May 2, 2012

Nicholas Financial Reports Record 4th Quarter Results & Quarterly Dividend

Clearwater, Florida, - May 2, 2012 - Nicholas Financial, Inc. (NASDAQ: NICK), announced that for the three months ended March 31, 2012, net earnings increased 27% to $6,045,000 as compared to $4,772,000 for the three months ended March 31, 2011. Per share diluted net earnings increased 25% to $0.50 as compared to $0.40 for the three months ended March 31, 2011. Revenue increased 7% to $17,182,000 for the three months ended March 31, 2012 as compared to $16,095,000 for the three months ended March 31, 2011.

For the year ended March 31, 2012, net earnings increased 32% to $22,230,000 as compared to $16,805,000 for the year ended March 31, 2011. Per share diluted net earnings increased 31% to $1.85 as compared to $1.41 for the year ended March 31, 2011. Revenue increased 9% to $68,167,000 for the year ended March 31, 2012 as compared to $62,774,000 for the year ended March 31, 2011.

"Our strong growth in earnings per share for the fourth quarter and year ended March 31, 2012 were largely impacted by a reduction in the provision for credit losses. Net charge offs during the current periods were less than the expected charge-offs previously contemplated in the allowance for loan losses. Accordingly, the amount of additional provision necessary to maintain an adequate allowance to absorb losses in the existing portfolio was less than the provision for prior periods”, stated Peter L. Vosotas, Chairman and CEO. Subject to market conditions, we plan on continuing our branch expansion and currently anticipate opening three additional locations during the first quarter of fiscal 2013.

As a result of our continued earnings growth and stable capital position, on May 2, 2012 the Board of Directors declared another quarterly dividend equal to $0.10 per common share, to be paid on June 6th to shareholders of record as of May 30th. 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      
March 31,          		 Year ended         
March 31,            
  2012      2011      2012      2011     
Revenue
  Interest and fee income on finance receivables $17,173  $16,070  $68,123  $62,720 
  Sales 9  25  44  54 
  17,182  16,095  68,167  62,774
Expenses
  Operating 6,878  6,977  27,108  25,712 
  Provision for credit losses (707)  101  5  4,610 
  Interest Expense 1,189  1,228  4,892  5,600 
  Change in fair value of interest rate swaps - (17) - (495)
  7,360  8,289  32,005  35,427 
 
Operating income before income taxes 9,822  7,806  36,162  27,347 
  Income tax expense 3,777  3,034  13,932  10,542 
    Net income $6,045  $4,772  $22,230  $16,805 
 
Earnings Per share:
    Basic $  0.51  $  0.41   $  1.89  $  1.45 
    Diluted $  0.50  $  0.40   $  1.85  $  1.41 
 
Weighted average shares 11,800,000  11,611,000  11,747,000  11,607,000 
 
Weighted average shares and assumed dilution 12,089,000  11,954,000  12,033,000  11,894,000 
 

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)
     
  March 31,
2012      		 March 31, 
2011     
Cash $   2,803  $   2,018 
Finance receivables, net 242,349  230,164 
Other assets 12,084  11,461 
     
  Total assets $257,236  $243,643 
     
Line of credit $112,000  $118,000 
Other Liabilities 9,297  10,430 
 
  Total Liabilities 121,297  128,430 
 
Shareholders' equity 135,939  115,213 
 
Total Liabilities and shareholders' equity $257,236   $243,643  
 

Portfolio Summary Three months ended
March 31,		 Year ended
March 31,
  2012      2011      2012      2011     
Average finance receivables, net of unearned interest (1) $275,276,658  $260,898,642  $272,979,496  $250,962,519 
Average indebtedness (2) $112,750,000  $116,754,219  $115,688,980  $113,833,641 
Interest and fee income on finance receivables (3) $  17,172,359  $  16,070,243  $  68,122,532  $  62,719,904 
Interest Expense 1,189,117  1,228,051  4,891,854  5,600,131 
Net Interest and fee income on finance receivables $15,983,242  $14,842,192  $63,230,678  $57,119,773 
Weighted average contractual rate (4) 24.06%  23.92%  23.93%  23.66% 
Average cost of borrowed funds (2) 4.22%  4.21%  4.23%  4.92% 
Gross portfolio yield (5) 24.95%  24.64%  24.96%  24.99% 
Interest expense as a percentage of average finance
   receivables, net of unearned interest		 1.73 %  1.88 %  1.79%  2.23% 
Provision for credit losses as a percentage of average
   finance receivables, net of unearned interest		 (1.03%)  0.16%  0.00%  1.84% 
Net portfolio yield (5) 24.25%  22.60%  23.17%  20.92% 
Marketing, salaries, employee benefits, depreciation
  and administrative expenses as a percentage of
  average finance receivables, net of unearned interest (6)		 9.91%  10.61%  9.85%  10.15% 
Pre-tax yield as a percentage of average finance
  receivables, net of unearned interest (7)		 14.34%  11.99%  13.32%  10.77% 
Write-off to liquidation (8) 4.86%  4.10%  5.66%  6.17% 
Net charge-off percentage (9) 4.29%  3.34%  4.59%  4.65% 
 
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 $53,000 and $52,000 for the three-month periods ended March 31, 2012 and 2011 and $220,000 and $216,000
           for the year ended March 31, 2012 and 2011 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, 2012 $ 382,766,667 $ 8,994,485 $ 1,889,643 $ 663,521 $ 11,547,649
    2.35% 0.49% 0.17% 3.01%
   
March 31, 2011 $ 368,099,418 $ 6,106.211 $ 1,468,079 $ 549,518 $ 8,123,808
    1.66% 0.40% 0.15% 2.21%
Direct Loans  Gross Balance
Outstanding		 30 - 50 days 60 - 89 days 90 +days Total
March 31, 2012 $ 6,221,688 $ 48,899 $ 14,257 $ 4,933 $ 68,089
    0.79% 0.23% 0.07% 1.09%
   
March 31, 2011 $ 4,850,864 $ 37,399 $ 5,636 $ 11,919 $ 54,954
    0.77% 0.11% 0.25% 1.13%
           

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,          
  2012      2011      2012      2011     
Purchases $42,289,228  $41,804,273  $146,321,678 $147,150,975 
Weighted APR 23.99%  23.87%  23.82%  23.57% 
Average Discount 8.50%  8.83%  8.47%  8.78% 
Weighted average term (months) 48  49  49  49 
Average Loan $    9,742  $    9,646  $    9,873  $    9,804 
Number of contracts 4,341  4,334  14,820  15,009