May 9, 2013

Nicholas Financial Reports 4th Quarter Results & Quarterly Dividend

Clearwater, Florida, - May 9, 2013 - Nicholas Financial, Inc. (NASDAQ: NICK), announced that for the three months ended March 31, 2013, net earnings decreased 20% to $4,865,000 as compared to $6,045,000 for the three months ended March 31, 2012. Per share diluted net earnings decreased 20% to $0.40 as compared to $0.50 for the three months ended March 31, 2012. Revenue increased 3% to $17,688,000 for the three months ended March 31, 2013 as compared to $17,182,000 for the three months ended March 31, 2012.

For the year ended March 31, 2013, net earnings decreased 10% to $19,966,000 as compared to $22,230,000 for the year ended March 31, 2012. Per share diluted net earnings decreased 12% to $1.63 as compared to $1.85 for the year ended March 31, 2012. Revenue increased 4% to $70,628,000 for the year ended March 31, 2013 as compared to $68,167,000 for the year ended March 31, 2012.

“During the three months ended March 31, 2013, our results were affected by an increase in the net charge-off rate, an increase in operating expenses and an increase in interest expense” stated Peter L. Vosotas, Chairman and CEO. "Subject to market conditions, we intend to continue expanding our branch network during the coming year."

On May 7th the Board of Directors declared a cash dividend of $0.12 per share on its common stock, to be paid on June 28, 2013 to shareholders of record as of June 21, 2013. Subject to market conditions and profitability targets, the Company anticipates it will continue to declare quarterly cash dividends in the future, however no assurances can be given.

Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeastern states. The Company presently operates 65 branch locations in both the Southeastern and the Midwestern states. The Company has approximately 12,200,000 shares of common stock outstanding. For an index of Nicholas Financial, Inc.’s news releases or to obtain a specific release, visit our web sitee 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      
March 31,          		 Year ended         
March 31,            
  2013      2012      2013      2012     
Revenue
  Interest and fee income on finance receivables $17,679  $17,173  $70,590  $68,123 
  Sales 9  9  38  44 
  17,688  17,182  70,628  68,167
Expenses
  Operating 7,661  6,818  29,114  26,928 
  Dividend tax 73  60  1,492  180 
  Provision for credit losses 732  (707)  1,869  5 
  Interest Expense 1,403  1,189  5,121  4,892 
  Change in fair value of interest rate swaps (141) - 505 -
  9,728  7,360  38,101  32,005 
 
Operating income before income taxes 7,960  9,822  32,527  36,162 
  Income tax expense 3,095  3,777  12,561  13,932 
    Net income $4,865  $6,045  $19,966  $22,230 
 
Earnings Per share:
    Basic $  0.40  $  0.51   $  1.67  $  1.89 
    Diluted $  0.40  $  0.50   $  1.63  $  1.85 
 
Weighted average shares 12,024,000  11,791,000  11,977,000  11,747,000 
 
Weighted average shares and assumed dilution 12,267,000  12,089,000  12,218,000  12,033,000 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)
     
  March 31,
2013      		 March 31, 
2012     
Cash $   2,798  $   2,803 
Finance receivables, net 250,961  242,349 
Other assets 10,777  12,084 
     
  Total assets $264,536  $257,236 
     
Line of credit $125,500  $112,000 
Other Liabilities 11,370  9,297 
 
  Total Liabilities 136,870  121,297 
 
Shareholders' equity 127,666  135,939 
 
Total Liabilities and shareholders' equity $264,536   $257,236  
 

Portfolio Summary Three months ended
March 31,		 Year ended
March 31,
  2013      2012      2013      2012     
Average finance receivables, net of unearned interest (1) $279,908,688  $275,276,658  $280,909,385  $272,979,496 
Average indebtedness (2) $126,750,000  $112,750,000  $115,157,810  $113,688,980 
Interest and fee income on finance receivables (3) $  17,679,561  $  17,172,359  $  70,628,195  $  68,122,532 
Interest Expense 1,403,441  1,189,117  5,120,827  4,891,854 
Net Interest and fee income on finance receivables $16,276,120  $15,983,242  $65,507,368  $63,230,678 
Weighted average contractual rate (4) 23.16%  24.06%  23.43%  23.93% 
Average cost of borrowed funds (2) 4.43%  4.22%  4.45%  4.23% 
Gross portfolio yield (5) 25.26%  24.95%  25.14%  24.96% 
Interest expense as a percentage of average finance
   receivables, net of unearned interest		 2.01 %  1.73 %  1.82%  1.79% 
Provision for credit losses as a percentage of average
   finance receivables, net of unearned interest		 1.05%  (1.03)%  0.67%  0.00% 
Net portfolio yield (5) 22.20%  24.25%  22.65%  23.17% 
Marketing, salaries, employee benefits, depreciation
  and administrative expenses as a percentage of
  average finance receivables, net of unearned interest (6)		 10.98%  9.91%  10.81%  9.85% 
Pre-tax yield as a percentage of average finance
  receivables, net of unearned interest (7)		 11.22%  14.34%  11.84%  13.32% 
Write-off to liquidation (8) 6.78%  4.86%  6.81%  5.66% 
Net charge-off percentage (9) 6.30%  4.29%  5.88%  4.59% 
 
Note:  All three 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 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 $48,000 and $53,000 for the three-month periods ended March 31, 2013 and 2012 and $220,000 for both years
           ended March 31, 2013 and 2012 respectively. The numerators for the three months ended March 31, 2013 and 2012 and the
           years ended March 31, 2013 and 2012 include a tax associated with cash dividends. In December 2012, this amount was
           substantial due to a $2.00 special cash dividend. Absent the dividend tax, the percentages would have been 10.88% and 9.83%
           for the three months ended March 31, 2013 and 2012 and 10.28% and 9.78% for the years ended March 31, 2013 and 2012
           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 and under its direct loan program:
 
  Delinquencies
Contracts  Gross Balance
Outstanding		 31 - 60 days 61 - 90 days Over 90 Total
March 31, 2013 $ 386,940,093 $ 10,557,122 $ 2,723,456 $ 1,373,507 $ 14,654,085
    2.73% 0.70% 0.35% 3.78%
   
March 31, 2012 $ 382,766,667 $ 8,994.485 $ 1,889,643 $ 663,521 $ 11,547,649
    2.35% 0.49% 0.17% 3.01%
Direct Loans  Gross Balance
Outstanding		 30 - 50 days 60 - 89 days 90 +days Total
March 31, 2013 $ 8,781,637 $ 72,364 $ 21,509 $ 13,790 $ 107,663
    0.82% 0.25% 0.16% 1.23%
   
March 31, 2012 $ 6,221,688 $ 48,899 $ 14,257 $ 4,933 $ 68,089
    0.79% 0.23% 0.07% 1.09%
           

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,          
  2013      2012      2013      2012     
Purchases $43,847,280  $42,289,228  $151,740,809 $146,321,687 
Weighted APR 23.06%  23.99%  23.28%  23.82% 
Average Discount 7.73%  8.50% 7.81%  8.47%
Weighted average term (months) 51  48  50  49 
Average Loan $  10,341  $    9,742  $  10,260  $    9,873 
Number of contracts 4,240  4,341  14,789  14,820