Exhibit 99.1

For more information, contact: Joseph W. Kiley III, President and Chief Executive Officer Rich Jacobson, Executive Vice President and Chief Financial Officer (425) 255-4400

First Financial Northwest, Inc.

Reports First Quarter Net Income of $6.8 Million or $0.66 per Diluted Share

Renton, Washington – April 26, 2018 - First Financial Northwest, Inc. (the "Company") (NASDAQ GS: FFNW), the holding company for First Financial Northwest Bank (the "Bank"), today reported net income for the quarter ended March 31, 2018, of $6.8 million, or $0.66 per diluted share, compared to net income of $2.4 million, or $0.23  per diluted share, for the quarter ended December 31, 2017, and $2.3 million, or $0.22 per diluted share, for the quarter ended March 31, 2017.

Net loans receivable increased to $991.1 million at March 31, 2018, compared to $988.7 million at December 31, 2017, and $838.8 million at March 31, 2017. Internal loan growth in the first quarter was partially offset by a $20.0 million repayment received on a $22.0 million construction/land development loan. The average balance of net loans receivable totaled $985.8 million for the quarter ended March 31, 2018, compared to $963.1 million for the quarter ended December 31, 2017, and $825.3 million for the quarter ended March 31, 2017.

The Company had a $4.0 million recapture of provision for loan losses in the quarter ended March 31, 2018, compared to a recapture of provision for loan losses of $1.2 million in the quarter ended December 31, 2017, and a provision for loan losses of $200,000 in the quarter ended March 31, 2017. The recapture of provision in the quarter ended March 31, 2018, was due primarily to $4.3 million in recoveries received during that quarter of loans previously charged off, while the recapture of provision for loan losses in the quarter ended December 31, 2017, was due primarily to $2.0 million in recoveries during the quarter of loans previously charged off. The provision recaptures were partially offset by increases to the allowance for loan losses related to higher loan balances. The provision for loan losses in the quarter ended March 31, 2017, was primarily due to the increase in net loans receivable during the quarter.

"As a result of strategies we employed to encourage certain borrowers to repay us for amounts previously charged off, we are off to a great start to 2018. These amounts were charged off during the downturn in our economy as a result of the financial crisis, and I am pleased that we were able to negotiate repayment of these debts during this time of economic strength in the region," stated Joseph W. Kiley III, President and Chief Executive Officer. "In addition, I am very pleased to report that our deposit base grew by $23.7 million during the current quarter, including a $5.3 million increase in checking account deposits. This is an area of extensive focus as we work to transform the Bank from a traditional savings bank to a full service community bank. If you have not visited one of our offices to see the technology we have deployed and meet our team of talented bankers, I encourage you to stop in to enjoy this new bank branch experience for yourself.  I am also happy to report that we opened our tenth branch office in a development known as 'The Junction' in Bothell. This new branch office is a continuation of our strategy to expand our network, augmenting our efforts to grow our franchise and meet the deposit and lending needs of our communities."

 

The following tables present an analysis of total deposits by branch office (unaudited):

 

		March 31, 2018
		Noninterest- bearing demand				Interest- bearing demand				Statement savings				Money market				Certificates of deposit, retail				Certificates of deposit, brokered				Total
										(Dollars in thousands)
King County:
Renton		$	31,945			$	19,620			$	22,637			$	228,134			$	294,434			$	-			$	596,770
The Landing			3,176				980				59				11,571				8,096				-				23,822
Woodinville (1)			1,617				3,431				711				19,744				8,112				-				33,615
Bothell			31				-				-				-				-				-				31
Crossroads			1,074				6,388				82				25,104				7,006				-				39,654
Total King County			37,843				30,419				23,489				284,553				317,648				-				693,952
Snohomish County:
Mill Creek			1,395				2,314				710				14,814				6,313				-				25,546
Edmonds			1,632				1,305				45				17,619				5,747				-				26,348
Clearview (1)			3,881				3,225				1,080				7,408				1,734				-				17,328
Lake Stevens (1)			1,517				1,359				517				3,131				2,645				-				9,169
Smokey Point (1)			1,867				2,182				547				6,983				3,819				-				15,398
Total Snohomish County			10,292				10,385				2,899				49,955				20,258				-				93,789
Total retail deposits			48,135				40,804				26,388				334,508				337,906				-				787,741
Brokered deposits			-				-				-				-				-				75,488				75,488
Total deposits		$	48,135			$	40,804			$	26,388			$	334,508			$	337,906			$	75,488			$	863,229

⁽¹⁾ Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $93,000.

		December 31, 2017
		Noninterest- bearing demand				Interest- bearing demand				Statement savings				Money market				Certificates of deposit, retail				Certificates of deposit, brokered				Total
										(Dollars in thousands)
King County:
Renton		$	30,005			$	18,099			$	25,095			$	225,714			$	298,819			$	-			$	597,732
The Landing			2,634				405				44				11,555				7,807				-				22,445
Woodinville (1)			1,904				3,124				685				20,527				7,072				-				33,312
Crossroads			606				5,413				81				13,831				945				-				20,876
Total King County			35,149				27,041				25,905				271,627				314,643				-				674,365
Snohomish County:
Mill Creek			1,721				2,931				355				14,325				5,652				-				24,984
Edmonds			1,300				1,119				30				17,576				4,932				-				24,957
Clearview (1)			3,960				3,631				1,247				7,009				1,724				-				17,571
Lake Stevens (1)			1,466				1,266				475				2,829				2,608				-				8,644
Smokey Point (1)			1,838				2,236				444				5,270				3,705				-				13,493
Total Snohomish County			10,285				11,183				2,551				47,009				18,621				-				89,649
Total retail deposits			45,434				38,224				28,456				318,636				333,264				-				764,014
Brokered deposits			-				-				-				-				-				75,488				75,488
Total deposits		$	45,434			$	38,224			$	28,456			$	318,636			$	333,264			$	75,488			$	839,502

⁽¹⁾ Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $107,000.

Additional highlights for the quarter ended March 31, 2018:

·	Net loans receivable increased to $991.1 million at March 31, 2018, compared to $988.7 million at December 31, 2017, and $838.8 million at March 31, 2017.

·	Deposits increased to $863.2 million at March 31, 2018, compared to $839.5 million at December 31, 2017, and $734.7 million at March 31, 2017. Excluding certificates of deposits, deposit balances increased $19.1 million during the quarter.

·	The Company's book value per share was $13.80 at March 31, 2018, compared to $13.27 at December 31, 2017, and $12.84 at March 31, 2017.

·	The Bank's Tier 1 leverage and total capital ratios at March 31, 2018, were 10.4% and 14.4%, respectively, compared to 10.2% and 13.8% at December 31, 2017, and 11.6% and 15.7% at March 31, 2017.

Based on management's evaluation of the adequacy of the Allowance for Loan and Lease Losses ("ALLL"), there was a $4.0 million recapture of provision for loan losses during the quarter ended March 31, 2018. The following items contributed to the recapture of provision during the quarter:

·	The Bank received a $20.0 million payment on its largest loan that had a balance of $22.0 million at December 31, 2017.

·	The Company received $4.3 million in recoveries during the quarter, primarily relating to balances from two customers, representing payment in full of loan balances previously charged off.

·	The Company's net loans receivable increased modestly during the quarter to $991.1 million at March 31, 2018, from $988.7 million at December 31, 2017, and was $838.8 million at March 31, 2017.

·	Delinquent loans (loans over 30 days past due) remained low at $225,000 at March 31, 2018, compared to $101,000 at December 31, 2017, and no delinquent loans at March 31, 2017.

·	Nonperforming loans totaled $175,000 at March 31, 2018, compared to $179,000 at December 31, 2017, and $602,000 at March 31, 2017.

·	Nonperforming loans as a percentage of total loans remained low at 0.02% at both March 31, 2018, and December 31, 2017, compared to 0.07% at March 31, 2017.

The ALLL represented 1.31% of total loans receivable, net of undisbursed funds, at March 31, 2018, compared to 1.28% at December 31, 2017, and 1.31% at March 31, 2017. Nonperforming assets totaled $658,000 at March 31, 2018, compared to $662,000 at December 31, 2017, and $2.9 million at March 31, 2017. The 77.2% reduction in the Company's nonperforming assets from the prior year was primarily due to sales of other real estate owned ("OREO") and, to a lesser extent, a reduction in nonperforming loan balances.

 

The following table presents a breakdown of our nonperforming assets (unaudited):

 

		Mar 31,				Dec 31,				Mar 31,				Three Month				One Year
		2018				2017				2017				Change				Change
		(Dollars in thousands)
Nonperforming loans:
One-to-four family residential		$	125			$	128			$	545			$	(3	)		$	(420	)
Consumer			50				51				57				(1	)			(7	)
Total nonperforming loans			175				179				602				(4	)			(427	)
OREO			483				483				2,281				-				(1,798	)
Total nonperforming assets (1)		$	658			$	662			$	2,883			$	(4	)		$	(2,225	)
Nonperforming assets as a
percent of total assets			0.05	%			0.05	%			0.27	%

⁽¹⁾ The difference between nonperforming assets reported above, and the totals reported by other industry sources, is due to their inclusion of all Troubled Debt Restructured Loans ("TDRs") as nonperforming loans, although 100% of our TDRs were performing in accordance with their restructured terms at March 31, 2018.

OREO totaled $483,000 at March 31, 2018, and December 31, 2017, down from $2.3 million at March 31, 2017, due to sales of properties. The Bank continues to actively market its two remaining OREO properties in an effort to minimize holding costs.

In circumstances where a customer is experiencing significant financial difficulties, the Company may elect to restructure the loan so the customer can continue to make payments while minimizing the potential loss to the Company. Such restructures must be classified as TDRs.

The following table presents a breakdown of our TDRs (unaudited):

		Mar 31, 2018				Dec 31, 2017				Mar 31, 2017				Three Month Change				One Year Change
		(Dollars in thousands)
Nonperforming TDRs:
One-to-four family residential		$	–			$	–			$	109			$	–			$	(109	)
Total nonperforming TDRs			–				–				109				–				(109	)
Performing TDRs:
One-to-four family residential			11,904				13,434				21,790				(1,530	)			(9,886	)
Multifamily			1,128				1,134				1,152				(6	)			(24	)
Commercial real estate			3,173				3,194				3,683				(21	)			(510	)
Consumer			43				43				43				(0	)			(0	)
Total performing TDRs			16,248				17,805				26,668				(1,557	)			(10,420	)
Total TDRs		$	16,248			$	17,805			$	26,777			$	(1,557	)		$	(10,529	)

Net interest income for the quarter ended March 31, 2018, increased to $11.0 million, compared to $10.4 million for the quarter ended December 31, 2017, and $8.9 million for the quarter ended March 31, 2017, due in part to the growth in the average balance of net loans outstanding between periods, partially offset by increased interest expense due to higher deposit balances and increasing short term interest rates.

Total interest income increased to $14.1 million during the quarter ended March 31, 2018, compared to $13.3 million in the quarter ended December 31, 2017, and $11.0 million in the quarter ended March 31, 2017. These increases were due in part to the growth in the average balance of net loans receivable to $985.8 million for the quarter ended March 31, 2018, compared to $963.1 million for the quarter ended December 31, 2017, and $825.3 million for the quarter ended March 31, 2017. Interest income was also impacted by the recognition of $1.0 million in interest income during the quarter ended March 31, 2018, related to payments discussed above from two borrowers for the interest owed on the balances of previously charged off loans, compared to $436,000 in the quarter ended December 31, 2017. There was no such additional interest income recognized in the quarter ended March 31, 2017.

Total interest expense increased to $3.1 million for the quarter ended March 31, 2018, compared to $2.9 million for the quarter ended December 31, 2017, and $2.1 million for the quarter ended March 31, 2017. The higher level of interest expense in the quarter ended March 31, 2018, was due primarily to increases in the average balances of interest-bearing liabilities, in particular deposits, and increases in short term market interest rates. Advances from the Federal Home Loan Bank ("FHLB") totaled $200.0 million at March 31, 2018, compared to $216.0 million at December 31, 2017, and $171.5 million at March 31, 2017. The Bank borrows from the FHLB to supplement its deposit gathering efforts when needed to support asset growth. The average cost of FHLB advances was 1.66% for the quarter ended March 31, 2018, compared to 1.46% for the quarter ended December 31, 2017, and 1.05% for the quarter ended March 31, 2017. The balance of brokered certificates of deposits was unchanged at $75.5 million at March 31, 2018, December 31, 2017, and March 31, 2017.

The following table presents a breakdown of our total deposits (unaudited):

		Mar 31, 2018				Dec 31, 2017				Mar 31, 2017				Three Month Change				One Year Change
Deposits:		(Dollars in thousands)
Noninterest-bearing		$	48,135			$	45,434			$	36,190			$	2,701			$	11,945
Interest-bearing demand			40,804				38,224				21,584				2,580				19,220
Statement savings			26,388				28,456				27,415				(2,068	)			(1,027	)
Money market			334,508				318,636				218,578				15,872				115,930
Certificates of deposit, retail (1)			337,906				333,264				355,452				4,642				(17,546	)
Certificates of deposit, brokered			75,488				75,488				75,488				-				-
Total deposits		$	863,229			$	839,502			$	734,707			$	23,727			$	128,522

⁽¹⁾ Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $93,000 at March 31, 2018, and $107,000 at December 31, 2017.

Our net interest margin was 3.88% for the quarter ended March 31, 2018, compared to 3.65% for the quarter ended December 31, 2017, and 3.64% for the quarter ended March 31, 2017. The increase in the quarter ended March 31, 2018, from the prior quarter, was the result of payments received on amounts previously charged off. The Company recorded $1.0 million in additional interest related to these recoveries in the quarter ended March 31, 2018, compared to $436,000 in the quarter ended December 31, 2017.

Noninterest income for the quarter ended March 31, 2018, totaled $646,000, compared to $211,000 in the quarter ended December 31, 2017, and $535,000 in the quarter ended March 31, 2017. The amount recorded in the quarter ended December 31, 2017, was impacted by the $670,000 loss on sale of investments due to our investment portfolio restructuring at year end, undertaken primarily to reduce interest rate risk and to take advantage of the higher income tax rates for 2017 compared to 2018 following the passage of the U.S. Tax

 

Cuts and Jobs Act of 2017 (the "Tax Act"). Specifically, the Company sold approximately $37 million in fixed rate securities, with the proceeds reinvested primarily into adjustable rate securities.

Noninterest expense for the quarter ended March 31, 2018, declined slightly to $7.0 million, from $7.1 million in the quarter ended December 31, 2017, and increased from $6.1 million in the quarter ended March 31, 2017. The increase from the prior year period was due primarily to growth in the Bank's number of locations in the past year, including the opening of a new office in the Crossroads neighborhood of Bellevue in June 2017, and the acquisition of four branch offices in August 2017.

The Company's federal income tax provision was $1.8 million for the quarter ended March 31, 2018, compared to $2.3 million in the quarter ended December 31, 2017, and $785,000 in the quarter ended March 31, 2017. The quarter ended December 31, 2017, included a charge of $807,000 relating to changes in the Company's deferred tax asset valuation following passage of the Tax Act.

First Financial Northwest, Inc. is the parent company of First Financial Northwest Bank; an FDIC insured Washington State-chartered commercial bank headquartered in Renton, Washington, serving the Puget Sound Region through 10 full-service banking offices. We are a part of the ABA NASDAQ Community Bank Index and the Russell 2000 Index. For additional information about us, please visit our website at ffnwb.com and click on the "Investor Relations" link at the bottom of the page.

Forward-looking statements:

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "believe," "will," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include, but are not limited to, the following: increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company's latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission – that are available on our website at www.ffnwb.com and on the SEC's website at www.sec.gov.

Any of the forward-looking statements that we make in this Press Release and in the other public statements are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2018 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us and could negatively affect our operating and stock performance.

 

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands, except share data)

(Unaudited)

Assets		Mar 31, 2018				Dec 31, 2017				Mar 31, 2017				Three Month Change				One Year Change
Cash on hand and in banks		$	6,595			$	9,189			$	6,066				(28.2	)%			8.7	%
Interest-earning deposits			13,954				6,942				20,007				101.0				(30.3	)
Investments available-for-sale, at fair value			142,872				132,242				129,662				8.0				10.2
Loans receivable, net of allowance of $13,136,     $12,882 and $11,158 respectively			991,138				988,662				838,768				0.3				18.2
Federal Home Loan Bank ("FHLB") stock, at cost			9,450				9,882				8,102				(4.4	)			16.6
Accrued interest receivable			3,981				4,084				3,389				(2.5	)			17.5
Deferred tax assets, net			1,362				1,211				2,907				12.5				(53.1	)
Other real estate owned ("OREO")			483				483				2,281				0.0				(78.8	)
Premises and equipment, net			21,208				20,614				18,912				2.9				12.1
Bank owned life insurance ("BOLI"), net			29,276				29,027				27,534				0.9				6.3
Prepaid expenses and other assets			3,922				5,738				2,892				(31.6	)			35.6
Goodwill			889				889				-				0.0				n/a
Core deposit intangible			1,228				1,266				-				(3.0	)			n/a
Total assets		$	1,226,358			$	1,210,229			$	1,060,520				1.3	%			15.6	%
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing deposits		$	48,135			$	45,434			$	36,190				5.9	%			33.0	%
Interest-bearing deposits			815,094				794,068				698,517				2.6				16.7
Total Deposits			863,229				839,502				734,707				2.8				17.5
Advances from the FHLB			200,000				216,000				171,500				(7.4	)			16.6
Advance payments from borrowers for taxes and insurance			4,478				2,515				4,092				78.1				9.4
Accrued interest payable			270				326				237				(17.2	)			13.9
Other liabilities			9,626				9,252				8,235				4.0				16.9
Total liabilities			1,077,603				1,067,595				918,771				0.9				17.3
Commitments and contingencies
Stockholders' Equity
Preferred stock, $0.01 par value; authorized     10,000,000 shares; no shares issued or
outstanding		$	-			$	-			$	-				n/a				n/a
Common stock, $0.01 par value; authorized     90,000,000 shares; issued and outstanding
shares 10,779,424 at March 31, 2018, 10,748,437 at December 31, 2017, and
11,035,791 at March 31, 2017			108				107				110				0.9	%			(1.8	)%
Additional paid-in capital			94,527				94,173				98,186				0.4				(3.7	)
Retained earnings, substantially restricted			60,767				54,642				50,702				11.2				19.9
Accumulated other comprehensive loss, net of tax			(1,568	)			(928	)			(1,042	)			69.0				50.5
Unearned Employee Stock Ownership Plan    ("ESOP") shares			(5,079	)			(5,360	)			(6,207	)			(5.2	)			(18.2	)
Total stockholders' equity			148,755				142,634				141,749				4.3				4.9
Total liabilities and stockholders' equity		$	1,226,358			$	1,210,229			$	1,060,520				1.3	%			15.6	%

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES

Consolidated Income Statements

(Dollars in thousands, except share data)

(Unaudited)

		Quarter Ended
		Mar 31, 2018				Dec 31, 2017				Mar 31, 2017				Three Month Change				One Year Change
Interest income
Loans, including fees		$	13,042			$	12,269			$	10,027				6.3	%			30.1	%
Investments available-for-sale			929				903				845				2.9				9.9
Interest-earning deposits with banks			38				43				44				(11.6	)			(13.6	)
Dividends on FHLB Stock			104				85				82				22.4				26.8
Total interest income			14,113				13,300				10,998				6.1				28.3
Interest expense
Deposits			2,276				2,117				1,691				7.5				34.6
FHLB advances			853				795				445				7.3				91.7
Total interest expense			3,129				2,912				2,136				7.5				46.5
Net interest income			10,984				10,388				8,862				5.7				23.9
(Recapture of provision) provision for loan losses			(4,000	)			(1,200	)			200				233.3				(2,100.0	)
Net interest income after (recapture of provision)     provision for loan losses			14,984				11,588				8,662				29.3				73.0
Noninterest income
Net loss on sale of investments			-				(670	)			-				(100.0	)			n/a
BOLI			249				133				201				87.2				23.9
Wealth management revenue			99				220				140				(55.0	)			(29.3	)
Deposit related fees			161				169				71				(4.7	)			126.8
Loan related fees			134				356				120				(62.4	)			11.7
Other			3				3				3				0.0				0.0
Total noninterest income			646				211				535				206.2				20.7
Noninterest expense
Salaries and employee benefits			4,662				4,673				4,285				(0.2	)			8.8
Occupancy and equipment			769				721				480				6.7				60.2
Professional fees			328				430				439				(23.7	)			(25.3	)
Data processing			324				326				240				(0.6	)			35.0
OREO related expenses (reimbursements), net			1				(81	)			40				(101.2	)			(97.5	)
Regulatory assessments			155				161				96				(3.7	)			61.5
Insurance and bond premiums			106				97				99				9.3				7.1
Marketing			107				68				48				57.4				122.9
Other general and administrative			575				674				341				(14.7	)			68.6
Total noninterest expense			7,027				7,069				6,068				(0.6	)			15.8
Income before federal income tax  provision			8,603				4,730				3,129				81.9				174.9
Federal income tax provision			1,761				2,324				785				(24.2	)			124.3
Net income		$	6,842			$	2,406			$	2,344				184.4	%			191.9	%
Basic earnings per share		$	0.67			$	0.24			$	0.23
Diluted earnings per share		$	0.66			$	0.23			$	0.22
Weighted average number of common shares     outstanding			10,210,828				10,184,804				10,319,722
Weighted average number of diluted shares     outstanding			10,336,566				10,313,114				10,504,046

The following table presents a breakdown of our loan portfolio (unaudited):

		March 31, 2018								December 31, 2017								March 31, 2017
		Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Commercial real estate:
Residential:
Micro-unit apartments		$	14,266				1.3	%		$	14,331				1.3	%		$	7,841				0.8	%
Other multifamily			176,126				16.2				170,571				15.6				113,877				12.5
Total Multifamily			190,392				17.5				184,902				16.9				121,718				13.3
Non-residential:
Office			107,966				9.9				112,327				10.2				101,369				11.1
Retail			131,978				12.1				129,875				11.9				105,233				11.5
Mobile home park			20,783				1.9				19,970				1.8				20,519				2.2
Warehouse			22,611				2.1				22,701				2.1				21,575				2.4
Storage			32,031				2.9				32,201				2.9				35,290				3.9
Other non-residential			51,405				4.7				44,768				4.1				33,733				3.7
Total non-residential			366,774				33.6				361,842				33.0				317,719				34.8
Construction/land development:
One-to-four family residential			97,779				9.0				87,404				8.0				58,447				6.4
Multifamily			85,773				7.9				108,439				9.9				108,801				11.9
Commercial			5,735				0.5				5,325				0.5				-				0.0
Land development			13,299				1.2				36,405				3.3				39,687				4.3
Total construction/land development			202,586				18.6				237,573				21.7				206,935				22.6
One-to-four family residential:
Permanent owner occupied			162,544				14.9				148,304				13.6				135,743				14.9
Permanent non-owner occupied			133,351				12.2				130,351				11.9				113,476				12.4
Total one-to-four family residential			295,895				27.1				278,655				25.5				249,219				27.3
Business:
Aircraft			10,514				1.0				12,491				1.1				2,760				0.3
Other business			13,723				1.2				10,596				1.0				7,610				0.8
Total business			24,237				2.2				23,087				2.1				10,370				1.1
Consumer			11,131				1.0				9,133				0.8				7,878				0.9
Total loans			1,091,015				100.0	%			1,095,192				100.0	%			913,839				100.0	%
Less:
Loans in Process ("LIP")			85,576								92,498								61,735
Deferred loan fees, net			1,165								1,150								2,178
ALLL			13,136								12,882								11,158
Loans receivable, net		$	991,138							$	988,662							$	838,768
Concentrations of credit: (1)
Construction loans as % of total capital			84.9	%							108.6	%							111.7	%
Total non-owner occupied commercial real estate as % of total capital			484.8	%							514.0	%							441.2	%

⁽¹⁾ Concentrations of credit percentages are for First Financial Northwest Bank only using classifications in accordance with FDIC regulatory guidelines.

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES

Key Financial Measures

		At or For the Quarter Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
		2018				2017				2017				2017				2017
		(Dollars in thousands, except per share data)
Performance Ratios:
Return on assets			2.28	%			0.80	%			0.66	%			0.70	%			0.91	%
Return on equity			19.16				6.70				5.13				5.22				6.76
Dividend payout ratio			10.47				29.17				38.89				38.89				26.09
Equity-to-assets ratio			12.13				11.79				12.10				13.27				13.37
Interest rate spread			3.73				3.51				3.38				3.47				3.51
Net interest margin			3.88				3.65				3.53				3.60				3.64
Average interest-earning assets to average     interest-bearing liabilities			113.46				113.32				114.08				114.29				114.74
Efficiency ratio			60.42				66.69				67.64				70.27				64.57
Noninterest expense as a percent of average total     assets			2.34				2.34				2.42				2.57				2.35
Book value per common share		$	13.80			$	13.27			$	13.08			$	13.00			$	12.84
Capital Ratios: (1)
Tier 1 leverage ratio			10.44	%			10.20	%			10.80	%			11.46	%			11.57	%
Common equity tier 1 capital ratio			13.10				12.52				12.95				13.94				14.40
Tier 1 capital ratio			13.10				12.52				12.95				13.94				14.40
Total capital ratio			14.35				13.77				14.20				15.19				15.65
Asset Quality Ratios: (2)
Nonperforming loans as a percent of total loans			0.02	%			0.02	%			0.02	%			0.07	%			0.07	%
Nonperforming assets as a percent of total assets			0.05				0.05				0.17				0.22				0.27
ALLL as a percent of total loans			1.31				1.28				1.28				1.29				1.31
ALLL as a percent of nonperforming loans			7,508.90				7,196.65				6,545.95				1,935.68				1,853.49
Net charge-offs (recoveries) to average loans     receivable, net			(0.43	)			(0.20	)			(0.04	)			(0.00	)			(0.00	)
Allowance for Loan Losses:
ALLL, beginning of the quarter		$	12,882			$	12,110			$	11,285			$	11,158			$	10,951
Provision (Recapture of provision)			(4,000	)			(1,200	)			500				100				200
Charge-offs			-				-				-				-				-
Recoveries			4,254				1,972				325				27				7
ALLL, end of the quarter		$	13,136			$	12,882			$	12,110			$	11,285			$	11,158

⁽¹⁾ Capital ratios are for First Financial Northwest Bank only.

⁽²⁾ Loans are reported net of undisbursed funds.

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES

Key Financial Measures (continued)

		At or For the Quarter Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
		2018				2017				2017				2017				2017
		(Dollars in thousands, except per share data)
Yields and Costs:
Yield on loans			5.37	%			5.05	%			4.95	%			4.91	%			4.93	%
Yield on investments available-for-sale			2.65				2.52				2.59				2.69				2.66
Yield on interest-earning deposits			1.32				1.23				1.27				1.00				0.74
Yield on FHLB stock			4.40				3.42				2.91				2.89				4.14
Yield on interest-earning assets			4.98				4.67				4.51				4.54				4.52
Cost of deposits			1.15				1.08				1.05				1.03				1.00
Cost of borrowings			1.66				1.46				1.40				1.24				1.05
Cost of interest-bearing liabilities			1.25				1.16				1.13				1.07				1.01
Average Balances:
Loans		$	985,799			$	963,097			$	879,075			$	844,853			$	825,251
Investments available-for-sale			142,236				141,962				132,959				132,375				128,993
Interest-earning deposits			11,717				13,843				33,854				16,831				24,233
FHLB stock			9,593				9,859				9,126				8,616				8,034
Total interest-earning assets		$	1,149,345			$	1,128,761			$	1,055,014			$	1,002,675			$	986,511
Deposits		$	804,451			$	780,671			$	727,702			$	692,922			$	688,298
Borrowings			208,544				215,418				197,098				184,357				171,500
Total interest-bearing liabilities		$	1,012,995			$	996,089			$	924,800			$	877,279			$	859,798
Average assets		$	1,218,418			$	1,199,774			$	1,120,176			$	1,066,477			$	1,046,473
Average stockholders' equity		$	144,786			$	142,390			$	143,975			$	143,643			$	140,546