February 2, 2012

Nicholas Financial Reports Record 3rd Quarter Revenue and Earnings

Clearwater, Florida, - February 2, 2012 - Nicholas Financial, Inc. (NASDAQ: NICK), announced that for the three months ended December 31, 2011 net earnings increased 20% to $5,363,000 as compared to $4,475,000 for the three months ended December 31, 2010. Per share diluted net earnings increased 18% to $0.45 as compared to $0.38 for the three months ended December 31, 2010. Revenue increased 7% to $17,140,000 for the three months ended December 31, 2011 as compared to $15,995,000 for the three months ended December 31, 2010.

For the nine months ended December 31, 2011 net earnings increased 35% to $16,186,000 as compared to $12,033,000 for the nine months ended December 31, 2010. Per share diluted net earnings increased 34% to $1.35 as compared to $1.01 for the nine months ended December 31, 2010. Revenue increased 9% to $50,985,000 for the nine months ended December 31, 2011 as compared to $46,679,000 for the nine months ended December 31, 2010.

“Our strong growth in earnings per share for the three and nine months ended December 31, 2011 were primarily the results of a reduction in the net charge-off rate,” stated Peter L. Vosotas, Chairman and CEO. We also recently opened our 60th branch location in Kansas City, MO and we continue to develop additional markets.

As a result of our continued earnings growth and stable capital position, on January 31, 2012 the Board of Directors declared another quarterly dividend equal to $0.10 per common share, to be paid on March 20th to shareholders of record as of March 13th.

Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeastern states. The Company presently operates 60 branch locations in both the Southeastern and the Midwestern states. The Company has approximately 12,000,000 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, 2011. 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,          
  2011      2010      2011      2010     
Revenue
  Interest and fee income on finance receivables $17,127  $15,985  $50,950  $46,650 
  Sales 13  10  35  29 
  15,995  15,995  46,679  46,679
Expenses
  Operating 6,755  6,244  20,229  18,735 
  Provision for credit losses 455  1,201  712  4,509 
  Interest Expense 1,237  1,383  3,703  4,372 
  Change in fair value of interest rate swaps - (96) - (478)
  8,447  8,732  24,644  27,138 
 
Operating income before income taxes 8,693  7,263  26,341  19,541 
  Income tax expense 3,330  2,788  10,155  7,508 
    Net income $5,363  $4,475  $16,186  $12,033 
 
Earnings Per share:
    Basic $  0.46  $  0.39  $  1.38  $  1.04 
    Diluted $  0.45  $  0.38  $  1.35  $  1.01 
 
Weighted average shares 11,783,000  11,604,000  11,733,000  11,606,000 
 
Weighted average shares 12,050,000  11,900,000  12,015,000  11,867,000 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)
     
  December 31,
2011      		 March 31, 
2011     
Cash $   4,720  $   2,018 
Finance receivables, net 237,485  230,164 
Other assets 12,671  11,461 
     
  Total assets $254,876  $243,643 
     
Line of credit $116,000  $118,000 
Other Liabilities 8,370  10,430 
 
  Total Liabilities 124,370  128,430 
 
Shareholders' equity 130,506  115,213 
 
Total Liabilities and shareholders' equity $254,876   $243,643  
 

Portfolio Summary Three months ended
December 31,		 Nine months ended
December 31,
  2011      2010      2011      2010     
Average finance receivables, net of unearned interest (1) $274,595,968  $255,571,347  $272,213,775  $247,650,478 
Average indebtedness (2) $116,000,000  $117,009,444  $116,668,640  $112,860,116 
Interest and fee income on finance receivables (3) $  17,126,855  $  15,984,880  $  50,950,173  $  46,649,661 
Interest Expense 1,236,866  1,382,950  3,702,737  4,372,080 
Net Interest and fee income on finance receivables $15,889,989  $14,601,930  $47,247,436  $42,277,581 
Weighted average contractual rate (4) 23.79%  23.48%  23.87%  23.45% 
Average cost of borrowed funds (2) 4.27%  4.73%  4.23%  5.17% 
Gross portfolio yield (5) 24.95%  25.02%  24.96%  25.12% 
Interest expense as a percentage of average finance
   receivables, net of unearned interest		 1.80 %  2.16%  1.81%  2.35% 
Provision for credit losses as a percentage of average
   finance receivables, net of unearned interest		 0.66%  1.88%  0.35%  2.43% 
Net portfolio yield (5) 22.49%  20.98%  22.80%  20.34% 
Marketing, salaries, employee benefits, depreciation
  and administrative expenses as a percentage of
  average finance receivables, net of unearned interest (6)		 9.76%  9.69%  9.82%  9.99% 
Pre-tax yield as a percentage of average finance
  receivables, net of unearned interest (7)		 12.73%  11.29%  12.98%  10.35% 
Write-off to liquidation (8) 7.16%  7.20%  5.96%  6.97% 
Net charge-off percentage (9) 5.70%  5.39%  4.69%  5.11% 
 
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 $51,000 and $52,000 during the three-month periods ended December 31, 2011 and 2010, respectively, and $167,000
           and $163,000 during the nine-month periods ended December 31, 2011 and 2010 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 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, 2011 $ 375,306,050 $ 13,643,453

$ 3,129,675

 $ 1,125,631 $ 17,898,759
    3.64% 0.83% 0.30% 4.77%
   
December 31, 2010 $ 353,963,564 $ 10,065.353 $ 2,807,904 $ 935,688 $ 13,808,945
    2.84% 0.79% 0.26% 3.89%
Direct Loans  Gross Balance
Outstanding		 31 - 60 days 61 - 90 days Over 90 days Total
December 31, 2011 $ 6,481,305 $ 98,826 $ 11,716 $ 5,662 $ 116,204
    1.53% 0.18% 0.09% 1.80%
   
December 31, 2010 $ 5,252,546 $ 63,680 $ 18,491 $ 14,378 $ 96,549
    1.21% 0.35% 0.27% 1.83%
           

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,           
  2011      2010      2011      2010     
Purchases $32,476,531  $31,865,984  $104,032,406 $105,346,702 
Weighted APR 23.62%  23.48%  23.75%  23.45% 
Average Discount 8.41%  8.74%  8.46%  8.76% 
Weighted average term (months) 49  49  49  49 
Average Loan $    9,990  $    9,841  $    9,928  $    9,869 
Number of contracts 3,251  3,238  10,479  10,675