Our Chief Financial Officer, Ralph Finkenbrink for the past thirteen years, continues to be conservative and cautious in his approach to the financial management of the Company. Since Nicholas Financial entered the non-prime auto finance business in 1990, Ralph has insisted on maintaining our loan loss reserves at a very conservative level. Because of his fiscal prudence and conservative conduct, he has been able to secure extremely favorable borrowing terms and rates with our lenders. During the past year, the Company increased its credit facility from $45 million to $75 million, while adding Hibernia National Bank and Bank One as participants with its lead bank, Bank of America.

In February we retained an outside investor relations company to assist us in building greater awareness for our Company and its stock. This firm, EPOCH Financial Group, Inc., based in Atlanta, Georgia, with an office in Denver, Colorado, has assisted us in generating a good deal of interest in our stock since we initiated this relationship. (Matthew J. Foget, Vice President Sales shown  at right) It specializes in telling a company's story to retail stockbrokers, buy and sell side analysts, institutional investors, financial media and market makers. Epoch has a great deal of experience in improving shareholder value, increasing market capitalization and liquidity. We are very optimistic that they will help to increase awareness and interest in our stock. 

Our consistent financial performance, highlighted by ten consecutive years of increasing revenues and income, hasn’t happened by accident. It is the result of many people working very hard over a long period. The cars of our employees are usually the first to arrive in the parking lot each morning and invariably the last to drive away at night. We, like many companies, have struggled to find qualified people. When we do, we try our best to keep those that work hard and produce results. We reward our employees with very good benefits, profit sharing, performance bonuses and numerous career opportunities. Surveys of industry salary rates indicate that we pay very well when compared to our competitors. As a result, we have had minimal employee turnover during the last few years. Our ability to mold and retain a team with veterans at its core is the primary reason for our success. Our accounting staff and the data processing staff, for example, have been with the Company virtually since its inception in 1985.

We are convinced that our business model is a very sound and time-tested approach to doing business in our market place. The way that we go about establishing a presence in a market is simple. The first step is to identify a market that meets our criteria for automobile dealerships, average household income and lending regulations. (Sotirios A. Kakalis, Director of Loss Recovery shown  at right) Once we decide to establish our Company in a particular area, we then construct a Business Development Center (BDC) of roughly 1,400 square feet, built to our preset interior design specifications as well as telecommunications systems that link the office to our corporate headquarters. Normally, the BDC is initially staffed with a manager and two assistants. Gradually assistants are added as needed until we reach a full compliment of five to seven in all. The manager and his/her staff make all lending and collection decisions for the BDC. The staff is required to comply with strict corporate lending and collection guidelines. All exceptions to these guidelines must be processed through the appropriate levels of management and confirmed in writing. Our internal auditing staff audits each of the BDC's on a quarterly basis. The Corporate staff makes repossession decisions and controls the final disposition of repossessions. Our goal is to have each BDC generate over $300,000 in pre-tax income, within three years of opening. Most of our BDC's have met this goal.

Our Loss Recovery Department, based in our Clearwater headquarters, is one of the most important contributors to the success of Nicholas Financial. Soti Kakalis, a seven-year veteran with the Company, leads this organization. He has a team comprised of former Company managers and collectors that are all seasoned veterans. Soti’s staff handles everything from repossessed vehicle logistics through vehicle disposition to loan loss collections. In performing their specialized tasks they interact with judges, attorneys and insurance companies on a daily basis. This team traces skips and collects unpaid balances from former customers. The Loss Recovery Department also supervises our licensing compliance in every BDC location. In a pinch, any of the members of this team can manage a BDC that is short handed or faltering. Over the past three years, this very talented team has recovered millions of dollars that would have written off by most of our competitors.

We continue to maintain and support many small businesses with our financial software products through our data processing subsidiary, Nicholas Data Services Inc. (NDS). NDS continues to sell and maintain our ROUTEMAN Accounts Receivable software for pest control operators. ROUTEMAN, first introduced in 1984, continues to get the highest marks for its reliability and design stability. (Michael  J. Marika, Chief Information Officer shown  at right) NDS also supplies Nicholas Financial with all of its data processing needs ranging from the financial application software to networking hardware and telecommunications equipment. Our NDS engineers have developed our web site and Internet facilities internally. We continue to leverage our use of the Internet for e-mail, business-to-business communications and software distribution. Anyone wishing detailed information about our Company can find it by visiting our web site at www.nicholasfinancial.com.

In May of 2000, the Company elected Mel Cutler and A. R. “Charlie” Neal to its board of directors. Charlie is a prominent attorney in the Tampa bay area, who specializes in Securities and Business law. Mel founded Cutler and Associates, a construction company headquartered in Worcester, Massachusetts. Mr. Cutler is also the founder and Chairman of Madison Bank, headquartered in Palm Harbor, Florida.

We look forward to a good year in Fiscal 2002. We expect to grow the Company by increasing our existing loan portfolios and building new BDC's. We intend to open several new BDC's over the course of this year and next. We are presently planning to open additional BDC's in Florida, Georgia and North Carolina. In addition, we are exploring opportunities for BDC's in South Carolina, Virginia, Kentucky and Ohio.