Nicholas Financial Reports 2nd Quarter Operating Results

• Press Release
• Source: Nicholas Financial, Inc.
• On 11:27 am EDT, Thursday October 29, 2009

CLEARWATER, Fla., Oct. 29, 2009 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (Nasdaq:NICK - News) announced that for the three months ended September 30, 2009, net earnings, excluding changes in fair value of interest rate swaps increased 189% to $2,286,000 as compared to $792,000 for the three months ended September 30, 2008. Per share diluted net earnings, excluding changes in fair value of interest rate swaps, increased 175% to $0.22 for the three months ended September 30, 2009 as compared to $0.08 for the three months ended September 30, 2008. See reconciliations of the non-GAAP measures on page 2. Revenue increased 5% to $14,158,000 for the three months ended September 30, 2009 as compared to $13,505,000 for the three months ended September 30, 2008.

Related Quotes

Symbol	Price	Change
NICK	6.99	-0.03

{"s" : "nick","k" : "c10,l10,p20,t10","o" : "","j" : ""}

For the six months ended September 30, 2009, net earnings, excluding changes in fair value of interest rate swaps increased 86% to $4,367,000 as compared to $2,350,000 for the six months ended September 30, 2008. Per share diluted net earnings, excluding changes in fair value of interest rate swaps, increased 78% to $0.41 for the six months ended September 30, 2009 as compared to $0.23 for the six months ended September 30, 2008. See reconciliations of the non-GAAP measures on page 2. Revenue increased 5% to $27,851,000 for the six months ended September 30, 2009 as compared to $26,624,000 for the six months ended September 30, 2008.

According to Peter L. Vosotas, Chairman and CEO, "We are pleased with our second quarter results. Our results were favorably impacted by a reduction in the net charge-off rate and an increase in revenues. While we remain cautious, we are continuing with our planned expansion. During the second quarter we opened our 49th branch location in Akron, Ohio, and during the third quarter our 50th branch location will be opening in Gastonia, North Carolina. The Company continues to evaluate additional markets for future branch locations, and subject to market conditions, could open additional branch locations during the remainder of the Company's fiscal year which ends March 31, 2010. The Company remains open to acquisitions should an opportunity present itself."

Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeast. The Company presently operates out of 49 branch locations in both the Southeastern and the Midwestern States. The Company has approximately 10,500,000 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.

The Nicholas Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6776

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 changes in fair value of interest rate swaps and per share diluted net earnings, excluding changes 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. Because the Company has historically reported mark-to-market (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            Six months ended
                      September 30,                September 30,
                    2009          2008         2009          2008
               -------------------------------------------------------
 Net income,
  GAAP         $  2,432,002  $    791,843  $  4,695,902  $  2,349,536
 Mark-to-market
  gain on
  interest rate
  swaps, net of
  tax expense
  of $89,379
  and $203,631     (145,699)           --      (328,751)           --
               -------------------------------------------------------
 Net earnings,
  excluding
  changes in
  fair value of
  interest rate
  swaps (a)    $  2,286,303  $    791,843  $  4,367,151  $  2,349,536
               =======================================================

                    Three months ended           Six months ended
                       September 30,               September 30,
               -------------------------------------------------------
                    2009          2008          2009          2008
               -------------------------------------------------------

 Diluted
  earnings per
  share, GAAP      $0.23         $0.08         $0.45         $0.23
 Per diluted
  share mark-to
  -market gain
  on interest
  rate swaps       (0.01)           --         (0.04)           --
               -------------------------------------------------------
 Per share
  diluted net
  earnings,
  excluding
  changes in
  fair value of
  interest rate
  swaps (a)        $0.22         $0.08         $0.41         $0.23
               =======================================================

 (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            Six months ended
                      September 30,                September 30,
               -------------------------------------------------------
                   2009           2008         2009           2008
               -------------------------------------------------------
 Revenue:
   Interest and
    fee income
    on finance
    receivables    $ 14,139      $ 13,487      $ 27,812      $ 26,591
    Sales                19            18            39            33
               -------------------------------------------------------
                     14,158        13,505        27,851        26,624
 Expenses:
   Operating          5,921         5,591        11,635        11,440
   Provision
    for credit
    losses            3,254         5,145         6,577         8,547
   Interest
    expense           1,294         1,432         2,566         2,841
   Unrealized
    mark to
    market gain
    on interest
    rate swaps         (235)           --          (532)           --
               -------------------------------------------------------
                     10,234        12,168        20,246        22,828

 Operating
  income before
  income taxes        3,924         1,337         7,605         3,796
   Income tax
    expense           1,492           545         2,909         1,446
               -------------------------------------------------------
     Net income    $  2,432      $    792      $  4,696      $  2,350
               =======================================================

 Earnings per
  share:
     Basic         $   0.23      $   0.08      $   0.45      $   0.23
               =======================================================
     Diluted       $   0.23      $   0.08      $   0.45      $   0.23
               =======================================================

 Weighted
  average
  shares         10,364,000    10,245,000    10,364,000    10,216,000
               =======================================================

 Weighted
  average
  shares and
  assumed
  dilution       10,577,000    10,426,000    10,546,000    10,409,000
               =======================================================


 Condensed Consolidated Balance Sheets
 (Unaudited, In Thousands)

                                           September 30,    March 31,
                                               2009           2009
                                           ---------------------------
 Cash                                          $  1,868      $  1,733
 Finance receivables, net                       197,166       186,694
 Other assets                                    10,134         9,355
                                           ---------------------------

    Total assets                               $209,168      $197,782
                                           ===========================

 Line of credit                                $109,676      $102,030
 Other liabilities                                9,188        10,734
                                           ---------------------------

    Total liabilities                           118,864       112,764

 Shareholders' equity                            90,304        85,018
                                           ---------------------------

 Total liabilities and shareholders' equity    $209,168      $197,782
                                           ===========================


                   Three months ended            Six months ended
 Portfolio             September 30,                September 30,
  Summary           2009          2008          2009          2008

 Average
  finance
  receivables,
  net of
  unearned
  interest (1) $222,701,667  $208,674,423  $219,211,625  $206,001,623
               =======================================================

 Average
  indebtedness
  (2)          $106,342,703  $105,150,419  $104,667,063  $103,503,324
               =======================================================

 Interest and
  fee income on
  finance
  receivables
  (3)          $ 14,138,708  $ 13,487,161  $ 27,811,980  $ 26,591,127
 Interest
  expense         1,293,561     1,431,677     2,566,238     2,841,013
               -------------------------------------------------------

 Net Interest
  and fee
  income on
  finance
  receivables  $ 12,845,147  $ 12,055,484  $ 25,245,742  $ 23,750,114
               =======================================================

 Weighted
  average
  contractual
  rate (4)           23.49%        24.15%        23.70%        24.16%
               =======================================================

 Average cost
  of borrowed
  funds (2)           4.87%         5.45%         4.90%         5.49%
               =======================================================


 Gross
  portfolio
  yield (5)          25.39%        25.85%        25.37%        25.82%

 Interest
  expense as a
  percentage of
  average
  finance
  receivables,
  net of
  unearned
  interest            2.32%         2.74%         2.34%         2.76%

 Provision for
  credit losses
  as a
  percentage of
  average
  finance
  receivables,
  net of
  unearned
  interest            5.84%         9.86%         6.00%         8.30%
               =======================================================

 Net portfolio
  yield (5)          17.23%        13.25%        17.03%        14.76%

 Marketing,
  salaries,
  employee
  benefits,
  depreciation
  and
  administra-
  tive expenses
  as a
  percentage of
  average
  finance
  receivables,
  net of
  unearned
  interest (6)       10.53%        10.75%        10.51%        10.89%
               -------------------------------------------------------

 Pre-tax yield
  as a
  percentage of
  average
  finance
  receivables,
  net of
  unearned
  interest (7)        6.70%         2.50%         6.52%         3.87%
               =======================================================

 Write-off to
  liquidation
  (8)                11.11%        12.97%        10.96%        12.09%

 Net charge-off
  percentage (9)      8.24%        10.25%         7.98%         9.82%

 Note: All three and six 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 and 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 $56,000 and $9,000 during the three-month periods
       ended September 30, 2009 and 2008 and $109,000 and $211,000
       during the six-month periods ended September 30, 2009 and 2008,
       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 the
       beginning receivable balance, plus current period purchases,
       minus voids and refinances, minus the 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:

 ---------------------------------------------------------------------
                             September 30,

                    2009                        2008
 ---------------------------------------------------------------------
 Contracts
 ---------
 Gross balance
  outstanding  $310,564,055                $287,272,780
               =============               =============

 Delinquencies
 -------------

 30 to 59 days $ 10,944,006      3.52%     $  9,621,940      3.35%
 60 to 89 days    4,366,307      1.41%        3,763,896      1.31%
 90 + days        1,537,826      0.50%        1,407,925      0.49%
               -------------------------------------------------------

 Total
  delinquen-
  cies         $ 16,848,139      5.43%     $ 14,793,761      5.15%
               =======================================================

 Direct Loans
 ------------
 Gross balance
  outstanding  $  5,952,797                $  8,472,099
               =============               =============

 Delinquencies

 30 to 59 days      169,242      2.84%     $    145,174      1.71%
 60 to 89 days       57,787      0.97%           64,682      0.76%
 90 + days           50,457      0.85%           67,351      0.80%
               -------------------------------------------------------

 Total
  delinquen-
  cies         $    277,486      4.66%     $    277,207      3.27%
               =======================================================

The following table presents selected information on Contracts purchased by the Company, net of unearned interest:

                   Three months ended           Six months ended
                      September 30,               September 30,
                    2009          2008         2009          2008
 ---------------------------------------------------------------------
 Purchases     $ 31,262,980  $ 27,662,818  $ 61,352,247  $ 60,987,269
 Weighted APR        23.38%        24.15%        23.59%        24.16%
 Average
  discount            8.96%         8.94%         9.07%         8.82%
 Weighted
  average term
  (months)               49            48            49            48
 Average loan  $      9,468  $      9,400  $      9,456  $      9,483
 Number of
  contracts           3,302         2,943         6,488         6,431
 ---------------------------------------------------------------------

Nicholas Financial, Inc.
Ralph Finkenbrink, Sr. Vice President, CFO
727-726-0763
www.nicholasfinancial.com