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-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 September 30,		Six Months Ended September 30,
	2008	2007	2008	2007
Revenue:
Interest income on finance receivables	$ 13,487	$ 12,560	$ 26,591	$ 24,708
Sales	18	18	33	40
	13,505	12,578	26,624	24,748
Costs and expenses:
Expenses	5,624	5,164	11,440	10,049
Provision for credit losses	5,112	1,569	8,547	2,766
Interest expense	1,432	1,643	2,841	3,232
	12,168	8,376	22,828	16,047

Operating income before income taxes	1,337	4,202	3,796	8,701
Income tax expense	545	1,605	1,446	3,320
Net income	$ 792 =======	$ 2,597 =======	$ 2,350 =======	$ 5,381 =======
..
Earnings per share:
Basic	$ 0.08 =======	$ 0.26 =======	$ 0.23 =======	$ 0.54 =======
Diluted	$ 0.08 =======	$ 0.25 =======	$ 0.23 =======	$ 0.52 =======
..
Weighted average shares	10,245,000 =======	10,036,000 =======	10,216,000 =======	10,010,000 =======

Weighted average shares & assumed dilution	10,426,000 ========	10,326,000 ========	10,409,000 =======	10,338,000 =======

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

	September 30,	March 31,
	2008	2008
Cash	$ 2,551	$ 2,298
Finance receivables, net	186,135	179,043
Other Assets	8,681	8,497
Total Assets	$ 197,367 =======	$ 189,838 =======
Line of credit	$ 106,125	$ 99,937
Other liabilities	8,606	11,325

Total liabilities	114,731	111,262
..
Shareholder's equity	82,636	78,578
Total liabilities & shareholders' equity	$ 197,367 =======	$ 189,838 =======

Portfolio Summary	Three Months Ended September 30		Six Months Ended September 30
	2008	2007	2008	2007
Average finance receivables, net of unearned interest (1)	$ 208,674,423 ============	$ 189,954,242 ============	$ 206,001,623 ============	$ 188,223,821 ============
Average indebtedness (2)	$105,150,419 ============	$ 95,625,225 ============	$ 103,503,324 ============	$ 94,815,680 ============
Finance revenue (3)	$ 13,487,161	$ 12,559,769	$ 26,591,127	$ 24,708,258
Interest expense	1,431,677	1,643,262	2,841,013	3,231,870
Net finance revenue	$ 12,055,484 ============	$ 10,916,507 ============	$ 23,750,114 ============	$ 21,476,388 ============
Weighted average contractual rate (4)	24.15% ============	24.34% ============	24.16% ============	24.26% ============
Average Cost of Borrowed Funds (2)	5.45% ============	6.87% ============	5.49% ============	6.82% ============
Gross Portfolio Yield (5)	25.85%	26.45%	25.82%	26.25%
Interest expense as a percentage of average finance receivables, net of unearned interest	2.74%	3.46%	2.76%	3.43%
Provision for credit losses as a percentage of average finance receivables, net of unearned interest	9.86%	3.35%	8.30%	2.94%
Net portfolio yield (5)	13.25%	19.64%	14.76%	19.88%
Operating expenses as a percentage of average finance receivables, net of unearned interest (6)	10.75%	10.70%	10.89%	10.56%
Pre-tax yield as a percentage of average finance receivables, net of unearned interest (7)	2.50% ============	8.94% ============	3.87% ============	9.32% ============
Write-off to liquidation (8)	12.97%	8.70%	12.09%	7.95%
Net charge-off percentage (9)	10.25%	7.79%	9.82%	7.20%


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,
	2008		2007
Contracts
Gross Balance Outstanding	$ 287,272,780		$ 257,975,631

Delinquencies

30 to 59 days	$9,621,940	3.35%	$6,641,029	2.58%
60 to 89 days	3,763,896	1.31%	2,510,684	0.97%
90 + days	1,407,925	0.49%	1,161,006	0.45%

Total Delinquencies	$14,793,761	4.00%	$10,312,719	4.00%

Direct Loans
Gross balance outstanding	$ 8,472,099		$ 10,645,154
..
Delinquencies

30 to 59 days	$145,174	1.71%	$220,321	2.07%
60 to 89 days	64,682	0.76%	86,784	0.82%
90 + days	67,351	0..80%	47,051	0.44%

Total Delinquencies	$277,207	3.27%	$354,156	3.33%

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	2008	2007	2008	2007
Purchases	$27,662,818	$30,061,561	$60,987,269	$58,029,064
Weighted APR	24.15%	24.25%	24.16%	24.16%
Avg. Discount	9.06%	8.04%	8.95%	8.12%
Weighted Avg. Term (months)	48	48	48	48
Average Loan	$ 9,400	$ 9,483	$ 9,483	$ 9,393
# of Contracts	2,943	3,170	6,431	6,178