc.’s news releases or to obtain a specific release, 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, 2009. 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.

This press release contains disclosures of non-GAAP financial measures including: net earnings, excluding change in fair value of interest rate swaps and per share diluted net earnings, excluding change in fair value of interest rate swaps. These measures utilize the GAAP terms “net income” and “diluted earnings per share” and adjust the GAAP terms to exclude the effect of mark to market adjustments and reclassifications of previously recorded accumulated comprehensive losses associated with interest rate swaps. Management believes this presentation provides additional and meaningful measures for the assessment of the Company's ongoing results and performance. Prior to the three months ended December 31, 2008, reported changes in the fair value of interest rate swaps through other comprehensive income under hedge accounting. Management believes that the inclusion of this non-GAAP measure provides consistency in its financial reporting and facilitates investors' understanding of the Company's historic operating trends by providing an additional basis for comparisons to prior periods. Management recognizes that the use of non-GAAP measures has limitations, including the fact that they may not be directly comparable with similar non-GAAP financial measures used by other companies. All non-GAAP financial measures are intended to supplement the applicable GAAP disclosures and should not be considered in isolation from, or as substitute for, financial information prepared in accordance with GAAP. For a reconciliation of non-GAAP measures from GAAP reported amounts, please see the supplemental information included with this press release.

NICHOLAS FINANCIAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
         
The following tables include reconciliations of GAAP reported net income to the non-GAAP measure, net earnings, excluding changes in fair value of interest rate swaps as well as GAAP reported diluted earnings per share to the non-GAAP measure, per share diluted net earnings, excluding changes in fair value of interest rate swaps. The non-GAAP measures exclude the effect of mark-to-market adjustments and reclassifications of previously recorded accumulated comprehensive losses associated with interest rate swaps.
         
  Three months ended      
March 31,           		 Year ended      
March 31,           
  2010      2009      2010      2009     

Net income, GAAP		 $3,259,522  $2,133,119 $10,864,562  $4,717,563
Mark-to-market (gain) loss on interest rate swaps, net of tax expense (benefit) $91,697, $49,441 and $397,856, ($574,157),  respectively (146,289) (84,774) (637,013) 955,848

Net earnings, excluding changes in fair value of
  interest rate swaps  (a)		 $3,113,233  $2,048,345 $10,227,549  $5,673,411
         
  Three months ended      
March 31,           		 Year ended       
March 31,           
  2010      2009      2010      2009     

Diluted earnings per share, GAAP		 $0.28  $0.19 $0.93  $0.41

Per diluted share mark-to-market (gain) loss on
  interest rate swaps 		($0.02) ($0.01) ($0.06) $0.09

Per share diluted net earnings, excluding changes
  in fair value ofinterest rate swaps  (a)		 $0.26  $0.18 $0.87  $0.50
 

(a) Represents a non-GAAP financial measure.  See information on non-GAAP financial measures above.

NICHOLAS FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, Dollars in Thousands, Except Per Share Amounts)
         
  Three months ended      
March 31,           		 Year ended       
March 31,           
  2010      2009      2010      2009     
Revenue
  Interest and fee income on finance receivables $14,238  $13,202  $56,404  $53,032 
  Sales 18  22  68  70 
  14,256  13,224  56,472  53,102 
Expenses
  Operating 5,942  5,435  23,364  22,249 
  Provision for credit losses 1,725  3,271  11,322  16,386 
  Interest Expense 1,525  1,275  5,170  5,385 
  Change in fair value of interest rate swaps (238) (134)  (1,035) 1,530 
  8,954  9,847  38,821  45,550 
 
Operating income before income taxes 5,302  3,377  17,651  7,552 
  Income tax expense 2,042  1,244  6,786  2,834 
    Net income $3,260  $2,133  $10,865  $4,718 
 
Earnings Per share:
    Basic $  0.28  $  0.19  $  0.95  $  0.42 
    Diluted $  0.28  $  0.19  $  0.93  $  0.41 
 
Weighted average shares 11,571,000  11,335,000  11,470,000  11,274,000 
 
Weighted average shares 11,788,000  11,463,000  11,689,000  11,440,000 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)
  March 31,
  2010       2009     
Cash $   1,534  $   1,733 
Finance receivables, net 202,440  186,694 
Other assets 10,162  9,355 
     
  Total assets $214,136  $197,782 
     
Line of credit $107,275  $102,030 
Other Liabilities 9,424  10,734 
 
  Total Liabilities 116,669  112,764 
 
Shareholders' equity 97,437  85,018 
 
Total Liabilities and hareholders' equity $214,136   $197,782  
 

Portfolio Summary Three months ended      
March 31,          		 Year ended      
March 31,          
  2010      2009      2009      2008     
Average finance receivables, net of unearned interest (1) $229,445,877  $209,166,023  $223,547,537  $207,402,047 
Average indebtedness (2) $108,548,279  $101,390,054  $106,985,830  $103,126,653 
Interest and fee income on finance receivables (3) $  14,237,535  $  13,201,938  $  56,403,536  $  53,032,438 
Interest Expense 1,524,454  1,274,850  5,169,736  5,384,532 
Net Interest and fee income on finance receivables $12,713,081  $11,927,088  $51,233,800  $47,647,906 
Weighted average contractual rate (4) 23.76%  24.15%  23.62%  24.17% 
Average cost of borrowed funds (2) 5.62%  5.03%  4.83%  5.22% 
Gross portfolio yield (5) 24.82%  25.25%  25.23%  25.57% 
Interest expense as a percentage of average finance
  receivables, net of unearned interest		 2.66%  2.44%  2.31%  2.60% 

Provision for credit losses as a percentage of average
  finance receivables, net of unearned interest		 3.01%  6.26%  5.06%  7.90% 
Net portfolio yield (5) 19.15%  16.55%  17.86%  15.07% 

Marketing, salaries, employee benefits, depreciation and
  administrative expenses as a percentage of average
  finance receivables, net of unearned interest (6)		 10.26%  10.27%  10.35%  10.57% 
Pre-tax yield as a percentage of average finance
  receivables, net of unearned interest (7)		 8.89%  6.28%  7.51%  4.50% 
Write-off to liquidation (8) 6.66%  10.91%  9.87%  12.39% 
Net charge-off percentage (9) 5.23%  8.94%  7.37%  9.93% 
 
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 Contracts purchased
           and direct loans originated during the period.
(5)     Gross portfolio yield represents finance revenues as a percentage of average finance receivables, net of unearned interest.
           Net portfolio yield represents finance revenue 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 $49,000 and $58,000 during the three months ended March 31, 2010 and 2009 and $213,000
           and $316,000 for the year ended March 31, 2010 and 2009 respectively.
(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 Contracts purchased by the Company and its direct loan program:
         
  March 31,
  2010 2009
Contracts    
Gross balance outstanding $320,579,222 $291,034,770
         
Delinquencies    
         
30 to 59 days $7,613,284  2.37% $8,737,694  3.00%
60 to 89 days 1,752,638  0.55% 2,666,484  0.92%
90 + days 778,606  0.24% 848,608  0.29%
Total delinquencies $10,144,528  3.16% $12,252,786  4.21%
         
Direct Loans    
Gross balance outstanding $4,840,381 $6,890,705
         
Delinquencies    
         
30 to 59 days $   98,854  2.04% $   173,517  2.52%
60 to 89 days 34,864  0.72% 49,780  0.72%
90 + days 14,383  0.30% 42,672  0.62%
Total delinquencies $   148,101  3.06% $   265,969  3.86%
         

The following table presents selected information on Contracts purchased by the Company, net of unearned interest:
         
  Three months ended      
March 31,          		 Year ended      
March 31,          
  2010      2009      2010      2009     
Purchases $34,027,042  $30,614,559  $121,606,738  $113,327,259 
Weighted APR 23.70%  24.08%  23.55%  24.06% 
Average Discount 9.22%  9.44%  9.11%  9.14% 
Weighted average term (months) 48  49  48  48 
Average Loan $    9,310  $    9,042  $    9,422  $    9,340 
Number of contracts 3,655  3,386  12,907  12,134