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, 2005. 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, Dollars in Thousands, Except Per Share Amounts)

	Three Months Ended September 30,		Six Months Ended September 30,
	2005	2004	2005	2004
Revenue:
Interest income on finance receivables	$ 10,198	$ 7,797	$ 19,308	$ 15,011
Sales	41	36	91	99
	10,239	7,833	19,399	15,110
Costs and expenses:
Expenses	4,295	3,269	8,191	6,426
Provision for credit losses	832	659	1,260	1,240
Interest expense	1,058	895	2,039	1,810
	6,185	4,823	11,490	9,476

Operating income before income taxes	4,054	3,010	7,909	5,634
Income tax expense	1,545	1,144	3,006	2,136
Net income	$ 2,509 =======	$ 1,866 =======	$ 4,903 =======	$ 3,498 =======
..
Earnings per share:
Basic	$ 0.25 =======	$ 0.19 =======	$ 0.50 =======	$ 0.38 =======
Diluted	$ 0.24 =======	$ 0.18 =======	$ 0.47 =======	$ 0.36 =======
..
Weighted average shares	9,871,183 =======	9,736,713 =======	9,861,474 =======	9,123,888 =======
..
Weighted average shares and assumed dilution	10,466,611 =======	10,315,108 =======	10,465,003 =======	9,709,086 =======
(Historical shares outstanding and earnings per share have been adjusted for the June 17, 2005 stock split)

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

	September 30,	March 31,
	2005	2005
Cash	$ 1,242	$ 853
Finance receivables, net	126,141	113,708
Other Assets	7,242	6,254
Total Assets	$ 134,625 =======	$ 120,815 =======
Line of credit	$ 74,154	$ 65,331
Other notes payable	600	1,000
Other liabilities	7,994	7,726
Total liabilities	82,748	74,057
..
Shareholder's equity	51,877	46,758
Total liabilities & shareholders' equity	$ 134,625 =======	$ 120,815 =======

Portfolio Summary	Three Months Ended September 30		Six Months Ended September 30
	2005	2004	2005	2004
Average finance receivables, net of unearned interest (1)	$ 146,973,291 ============	$ 128,266,971 ============	$ 144,471,462 ============	$ 125,646,208 ============
Average indebtedness (2)	71,747,445 ============	63,070,954 ============	69,843,069 ============	63,392,887 ============
Finance revenue (3)	10,197,903	7,796,997	19,307,604	15,011,255
Interest expense	1,058,479	894,764	2,039,032	1,810,084
Net finance revenue	$ 9,139,424 ============	$ 6,902,233 ============	$ 17,268,572 ============	$ 13,201,171 ============
Weighted average contractual rate (4)	23.92% ============	24.06% ============	24.02% ============	24.17% ============
Average Cost of Borrowed Funds (2)	5.90% ============	5.67% ============	5.84% ============	5.71% ============
Gross Portfolio Yield (5)	27.75%	24.31%	26.73%	23.89%
Interest expense as a percentage of average finance receivables, net of unearned interest	2.88%	2.79%	2.82%	2.88%
Provision for credit losses as a percentage of average finance receivables, net of unearned interest	2.26%	2.06%	1.74%	1.97%
Net portfolio yield (5)	22.61%	19.46%	22.17%	19.04%
Operating expenses as a percentage of average finance receivables, net of unearned interest (6)	11.46%	9.96%	11.10%	10.00%
Pre-tax yield as a percentage of average finance receivables, net of unearned interest (7)	11.15% ============	9.50% ============	11.07% ============	9.04% ============
Write-off to liquidation (8)	6.48%	7.99%	5.77%	6.75%
Net charge-off percentage (9)	5.83%	6.85%	5.13%	5.77%


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 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 period. (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.

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,
	2005		2004
Contracts
Gross Balance Outstanding	$ 194,489,189		$ 164,289,883

Delinquencies	Dollar Amount	Percent	Dollar Amount	Percent

30 to 59 days	$2,793,371	1.44%	$2,866,168	1.75%
60 to 89 days	707,902	0.36%	801,212	0.49%
90 + days	375,156	0.19%	253,180	0.15%

Total Delinquencies	$3,876,429	1.99%	$3,920,560	2.39%

Direct Loans
Gross Balance Outstanding	$ 7,077,542		$ 5,138,519
..
Delinquencies

30 to 59 days	$42,556	0.60%	$39,728	0.77%
60 to 89 days	21,067	0.30%	33,915	0.66%
90 + days	28,138	0.40%	27,475	0.54%

Total Delinquencies	$91,761	1.30%	$101,118	1.97%

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	2005	2004	2005	2004
Purchases	$28,065,448	$20,246,708	$51,487,410	$42,646,027
Weighted APR	23.79%	23.91%	23.88%	24.01%
Avg. Discount	8.71%	8.67%	8.63%	8.71%
Weighted Avg. Term (months)	46	44	45	44
Average Loan	$ 8,884	$ 8,391	$ 8,801	$ 8,329
# of Contracts	3,159	2,413	5,850	5,120