EX-34 2 v033879_ex34.htm

Exhibit 34
 
  
FOR IMMEDIATE RELEASE
 
Nicholas
Nicholas Financial, Inc.
Corporate Headquarters

2454 McMullen-Booth Rd.
Building C, Suite 501
Clearwater, FL 33759
 
Contact: Ralph Finkenbrink 
Sr. Vice President, CFO
Ph # - 727-726-0763
NASDAQ: NICK
Web site: www.nicholasfinancial.com
Nicholas Financial Reports Record 3rd Quarter Results
 
Clearwater, Florida - January 25, 2006 - Nicholas Financial, Inc. (NASDAQ: NICK)

 
·
Net income increased to $2.7 million, $0.26 per share
 
·
Loan origination increased 42% from the December 2004 quarter
 
·
Credit losses of 5.47% improved from prior year

Nicholas Financial, Inc. announced that net income increased 23% to $2,718,000 for the three months ended December 31, 2005 as compared to $2,214,000 for the three months ended December 31, 2004. Diluted earnings per share increased 24% to $0.26 for the three months ended December 31, 2005 as compared to $0.21 for the three months ended December 31, 2004. Revenue increased 30% to $11,107,000 for the three months ended December 31, 2005 as compared to $8,541,000 for the three months ended December 31, 2004. “These results are a direct reflection of our disciplined underwriting coupled with record low charge-offs and strong loan origination growth”, according to Peter L. Vosotas, Chairman and CEO of the Company.

Net income increased 33% to $7,621,000 for the nine months ended December 31, 2005 as compared to $5,712,000 for the nine months ended December 31, 2004. Diluted earnings per share increased 28% to $0.73 for the nine months ended December 31, 2005 as compared to $0.57 for the nine months ended December 31, 2004. Revenue increased 29% to $30,506,000 for the nine months ended December 31, 2005 as compared to $23,651,000 for the nine months ended December 31, 2004. 

Founded in 1985, with assets of $141,982,000 as of December 31, 2005, Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeast. The Company presently operates out of 42 branch locations in both the Southeast and the Mid-West States. The Company has approximately 10,000,000 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 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.

## More ##

 
 
 

Nicholas Financial, Inc.
 
Condensed Consolidated Statements of Income
 
(Unaudited, Dollars in Thousands, Except Per Share Amounts)

   
Three months ended December 31,
  
Nine months ended December 31,
  
   
 2005
  
 2004
  
 2005
  
 2004
  
Revenue:
                          
Interest income on finance receivables
  
$
11,065
  
$
8,485
  
$
30,373
  
$
23,496
  
Sales
    
42
    
56
    
133
    
155
  
     
11,107
    
8,541
    
30,506
    
23,651
  
Expenses:
                          
Operating
    
4,425
    
3,506
    
12,616
    
9,930
  
Provision for credit losses
    
1,172
    
566
    
2,432
    
1,806
  
Interest expense
    
1,122
    
909
    
3,161
    
2,720
  
     
6,719
    
4,981
    
18,209
    
14,456
  
                           
Operating income before income taxes
    
4,388
    
3,560
    
12,297
    
9,195
  
Income tax expense
    
1,670
    
1,346
    
4,676
    
3,483
  
Net income
  
$
2,718
  
$
2,214
  
$
7,621
  
$
5,712
  
                           
Earnings per share:
                          
Basic
  
$
0.28
  
$
0.23
  
$
0.77
  
$
0.61
  
Diluted
  
$
0.26
  
$
0.21
  
$
0.73
  
$
0.57
  
                           
Weighted average shares
    
9,875,864
    
9,771,950
    
9,866,288
    
9,340,694
  
                           
Weighted average shares and assumed dilution
    
10,461,620
    
10,394,879
    
10,470,382
    
9,944,595
  
 
(Historical shares outstanding and earnings per share have been adjusted for the June 17, 2005 stock split) 

Condensed Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)

   
December 31,
  
March 31,
  
   
2005
  
2005
  
           
Cash
  
$
1,671
  
$
853
  
Finance receivables, net
    
133,039
    
113,708
  
Other assets
    
7,272
    
6,254
  
               
Total assets
  
$
141,982
  
$
120,815
  
               
Line of credit
  
$
78,397
  
$
65,331
  
Other notes payable
    
600
    
1,000
  
Other liabilities
    
8,142
    
7,726
  
               
Total liabilities
    
87,139
    
74,057
  
               
Shareholders' equity
    
54,843
    
46,758
  
               
Total liabilities and
              
shareholders’ equity
  
$
141,982
  
$
120,815
  

## More ##
 
 
 
 

   
Three months ended
  
Nine months ended
  
   
December 31,
  
December 31,
  
Portfolio Summary
  
2005
  
2004
  
2005
  
2004
  
                   
Average finance receivables, net of unearned interest (1)
  
$
153,011,496
  
$
130,157,442
  
$
146,526,954
  
$
127,149,953
  
Average indebtedness (2)
  
$
76,791,186
  
$
63,908,352
  
$
71,499,601
  
$
63,564,709
  
Finance revenue (3)
  
$
11,065,071
  
$
8,484,354
  
$
30,372,375
  
$
23,495,609
  
Interest expense
    
1,122,358
    
909,468
    
3,161,390
    
2,719,551
  
Net finance revenue
  
$
9,942,713
  
$
7,574,886
  
$
27,210,985
  
$
20,776,058
  
Weighted average contractual rate (4)
    
23.99
%
  
23.80
%
  
24.01
%
  
24.03
%
Average cost of borrowed funds (2)
    
5.85
%
  
5.69
%
  
5.90
%
  
5.70
%
                           
Gross portfolio yield (5)
    
28.93
%
  
26.07
%
  
27.64
%
  
24.63
%
                           
Interest expense as a percentage of average finance receivables, net of unearned interest
    
2.93
%
  
2.79
%
  
2.88
%
  
2.85
%
                           
Provision for credit losses as a percentage of average finance receivables, net of unearned interest
   
3.06
%
  
1.74
%
  
2.21
%
  
1.89
%
                           
Net portfolio yield (5)
   
22.94
%
  
21.54
%
  
22.55
%
  
19.89
%
                           
Operating expenses as a percentage of average finance receivables, net of unearned interest (6)
   
11.41
%
  
10.54
%
  
11.27
%
  
10.18
%
                           
Pre-tax yield as a percentage of average finance receivables, net of unearned interest (7)
    
11.53
%
  
11.00
%
  
11.28
%
  
9.71
%
                           
Write-off to liquidation (8)
    
6.19
%
  
7.45
%
  
5.92
%
  
6.99
%
                           
Net charge-off percentage (9)
    
5.47
%
  
6.52
%
  
5.28
%
  
6.03
%
 
Note:
All three and nine 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.

## More ##

 
 
 

The following tables present certain information regarding the delinquency rates experienced by
the Company with respect to Contracts and under its direct loan program:

   
At December 31,
 
   
2005
  
2004
  
Contracts
                          
Gross balance outstanding
  
$
203,293,741
        
$
165,583,890
        
                           
Delinquencies
                          
                           
30 to 59 days
  
$
3,438,414
    
1.70
%
$
3,056,372
    
1.85
%
60 to 89 days
    
1,144,851
    
0.56
%
  
706,221
    
0.43
%
90 + days
    
409,335
    
0.20
%
  
327,077
    
0.19
%
                           
Total delinquencies
  
$
4,992,600
    
2.46
%
$
4,089,670
    
2.47
%
                           
                           
Direct Loans
                          
Gross balance outstanding
  
$
7,904,426
        
$
5,583,074
        
                           
Delinquencies
                          
                           
30 to 59 days
  
$
89,224
    
1.13
%
$
61,980
    
1.11
%
60 to 89 days
    
35,969
    
0.46
%
  
16,758
    
0.30
%
90 + days
    
28,087
    
0.35
%
  
27,475
    
0.49
%
                           
Total delinquencies
  
$
153,280
    
1.94
%
$
106,213
    
1.90
%
 
The following table presents selected information on Contracts purchased by the Company,
net of unearned interest: 
           
   
Three months ended
December 31,
  
Nine months ended
December 31,
  
Contracts  
2005
 
2004
  
2005
 
2004
  
Purchases
  
$
26,698,595
  
$
18,750,570
  
$
78,186,005
  
$
61,396,597
  
Weighted APR
    
23.86
%
  
23.65
%
  
23.88
%
  
23.90
%
Average discount
    
8.90
%
  
8.73
%
  
8.72
%
  
8.72
%
Weighted average term (months)
    
45
    
45
    
45
    
44
  
Average loan
  
$
8,829
  
$
8,504
  
$
8,811
  
$
8,382
  
Number of contracts
    
3,024
    
2,205
    
8,874
    
7,325
  

## End ##