Nicholas Financial Reports Results for the 1st Quarter Ended June 30, 2008

CLEARWATER, Fla., July 31 /PRNewswire-FirstCall/ -- Nicholas Financial,
Inc. (Nasdaq: NICK) announced that net income decreased 44% to $1,558,000 for
the three months ended June 30, 2008 as compared to $2,784,000 for the three
months ended June 30, 2007. Diluted earnings per share decreased 44% to $0.15
for the three months ended June 30, 2008 as compared to $0.27 for the three
months ended June 30, 2007. Revenue increased 8% to $13,119,000 for the three
months ended June 30, 2008 as compared to $12,170,000 for the three months
ended June 30, 2007.
According to Peter L. Vosotas, Founder and CEO, the Company's performance
during the first quarter reflects a continuation of economic weakness first
recognized by the Company approximately one year ago. Higher gasoline prices,
food prices and other inflationary pressures associated with the rising price
of oil have significantly contributed to additional economic weakness, which
was first felt by the downturn in the housing market. The Company's strategy
is to continue evaluating potential new markets, increase its market share in
existing markets, and determine if the profitability metrics of certain branch
locations are meeting Company standards.
Founded in 1985, with assets of $195,512,000 as of June 30, 2008, Nicholas
Financial, Inc. is one of the largest publicly traded specialty consumer
finance companies based in the Southeast. The Company presently operates out
of 47 branch locations in both the Southeast and the Mid-West States. The
Company has approximately 10,200,000 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 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-K for the year ended March 31, 2008. 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
June 30,
2008 2007
Revenue:
Interest income on finance receivables $13,104 $12,148
Sales 15 22
13,119 12,170

Expenses:
Operating 5,816 4,885
Provision for credit losses 3,435 1,197
Interest expense 1,409 1,589
10,660 7,671

Operating income before income taxes 2,459 4,499
Income tax expense 901 1,715
Net income $1,558 $2,784

Earnings per share:
Basic $0.15 $0.28
Diluted $0.15 $0.27

Weighted average shares 10,187,000 10,000,000

Weighted average shares and 10,393,000 10,352,000
assumed dilution

Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)

June 30, March 31,
2008 2008

Cash $2,139 $2,298
Finance receivables, net 185,451 179,043
Other assets 7,922 8,497

Total assets $195,512 $189,838

Line of credit $103,775 $99,937
Other liabilities 10,079 11,325

Total liabilities 113,854 111,262

Shareholders' equity 81,658 78,576

Total liabilities and
shareholders' equity $195,512 $189,838

Three months ended
June 30,
Portfolio Summary 2008 2007

Average finance receivables, net
of unearned interest (1) $203,328,823 $186,493,399

Average indebtedness (2) $101,856,230 $94,006,134

Finance revenue (3) $13,103,966 $12,148,489

Interest expense 1,409,336 1,588,608

Net finance revenue $11,694,630 $10,559,881

Weighted average contractual rate (4) 24.28% 24.17%

Average cost of borrowed funds (2) 5.53% 6.76%

Gross portfolio yield (5) 25.78% 26.06%

Interest expense as a percentage of average
finance receivables, net of unearned interest 2.77% 3.41%

Provision for credit losses as a percentage
of average finance receivables, net of
unearned interest 6.76% 2.57%

Net portfolio yield (5) 16.25% 20.08%

Operating expenses as a percentage of
average finance receivables, net of
unearned interest (6) 11.04% 10.36%

Pre-tax yield as a percentage of average
finance receivables, net of
unearned interest (7) 5.21% 9.72%

Write-off to liquidation (8) 11.24% 7.20%

Net charge-off percentage (9) 9.39% 6.59%

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) 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 the delinquency
rates experienced by the Company with respect to Contracts and under its
direct loan program:

June 30,
2008 2007
Contracts
Gross balance
outstanding $282,828,447 $250,450,750

Delinquencies

30 to 59 days $7,066,773 2.50 % $5,005,607 2.00 %
60 to 89 days 2,734,258 0.97 % 1,857,560 0.74 %
90 + days 1,106,775 0.39 % 615,176 0.25 %

Total delinquencies $10,907,806 3.86 % $7,478,343 2.99 %

Direct Loans
Gross balance
outstanding $9,275,896 $10,315,193

Delinquencies

30 to 59 days $123,548 1.33 % $98,820 0.96 %
60 to 89 days 61,820 0.67 % 65,710 0.64 %
90 + days 44,009 0.47 % 41,762 0.40 %

Total delinquencies $229,377 2.47 % $206,292 2.00 %

The following table presents selected information on Contracts purchased
by the Company, net of unearned interest:
Three months ended
June 30,
Contracts 2008 2007

Purchases $33,324,451 $27,967,503
Weighted APR 24.19% 24.07%
Average discount 8.87% 8.21%
Weighted average term (months) 49 47
Average loan $9,554 $9,298
Number of contracts 3,488 3,008

SOURCE Nicholas Financial, Inc.

Ralph Finkenbrink, Sr. Vice President, CFO, Nicholas Financial, Inc.,
+1-727-726-0763