CLEARWATER, Fla. — Like many other portfolio purchasers and servicers during the current economic and credit environment, Nicholas Financial reported that it had a difficult second quarter, with its chief executive officer saying he doesn't expect to witness improvement soon.

Overall, net income for the company dropped 70 percent to $792,000 for the period, compared to about $2.6 million in the previous year.

Additionally, diluted earnings per share decreased 68 percent to $0.08, compared to $0.25 last year.

Meanwhile, the company reported that revenue was up 7 percent to $13.5 million for the quarter, compared to about $12.6 million.

For the six-month period, Nicholas said net income was down 56 percent to $2.4 million, compared to $5.4 million in 2007. As for revenue, it climbed 8 percent to $26.6 million, compared to $24.7 million last year.

"It has been a very difficult year in the auto market and we do not expect to see much improvement in the near term," explained Peter Vosotas, president and CEO. However, on the brighter side, he indicated, "We believe there is a certain amount of pent-up demand for both new and used vehicles and while we do not know how long this will take to manifest itself into consumer buying, we know that Americans love their cars and eventually will return to the market.

"We believe in the near term employment outlook is weak, which will in turn affect our customers' ability to service their debt loans," he continued. "We are uncertain as to how long we will continue to experience economic weakness; in the meantime, we are managing our operating expenses and continuing to evaluate the markets in which we operate branch locations"

For instance, he said, "Twelve months ago we operated out of 47 branch locations; since that time we have closed three branch locations and opened three new locations for a net total of 47 branch locations. In the next few weeks we will be opening our second location in Columbus, Ohio, which brings our branch location total to 48."

Founded in 1985, with assets of $197,367,000, Nicholas Financial is a large publically traded specialty consumer company based in the Southeast. It purchases and services portfolios for both franchised and independent dealers.

In its recent annual report, the CEO explained, "This past year, our 23rd, has been very difficult for those of us in the financial services industry. It seems that none of the institutions operating in this sector have escaped unharmed. Many have been badly bruised. Some have totally collapsed, while others have been severely wounded."

Continuing on, he indicated, "For several years credit has been too easy to obtain. This seemed to reach a tipping point with the subprime housing disaster, which caused widespread difficulties not only within USA financial institutions but has spread to financial sectors throughout the world. As a result of this credit crisis, virtually all lenders have tightened up their lending guidelines, causing those in debt to pay up or face the consequences. In many instances the lender has suffered as much or even more than the debtor.

"Our customers, those with subprime credit who need their vehicles to get to work, are struggling not only with their debt obligations, but also with the higher costs of everything, starting with the cost of gas for their vehicles. Fortunately, less than 10 percent of our 30,000 plus customers are home owners and therefore are not affected by the mortgage crisis," he added.

Finally, he explained, "We are very proud of our employees, whose dedication, talent and loyalty have made Nicholas an important force in automobile financing. We are grateful for their ongoing efforts and for the support of our customers, bankers, vendors and shareholders. We remain determined to increase the value of our publicly traded stock. We are convinced that our shareholders will be rewarded if we continue to build the net worth of our company each year."