Nicholas Financial Reports Record 2nd Quarter Results

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties including competitive factors, the management of growth, 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-KSB for the year ended March 31, 2004. 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.

NICHOLAS FINANCIAL, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited, Dollars in Thousands, Except Per Share Amounts)

	Three Months Ended September 30,		Six Months Ended September 30,
	2004	2003	2004	2003
Revenue:
Finance charge income	$ 7,797	$ 6,074	$ 15,011	$ 12,063
Other income	36	71	99	142
	7,833	6,145	15,110	12,205
Costs and expenses:
Operating expenses	3,269	2,777	6,426	5,390
Provision for losses	659	404	1,240	984
Interest expense	895	968	1,810	1,956
	4,823	4,149	9,476	8,330
Income before income taxes	3,010	1,996	5,634	3,875
Income tax provision	1,144	747	2,136	1,460
Net income	$ 1,866 =======	$ 1,249 =======	$ 3,498 =======	$ 2,415 =======
..
Earnings per share:
Basic	$ 0.29 =======	$ 0.25 =======	$ 0.58 =======	$ 0.48 =======
Diluted	$ 0.27 =======	$ 0.23 =======	$ 0.54 =======	$ 0.45 =======
..
Weighted average shares	6,491,142 =======	5,038,318 =======	6,082,592 =======	5,022,622 =======
..
Weighted average shares and assumed dilution	6,876,739 =======	5,405,176 =======	6,472,724 =======	5,352,817 =======

NICHOLAS FINANCIAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)

	September 30,	March 31,
	2004	2004
Cash	$ 1,685	$ 958
Finance receivables, net	105,146	97,237
Other Assets	5,747	5,028
Total Assets	$ 112,578 =======	$ 103,223 =======
Line of credit	$ 63,540	$ 67,510
Other notes payable	1,001	1,593
Other liabilities	7,038	6,674
Total liabilities	71,579	75,777
..
Shareholder's equity	40,999	27,446
Total liabilities & Shareholders' equity	$ 112,578 =======	$ 103,223 =======

Portfolio Summary	Three Months Ended September 30		Six Months Ended September 30
	2004	2003	2004	2003
Average finance receivables, net of unearned interest (1)	$ 128,266,971 ============	$ 111,195,574 ============	$ 125,646,208 ============	$ 109,204,020 ============
Average indebtedness (2)	63,070,954 ============	64,162,081 ============	63,392,887 ============	63,200,691 ============
Finance revenue (3)	7,796,997	6,074,326	15,011,258	12,062,800
Interest expense	894,764	968,310	1,810,084	1,955,638
Net finance revenue	$ 6,902,233 ============	$ 5,106,016 ============	$ 13,201,171 ============	$ 10,107,162 ============
Weighted average contractual rate (4)	24.06% ============	24.13% ============	24.17% ============	24.10% ============
Average Cost of Borrowed Funds (2)	5.67% ============	6.04% ============	5.71% ============	6.19% ============
Gross Portfolio Yield (5)	24.31%	21.85%	23.89%	22.09%
Interest expense as a percentage of average finance receivables, net of unearned interest	2.79%	3.48%	2.88%	3.58%
Provision for credit losses as a percentage of average finance receivables, net of unearned interest	2.06%	1.45%	1.97%	1.80%
Net portfolio yield (5)	19.46%	16.92%	19.04%	16.71%
Operating expenses as a percentage of average finance receivables, net of unearned interest (6)	9.96%	9.71%	10.00%	9.57%
Operating expenses as a percentage of average finance receivables, net of unearned interest (7)	9.51% ============	7.21% ============	9.04% ============	7.14% ============
Write-off to liquidation (8)	7.99%	9.89%	6.75%	8.85%
Net charge-off percentage (9)	6.85%	8.58%	5.77%	7.63%


(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 and notes payable-related party. Average cost of borrowed funds represents interest expense as a percentage of average indebtedness. (3) Finance revenue 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 fiscal years ended September 30, 2004 and 2003, respectively. (5) Gross portfolio yield represents finance revenues as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents finance revenue minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest. (6) Operating expenses represent total expenses, less interest expense, the provision for credit losses and operating costs associated with NDS. (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. Note: All three and six month key performance indicators expressed as percentages have been annualized

The following tables present certain information regarding delinquency rates experienced by the Company with respect to Contracts and under its direct loan program.
	At September 30,
	2004		2003
Contracts
Gross Balance Outstanding	$ 164,289,883		$ 142,611,322

Delinquencies	Dollar Amount	Percent	Dollar Amount	Percent

30 to 59 days	$2,866,168	1.74%	$2,554,310	1.79%
60 to 89 days	801,212	0.49%	921,969	0.65%
90 + days	253,180	0.15%	269,734	0.19%

Total Delinquencies	$3,920,560	2.38%	$3,746,013	2.63%

Direct Loans
Gross Balance Outstanding	$ 5,138,519		$ 4,378,131
..
Delinquencies

30 to 59 days	$39,728	0.77%	$67,549	1.54%
60 to 89 days	33,915	0.66%	15,716	0.36%
90 + days	27,475	0.54%	47,737	1.09%

Total Delinquencies	$101,118	1.97%	$131,002	2.99%

The amounts shown in the table below represent the amount of finance receivables purchased, net of unearned interest
	Three Months Ended September 30		Six Months Ended September 30
State	2004	2003	2004	2003
FL	$ 9,500,663	$ 9,077,354	$ 20,521,502	$ 19,125,752
GA	1,798,615	2,263,364	4,309,158	4,570,548
NC	2,342,704	1,998,984	4,495,934	3,969,578
SC	930,773	743,924	2,065,391	1,479,639
OH	3,319,862	3,109,399	6,571,070	6,214,025
MI	861,955	612,723	1,813,086	1,068,257
VA	1,492,136	184,573	2,869,886	201,613
Total	$20,246,708 ============	$17,990,321 ============	$42,646,027 ============	$36,629,412 ============

The following table represents information on Contracts purchased by the Company, net of unearned interest.
	Three Months Ended September 30		Six Months Ended September 30
Contracts	2004	2003	2004	2003
Purchases	$20,246,708	$17,990,321	$42,646,027	$36,629,412
Weighted APR	23.91%	24.00%	24.01%	23.96%
Avg. Discount	8.67%	8.95%	8.71%	8.95%
Avg.Term (months)	44	43	44	44
Average Loan	$ 8,391	$ 8,082	$ 8,329	$ 8,138
# of Contracts	2,413	2,226	5,120	4,501