nick-ex991

February 3, 2021 – Clearwater, Florida - Nicholas Financial, Inc. (NASDAQ: NICK) announced net income for the three months ended December 31, 2020 of $3.8 million compared to $0.3 million for the three months ended December 31, 2019. Diluted net income per share was $0.49 for the three months ended December 31, 2020 as compared to $0.04 for the three months ended December 31, 2019. Total revenue decreased 3.3% to $14.5 million for the three months ended December 31, 2020 as compared to $15.0 million for the three months ended December 31, 2019, which included realized gains of $0.2 million and unrealized gains of $1.1 million on equity investments during the three months ended December 31, 2020. The Company reported income before income taxes for the three months ended December 31, 2020 of $5.0 million compared to $0.5 million for the three months ended December 31, 2019. The Company recorded an income tax expense of approximately $1.2 million during the three months ended December 31, 2020 compared to an income tax expense of $0.2 million during the three months ended December 31, 2019.

The Company announced net income for the nine months ended December 31, 2020 of $6.5 million compared to $1.2 million for the nine months ended December 31, 2019. Diluted net income per share was $0.85 for the nine months ended December 31, 2020 as compared to $0.15 for the nine months ended December 31, 2019. Total revenue decreased 9.5% to $42.7 million for the nine months ended December 31, 2020 as compared to $47.2 million for the nine months ended December 31, 2019, which included realized and unrealized gains of $1.3 million on equity investments during the nine months ended December 31, 2020. The Company reported income before income taxes for the nine months ended December 31, 2020 of $8.2 million compared to $1.7 million for the nine months ended December 31, 2019. The Company recorded an income tax expense of approximately $1.7 million during the nine months ended December 31, 2020 compared to $0.5 million during the nine months ended December 31, 2019.

For the nine months ended December 31, 2020, the Company originated $60.3 million in finance receivables, collected $87.5 million in principal payments, reduced debt by a net amount of $29.8 million, repurchased $0.7 million of common stock, and increased cash by $4.6 million.

“For the third consecutive Quarter we recognized near-record low losses and strong portfolio performance in terms of organic delinquency control,” stated Doug Marohn, President and CEO of Nicholas Financial, Inc. “We continue to enjoy these results without any increase in deferments and without the use of any special Covid-19 related customer assistance programs. Indirect sales finance originations continue to be soft, but our direct loan originations are strong.”

“The increase in core earnings is exciting and is a testament to our successful implementation and execution of Nicholas’ business strategy,” Marohn continued. “This unique and disciplined business model is being replicated in new markets as we look to continue our expansion. We have just completed several new offices expansions, and continue to initiate expansion in several others states including Texas, Arizona, Utah, Idaho and New Mexico. This will allow us to be prepared to maximize originations potential when the market starts to return to normal levels.”

Key Performance Indicators on Contracts Purchased
(Purchases in thousands)
		Number of				Average
Fiscal Year		Contracts		Principal Amount		Amount		Average			Average			Average
/Quarter		Purchased		Purchased#		Financed*^		APR*			Discount%*			Term*
2021			4,878	$	49,388	$	10,132		23.5	%		7.4	%		46
	3		1,483		15,285		10,307		23.4	%		7.5	%		46
	2		1,709		17,307		10,127		23.5	%		6.8	%		46
	1		1,686		16,796		9,962		23.5	%		8.0	%		46
2020			7,647	$	76,696	$	10,035		23.4	%		7.9	%		47
4			1,991		19,658		9,873		23.5	%	7.9		%		46
3			1,753		17,880		10,200		23.3	%	7.6		%		47
2			2,011		20,104		9,997		23.5	%	7.9		%		46
1			1,892		19,054		10,071		23.4	%	8.3		%		47
2019			7,684	$	77,499	$	10,086		23.5	%		8.2	%		47
4			2,151		21,233		9,871		23.5	%		8.0	%		46
3			1,625		16,476		10,139		23.5	%		8.1	%		47
2			1,761		17,845		10,133		23.5	%		8.4	%		47
1			2,147		21,945		10,221		23.7	%		8.3	%		48

Key Performance Indicators on Direct Loans Originated (Originations in thousands)
	Number of		Principal
Fiscal Year	Loans		Amount		Average Amount		Average			Average
/Quarter	Originated		Originated		Financed*^		APR*			Term*
2021		2,744	$	10,864	$	4,054		29.6	%		24
3		1,265		4,605		3,641		30.9	%		22
2		924		3,832		4,147		29.2	%		25
1		555		2,427		4,373	28.7		%		26
2020		3,142	$	12,638	$	4,017	28.2		%		25
4		720		3,104		4,310	28.6		%		25
3		1,137		4,490		3,949	28.4		%		24
2		739		2,988		4,043	27.4		%		25
1		546		2,056		3,765	28.2		%		24
2019		1,918	$	7,741	$	4,036	26.4		%		25
4		236		1,240		4,654	27.3		%		24
3		738		2,999		4,063	25.9		%		25
2		495		1,805		3,646	26.5		%		25
1		449		1,697		3,779	25.7		%		28

Nicholas Financial, Inc. (NASDAQ:NICK) is a specialized consumer finance company, operating branch locations in primarily Southeastern and Midwestern U.S. States. The Company engages primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. For an index of Nicholas Financial, Inc’s new releases or to obtain a specific release, please visit our website at www.nicholasfinancial.com.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements, including expectations regarding the impact of COVID-19 on the Company’s business, its ability to obtain the expected financial and tax benefits from the CARES Act, and its ability to obtain loan forgiveness under its PPP loan, that involve risks and uncertainties, including risk relating to competition and our ability to increase and maintain yield and profitability at desirable levels, as well as risks relating to general economic conditions, including in connection with the current COVID-19 pandemic, access to bank financing, our ability to expand the geographical scope of, and otherwise continue growing, our Direct Loan operations, 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, 2020. When used in this document, the words “anticipate”, “estimate”, “expect”, “will”, “may”, “plan,” “believe”, “intend” and similar expressions are intended to identify forward-looking statements. Such statements are based on the beliefs of Company management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially from those anticipated, estimated or expect. All forward-looking statements and cautionary statements included in this document are made as of the date hereof 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.

	Three months ended					Nine months ended
		December 31,				December 31,
		2020		2019		2020		2019
Revenue:
Interest and fee income on finance receivables		$	13,180	$	14,973	$	41,395		$	47,199
Realized gain on equity investments			238		-		238			-
Unrealized gain on equity investments			1,056		-		1,101			-
Total revenue			14,474		14,973		42,734			47,199
Expenses:
Operating expenses			7,407		7,950		22,881			25,848
Provision for credit losses			650		4,597		7,000			12,982
Interest expense			1,442		1,886		4,660			6,672
Total expenses			9,499		14,433		34,541			45,502
Income before income taxes			4,975		540		8,193			1,697
Income tax expense			1,190		229		1,711			527
Net income		$	3,785	$	311	$	6,482		$	1,170
Earnings per share:
Basic		$	0.49	$	0.04	$	0.84		$	0.15
Diluted		$	0.49	$	0.04	$	0.85		$	0.15

	December 31,		March 31,
	2020		2020
Cash and restricted cash	$	29,261	$	24,684
Equity investments with readily determinable fair values		4,286		-
Finance receivables, net		172,386		199,781
Repossessed assets		805		1,340
Operating lease right-of-use assets		2,940		2,598
Other assets		5,015		10,415
Total assets	$	214,693	$	238,818
Credit facility, net of debt issuance costs	$	91,547	$	124,255
Note payable		3,244		-
Operating lease liabilities		2,929		2,652
Other liabilities		3,513		4,332
Total liabilities		101,233		131,239
Shareholders’ equity		113,460		107,579
Total liabilities and shareholders’ equity	$	214,693	$	238,818
Book value per share	$	14.69	$	13.78

	Three months ended						Nine months ended
	December 31,						December 31,
	(In thousands)						(In thousands)
Portfolio Summary	2020			2019			2020			2019
Average finance receivables (1)	$	192,966		$	219,618		$	203,996			$	230,527
Average indebtedness (2)	$	101,522		$	119,518		$	112,476			$	136,164
Interest and fee income on finance receivables	$	13,180		$	14,973		$	41,395			$	47,199
Interest expense		1,442			1,886			4,660				6,672
Net interest and fee income on finance receivables	$	11,738		$	13,087		$	36,735			$	40,527
Portfolio yield (3)		27.32	%		27.27	%		27.06	%			27.30	%
Interest expense as a percentage of average finance receivables		2.99	%		3.44	%		3.05	%			3.86	%
Provision for credit losses as a percentage of average finance receivables		1.35	%		8.37	%		4.58	%			7.51	%
Net portfolio yield (3)		22.98	%		15.46	%		19.43	%			15.93	%
Operating expenses as a percentage of average finance receivables		15.35	%		14.48	%		14.96	%			14.95	%
Pre-tax yield as a percentage of average finance receivables (4)		7.63	%		0.98	%		4.47	%			0.98	%
Net charge-off percentage (5)		6.30	%		8.84	%		5.94	%			9.63	%
Finance receivables							$	188,626			$	211,813
Allowance percentage (6)								4.81	%			6.27	%
Total reserves percentage (7)								8.76	%			10.35	%

Note: All three-month and nine-month statement of income performance indicators expressed as percentages have been annualized.

The following tables present certain information regarding the delinquency rates experienced by the Company with respect to automobile finance installment contracts (“Contracts”) and direct consumer loans (“Direct Loans”), excluding any Chapter 13 bankruptcy accounts:

Contracts	Balance
	Outstanding		30 – 59 days			60 – 89 days			90 – 119 days			120+			Total
December 31, 2020	$	174,170	$	12,914		$	4,955		$	2,117		$	28		$	20,014
				7.41	%		2.84	%		1.22	%		0.02	%		11.49	%
December 31, 2019	$	200,092	$	16,748		$	5,993		$	2,279		$	47		$	25,067
				8.37	%		3.00	%		1.14	%		0.02	%		12.53	%

Direct Loans	Balance
	Outstanding		30 – 59 days			60 – 89 days			90 – 119 days			120+			Total
December 31, 2020	$	14,227	$	442		$	188		$	110		$	4		$	744
				3.11	%		1.32	%		0.77	%		0.03	%		5.23	%
December 31, 2019	$	11,423	$	331		$	123		$	68		$	3		$	525
				2.90	%		1.08	%		0.60	%		0.03	%		4.60	%

The following table presents selected information on Contracts purchased and Direct Loans originated by the Company:

	Contracts						Direct Loans
	Three months ended						Three months ended
	December 31,						December 31,
	(Purchases in thousands)						(Originations in thousands)
	2020			2019			2020			2019
Purchases/Originations	$	15,285		$	17,880		$	4,605			$	4,490
Average APR		23.4	%		23.3	%		30.9	%		28.4		%
Average discount		7.5	%		7.6	%	N/A				N/A
Average term (months)		46			47			22				24
Average amount financed	$	10,307		$	10,200		$	3,641			$	3,949
Number of contracts		1,483			1,753			1,265				1,137

	Contracts						Direct Loans
	Nine months ended						Nine months ended
	December 31,						December 31,
	(Purchases in thousands)						(Originations in thousands)
	2020			2019			2020			2019
Purchases/Originations	$	49,388		$	57,038		$	10,864			$	9,534
Average APR		23.5	%		23.4	%		29.6	%			28.0	%
Average discount		7.4	%		7.9	%	N/A				N/A
Average term (months)		46			47			24				24
Average amount financed	$	10,132		$	10,089		$	4,054			$	3,919
Number of contracts		4,878			5,656			2,744				2,422

The following table presents selected information on the entire Contract and Direct Loan portfolios of the Company:

	Contracts						Direct Loans
	As of						As of
	December 31,						December 31,
Portfolio	2020			2019			2020			2019
Average APR		22.7	%		22.7	%		28.4	%			27.0	%
Average discount		7.6	%		7.7	%	N/A				N/A
Average term (months)		51		51			26				26
Number of active contracts		23,388			25,995			4,126				3,376