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Nicholas Financial (NASDAQ:NICK) reported third-quarter earnings yesterday, and it was basically what I expected. The company earned eight cents a share, which was a big drop from the 25 cents a share it earned in last year’s third quarter. Still, it's making money, and that needs to be stressed. Revenues increased 7.4% to $13.5 million.

I was impressed to see that most of the measures of its business were fairly stable compared with previous quarters. The big exception is NICK’s provision for credit losses. That grew by 225% over last year’s third quarter, and it’s nearly 50% from the second quarter.

This confirms my earlier view—NICK’s business is in a lot of trouble right now. However, any fear that the company is about to go under isn’t yet shown by the evidence. By my guess, I would say the current market price probably reflects a 50% chance that NICK will go bankrupt sometime in 2009.

This investment will take a while to be worthwhile, but it looks to reward patient investors.

Disclosure: Long NICK

Source: Nicholas Financial: For the Patient Investor