OREANDA-NEWS. First Financial Northwest, Inc. (the “Company”) (NASDAQ:FFNW), the holding company for First Financial Northwest Bank (the “Bank”), today reported net income for the quarter ended June 30, 2016, of $1.4 million, or $0.11 per diluted share, compared to net income of $1.8 million, or $0.14 per diluted share, for the quarter ended March 31, 2016, and $2.4 million, or $0.17 per diluted share, for the quarter ended June 30, 2015. In the first six months of 2016, net income was $3.3 million, or $0.26 per diluted share, compared to net income of $4.6 million, or $0.33 per diluted share, for the comparable period in 2015.

Changes in the provision for loan losses contributed significantly to the differences in net income between periods. Specifically, the Company recorded a $600,000 provision for loan losses in the quarter ended June 30, 2016, compared to a recapture of provision of $100,000 in the quarter ended March 31, 2016, and a recapture of provision of $500,000 in the quarter ended June 30, 2015. The provision in the quarter ended June 30, 2016 was related to growth in the Company’s balances of net loans receivable. The recaptures in the prior periods were due primarily to the continued credit quality improvement of the Company’s loan portfolio and recoveries of amounts previously charged off.

Net loans receivable increased $48.5 million to $766.0 million at June 30, 2016, compared to $717.5 million at March 31, 2016, and were $685.1 million at December 31, 2015, and $659.3 million at June 30, 2015.

“This is the first quarter in three years that we have recorded a provision for loan losses. This provision related solely to the growth in our loan portfolio and did not reflect a deterioration in asset quality, as our loan delinquencies and other asset quality metrics continued to remain low during the first half of the year. We are pleased with the year-to-date growth of $81.0 million in loans receivable and the provision for loan losses was deemed appropriate in conjunction with the loan growth,” stated Joseph W. Kiley III, President and Chief Executive Officer. “This growth was achieved through internal loan origination channels and through external purchases of loans. Specifically, we supplemented our loan growth by purchasing $49.8 million in commercial real estate loans originated by others during the first two quarters of 2016, consisting of a $30.0 million purchase of eight loans in the quarter ended March 31, 2016, and $19.8 million purchase of five loans in the quarter ended June 30, 2016. A total of $40.2 million of these commercial real estate loan purchases were secured by properties located in Arizona, California, Colorado, Oregon, and Utah, in our efforts to geographically diversify our portfolio while meeting our investment and credit quality objectives,” continued Kiley.

“In addition, I am pleased to update you on the success of our recent expansion efforts. Our Mill Creek office opened in September 2015 and its deposit base totaled $10.1 million at June 30, 2016. Our Edmonds office opened on March 21, 2016, and its deposit base had $8.6 million in deposits at June 30, 2016. An additional office in Renton opened on July 11, 2016, in the area known as The Landing, near the Boeing 737 plant at the south end of Lake Washington, utilizing the same successful design elements as our Mill Creek and Edmonds offices. I look forward to reporting on the growth of each of these offices in future quarters,” concluded Kiley.

Highlights for the quarter ended June 30, 2016:

  • We repurchased 122,058 shares of our common stock during the quarter under the share repurchase plan approved by the Board of Directors in October 2015, at an average price of $13.38 per share. From October 29, 2015, through April 27, 2016, we repurchased a total of 800,199 shares under the plan at an average price of $13.02 per share. The share repurchase plan authorized the repurchase of 1.4 million shares and expired on April 27, 2016.
  • The Company’s book value per share at June 30, 2016, increased to $12.71 from $12.52 at March 31, 2016, and $12.20 at June 30, 2015.
  • The Bank’s Tier 1 leverage and total capital ratios at June 30, 2016, were 12.0% and 15.7%, respectively, compared to 11.8% and 16.8% at March 31, 2016, and 11.7% and 18.5% at June 30, 2015.

Based on management’s evaluation of the adequacy of the Allowance for Loan and Lease Losses (“ALLL”), there was a $600,000 provision for loan losses for the quarter ended June 30, 2016. The following items contributed to this provision during the quarter:

  • The Company’s net loans receivable increased $48.5 million during the quarter to $766.0 million at June 30, 2016, compared to $717.5 million at March 31, 2016, and $659.3 million at June 30, 2015.
  • Delinquent loans (loans over 30 days past due) decreased to $720,000 at June 30, 2016, compared to $1.4 million at March 31, 2016, and $3.6 million at June 30, 2015.
  • Nonperforming loans totaled $1.1 million at both June 30, 2016, and March 31, 2016, compared with $2.4 million at June 30, 2015. 
  • Nonperforming loans as a percentage of total loans remained low at 0.14% at both June 30, 2016, and at March 31, 2016, compared to 0.36 % at June 30, 2015.

The ALLL represented 935% of nonperforming loans and 1.30% of total loans receivable, net of undisbursed funds, at June 30, 2016, compared to 899% and 1.30%, respectively, at March 31, 2016, and 439% and 1.58%, respectively, at June 30, 2015.

Nonperforming assets totaled $3.4 million at June 30, 2016, compared to $4.5 million at March 31, 2016, and $6.8 million at June 30, 2015. The decline in the Company’s nonperforming assets between periods was due primarily to sales and market value adjustments of Other Real Estate Owned (“OREO”).

The following table presents a breakdown of our nonperforming assets:

                     
    Jun 30,   Mar 31,   Jun 30,   Three
Month		   One
Year
      2016       2016       2015     Change   Change
              (Dollars in thousands)          
Nonperforming loans:                    
One-to-four family residential   $   1,019     $   985     $   252     $   34     $   767  
Multifamily       -         -         1,683         -         (1,683 )
Commercial real estate       -         -         407         -         (407 )
Consumer       64         69         73         (5 )       (9 )
Total nonperforming loans       1,083         1,054     $   2,415         29         (1,332 )
                     
OREO       2,331         3,405         4,416         (1,074 )       (2,085 )
                     
Total nonperforming assets (1)   $   3,414     $   4,459     $   6,831     $   (1,045 )   $ (3,417 )
                     
Nonperforming assets as a                    
percent of total assets     0.34 %     0.47 %     0.72 %        
                                 

(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 99.5% of our TDRs were performing in accordance with their restructured terms at quarter end. The remaining 0.5% of TDRs that were nonperforming at quarter-end are reported above as nonperforming loans.

The following table presents a breakdown of our OREO by county and property type at June 30, 2016:

                 
    County            
     Pierce    Kitsap    Mason   Total
OREO		   Number
of
Properties		   Percent of
Total
OREO
    (Dollars in thousands)        
OREO:                        
Commercial real estate (1)   $   1,320     $   506     $   505     $  2,331     5     100.0 %
                         
Total OREO   $   1,320     $   506     $   505     $  2,331       5     100.0 %
                                             

(1)  Of the five properties classified as commercial real estate, two are office/retail buildings and three are undeveloped lots.

OREO decreased to $2.3 million at June 30, 2016, compared to $3.4 million at March 31, 2016, and $4.4 million at June 30, 2015, due to sales and write-downs of OREO during the quarter and the preceding 12 months. We continue to actively market our 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 often be classified as TDRs.

The following table presents a breakdown of our TDRs:

                   
  Jun 30,
2016		   Mar 31,
2016		   Jun 30,
2015		   Three
Month
Change		   One Year
Change
            (Dollars in thousands)          
Nonperforming TDRs:                  
One-to-four family residential $   189     $    131     $    -     $    58     $   189  
                   
Performing TDRs:                  
One-to-four family residential      30,116          32,284          38,189          (2,168 )        (8,073 )
Multifamily      1,580          1,587          1,609          (7 )        (29 )
Commercial real estate      4,941          4,964          7,765         (23 )       (2,824 )
Consumer      43         43         43          -         -  
                   
Total performing TDRs      36,680         38,878         47,606         (2,198 )        (10,926 )
                   
Total TDRs $    36,869     $    39,009     $    47,606     $    (2,140 )   $   (10,737 )
                   
% TDRs classified as performing   99.5 %     99.7 %     100.0 %        
                               

Net interest income for the second quarter of 2016 increased to $8.2 million, compared to $7.8 million for the first quarter of 2016, and $7.6 million in the second quarter of 2015, due primarily to increases in interest income.

Interest income totaled $9.9 million during the quarter ended June 30, 2016, compared to $9.6 million in the quarter ended March 31, 2016, and $9.2 million in the quarter ended June 30, 2015. These increases related primarily to growth in average balances in loans receivable, including continued growth in higher yielding construction and commercial real estate loans and an increase in balances in the Bank’s investment securities portfolio.

Interest expense remained relatively stable at $1.7 million for the quarter ended June 30, 2016, compared to $1.8 million for the quarter ended March 31, 2016, and $1.7 million for the quarter ended June 30, 2015. The higher level in the quarter ended March 31, 2016, was primarily the result of costs associated with redemptions of certain brokered certificates of deposit (“CDs”). Specifically, we redeemed $14.6 million in callable brokered CDs in the quarter ended March 31, 2016, and issued $14.1 million in new brokered CDs at lower interest rates. These redemptions require that the remaining unamortized fees relating to the original acquisition of the deposits be recognized at the time of redemption. These redemptions had a favorable impact in the second quarter as these redemptions were executed to decrease future interest expense on these deposits. Balances of brokered certificates of deposit were little changed between periods, totaling $65.6 million at June 30, 2016, and at March 31, 2016, compared to $66.1 million at June 30, 2015. Advances from the Federal Home Loan Bank increased $70 million to $161.5 million at June 30, 2016, compared to $91.5 million at March 31, 2016, to fund the growth in loans receivable.

Our net interest margin was 3.63% for the quarter ended June 30, 2016, compared to 3.46% for the quarter ended March 31, 2016, and 3.42% for the quarter ended June 30, 2015. The increase in the most recent quarter was primarily attributable to a $49.2 million reduction in the average balances of low-yielding interest earning deposits outstanding during the quarter ended June 30, 2016, compared to the prior quarter. These funds shifted into higher yielding loans, including growth in multi-family loans, commercial real estate loans, and construction loans and recent purchases of higher yielding investment securities. These investment security purchases increased the proportion of securities that have longer maturities and higher yields in order to enhance our interest income.

Noninterest income for the quarter ended June 30, 2016, totaled $708,000, compared to $480,000 in the quarter ended March 31, 2016, and $357,000 in the quarter ended June 30, 2015, due primarily to increased income from wealth management services and Bank Owned Life Insurance (“BOLI”). The increase in the quarter ended June 30, 2016, related to an increase in income from our wealth management services to $281,000 compared to $210,000 in the quarter ended March 31, 2016 and $23,000 in the quarter ended June 30, 2015, that represented the initial two months of offering wealth management services. During the quarter ended June 30, 2016, the Bank replaced one of its BOLI policies with a higher yielding policy that increased its income from BOLI during the quarter.

Noninterest expense for the quarter ended June 30, 2016, increased to $6.1 million from $5.8 million in the quarter ended March 31, 2016, and $4.9 million during the quarter ended June 30, 2015. For the quarter ended June 30, 2016, increases in salaries and employee benefits and occupancy and equipment expenses related to hiring staff for the new office in the Landing in Renton, and the recent opening of new offices in Edmonds and Mill Creek, along with increased professional fees, contributed to the increase in the current quarter. The quarter ended June 30, 2016, included $75,000 in OREO related expenses, compared to $237,000 in the quarter ended March 31, 2016, and a $7,000 gain in the quarter ended June 30, 2015. Changes to the Company’s unfunded commitment reserve, which is included in other general and administrative expenses, also contributed significantly to the increase in noninterest expense, with an expense of $153,000 in the quarter ended June 30, 2016, compared to a $19,000 expense in the quarter ended March 31, 2016, and $75,000 in the quarter ended June 30, 2015. This unfunded commitment reserve expense can vary significantly each quarter, based on the amount believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities, and reflects changes in the amounts that the Company has committed to fund but has not yet disbursed. The increase in our construction lending activity was the primary reason for the increase in the quarter ended June 30, 2016.

First Financial Northwest, Inc. is the parent company of First Financial Northwest Bank; a Washington State chartered commercial bank headquartered in Renton, Washington, serving the Puget Sound Region through its four full-service banking offices. We are a part of the ABA NASDAQ Community Bank Index and the Russell 3000 Index.

 
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
                   
Assets  Jun 30,
2016		    Mar 31,
2016		    Jun 30,
2015		   Three
Month
Change		   One Year 
Change
                   
Cash on hand and in banks $   6,051     $   6,552     $   5,550       (7.6 )%     9.0 %
Interest-earning deposits     31,454         21,706         101,424       44.9       (69.0 )
Investments available-for-sale, at fair value     136,028         135,133         116,913       0.7       16.3  
Loans receivable, net of allowance of $10,134, $9,471,
  and $10,603, respectively		     766,046         717,483         659,273       6.8       16.2  
Premises and equipment, net     18,206         18,166         16,934       0.2       7.5  
Federal Home Loan Bank ("FHLB") stock, at cost     7,631         4,831         6,537       58.0       16.7  
Accrued interest receivable     3,158         3,114         3,033       1.4       4.1  
Deferred tax assets, net     3,438         3,917         6,195       (12.2 )     (44.5 )
Other real estate owned ("OREO")     2,331         3,405         4,416       (31.5 )     (47.2 )
Bank owned life insurance ("BOLI")     23,700         23,474         22,932       1.0       3.3  
Prepaid expenses and other assets     1,193         1,462         1,225       (18.4 )     (2.6 )
Total assets $   999,236     $   939,243     $   944,432       6.4 %     5.8 %
                   
Liabilities and Stockholders' Equity                  
                   
Deposits                  
Noninterest-bearing deposits $   25,137     $   21,186     $   20,531       18.6 %     22.4 %
Interest-bearing deposits     635,073         647,370         603,177       (1.9 )     5.3  
Total Deposits     660,210         668,556         623,708       (1.2 )     5.9  
Advances from the FHLB     161,500         91,500         135,500       76.5       19.2  
Advance payments from borrowers for taxes and
  insurance		     2,144         3,624         1,581       (40.8 )     35.6  
Accrued interest payable     114         106         145       7.5       (21.4 )
Investment trade payable     -         -         578       n/a       (100.0 )
Other liabilities     5,813         6,279         5,349       (7.4 )     8.7  
Total liabilities $   829,781     $   770,065     $   766,861       7.8 %     8.2 %
                   
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		                  
13,327,916 shares at June 30, 2016
13,510,400 shares at March 31, 2016
14,552,324 shares at June 30, 2015		     133         135         146       (1.5 )%     (8.9 )%
Additional paid-in capital     131,312         132,564         146,240       (0.9 )     (10.2 )
Retained earnings, substantially restricted     44,640         43,954         39,900       1.6       11.9  
Accumulated other comprehensive income/(loss),
   net of tax		     423         (140 )       (533 )     (402.1 )     (179.4 )
Unearned Employee Stock Ownership Plan
  ("ESOP") shares		     (7,053 )       (7,335 )       (8,182 )     (3.8 )     (13.8 )
Total stockholders' equity     169,455         169,178         177,571       0.2       (4.6 )
Total liabilities and stockholders' equity $   999,236     $   939,243     $   944,432       6.4 %     5.8 %
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except share data)
(Unaudited)
                   
  Quarter Ended        
  Jun 30,
2016		   Mar 31,
2016		   Jun 30,
2015		   Three
Month
Change		   One Year
Change
Interest income                   
Loans, including fees $   9,048     $   8,727     $   8,658       3.7 %     4.5 %
Investments available-for-sale       757         675         495       12.1       52.9  
Interest-earning deposits with banks      47         113          65       (58.4 )     (27.7 )
Dividends on FHLB Stock      44         47          3       (6.4 )     1,366.7  
Total interest income       9,896         9,562          9,221       3.5       7.3  
Interest expense                   
Deposits       1,441         1,483         1,333       (2.8 )     8.1  
FHLB advances      272          298          320       (8.7 )     (15.0 )
Total interest expense       1,713          1,781          1,653       (3.8 )     3.6  
Net interest income       8,183          7,781          7,568       5.2       8.1  
Provision (recapture of provision) for loan losses      600         (100 )        (500 )     (700.0 )     (220.0 )
Net interest income after provision (recapture of  
  provision) for loan losses		      7,583         7,881          8,068       (3.8 )     (6.0 )
                   
Noninterest income                  
BOLI income      225          165         136       36.4       65.4  
Other       483          315          221       53.3       118.6  
Total noninterest income      708          480          357       47.5       98.3  
                   
Noninterest expense                   
Salaries and employee benefits       3,841          3,774          3,251       1.8       18.1  
Occupancy and equipment       488          508          314       (3.9 )     55.4  
Professional fees      561          468          458       19.9       22.5  
Data processing      251          190          188       32.1       33.5  
Net loss (gain) on sale of OREO  property      89          (1 )        (2 )     (9,000.0 )     (4,550.0 )
OREO market value adjustments      -          258         (46 )     (100.0 )     (100.0 )
OREO related expenses, net      (14 )       (20 )        41       30.0       (134.1 )
Regulatory assessments      117          120         116       (2.5 )     0.9  
Insurance and bond premiums      86          88          89       (2.3 )     (3.4 )
Marketing      40          36          54       11.1       (25.9 )
Other general and administrative       613          352          411       74.1       49.1  
Total noninterest expense       6,072         5,773          4,874       5.2       24.6  
Income before federal income tax provision      2,219          2,588          3,551       (14.3 )     (37.5 )
Federal income tax provision      779          763          1,183       2.1       (34.2 )
Net income $   1,440     $   1,825     $   2,368       (21.1 )%     (39.2 )%
                   
Basic earnings per share $   0.12     $   0.14     $   0.17          
Diluted earnings per share $   0.11     $   0.14     $   0.17          
Weighted average number of common shares
  outstanding		   12,390,234       12,744,694       13,756,336          
Weighted average number of diluted shares
  outstanding		   12,530,720       12,905,527       13,916,314          
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except share data)
(Unaudited)
           
  Six Months Ended    
  Jun 30,    
    2016       2015     One
Year
Change
Interest income           
Loans, including fees $   17,775     $   17,234         3.1 %
Investments available-for-sale      1,432          1,007       42.2  
Interest-earning deposits with banks     160         129       24.0  
Dividends on FHLB Stock     91         5       1,720.0  
Total interest income      19,458         18,375       5.9  
Interest expense           
Deposits      2,924         2,647       10.5  
FHLB advances      570         638       (10.7 )
Total interest expense       3,494         3,285       6.4  
Net interest income       15,964         15,090       5.8  
Provision (recapture of provision) for loan losses     500         (600 )     (183.3 )
Net interest income after  provision (recapture of provision) for  
  loan losses		     15,464         15,690       (1.4 )
           
Noninterest income          
BOLI     390         156       150.0  
Other      798         292       173.3  
Total noninterest income     1,188         448       165.2  
           
Noninterest expense           
Salaries and employee benefits      7,615         6,665       14.3  
Occupancy and equipment      996         652       52.8  
Professional fees     1,029         812       26.7  
Data processing      441         348       26.7  
Loss (gain) on sale of OREO property, net     87         (531 )     (116.4 )
OREO market value adjustments     257         4       6,325.0  
OREO related expenses, net     (34 )       (7 )     385.7  
Regulatory assessments     237         232       2.2  
Insurance and bond premiums     174         181       (3.9 )
Marketing     78         87       (10.3 )
Other general and administrative      965         721       33.8  
Total noninterest expense      11,845         9,164       29.3  
Income before federal income tax  provision      4,807         6,974       (31.1 )
Federal income tax provision     1,542         2,377       (35.1 )
Net income $   3,265     $   4,597         (29.0 )%
           
Basic earnings per share $   0.26     $   0.33      
Diluted earnings per share $   0.26     $   0.33      
Weighted average number of common shares outstanding     12,567,464         13,895,872      
Weighted average number of diluted shares outstanding     12,718,155         14,057,198      
                   

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

           
  Jun 30, 2016   Mar 31, 2016   Jun 30, 2015
  Amount   Percent   Amount   Percent   Amount   Percent
                  (Dollars in thousands)                
One-to-four family residential:                      
Permanent owner occupied $   146,762       17.3 %   $   147,912        18.8 %   $ 152,764         21.9 %
Permanent non-owner occupied     104,970       12.4         108,905       13.8         105,046       15.1  
      251,732       29.7         256,817       32.6         257,810       37.0  
                       
Multifamily:                      
Permanent     132,189       15.6         129,553       16.4         20,758       17.3  
Construction      35,565       4.2         21,115       2.7         2,265       0.3  
      167,754       19.8         150,668       19.1         23,023       17.6  
Commercial real estate:                      
Permanent     285,449       33.7         258,946       32.9         33,652       33.5  
Land     16,822       2.0         14,700       1.9         7,598       1.1  
      302,271       35.7         273,646       34.8         41,250       34.6  
Construction/land development: (1)                      
One-to-four family residential     64,312       7.6         50,770       6.4         30,448       4.4  
Multifamily     41,716       4.9         35,436       4.5         19,438       2.8  
Commercial   -       -       -       -         4,300       0.6  
Land development      5,773       0.7         7,513       1.0         8,013       1.1  
      111,801       13.2          93,719       11.9         62,199       8.9  
                       
Business     7,208       0.9         6,548       0.8         6,275       0.9  
Consumer     6,333       0.7         5,972       0.8         7,051       1.0  
Total loans      847,099       100.0 %       787,370       100.0 %       697,608       100.0 %
Less:                      
Loans in Process ("LIP")      68,979             58,172             25,182      
Deferred loan fees, net     1,940             2,244             2,550      
ALLL     10,134             9,471              10,603      
Loans receivable, net $   766,046         $   717,483         $ 659,273      
                                   

(1)  Excludes construction loans that will convert to permanent loans. The Company considers these loans to be "rollovers" in that one loan is originated for both the construction loan and permanent financing. These loans are classified according to the underlying collateral categories in the table above instead of being listed in the Construction/land development category. At June 30, 2016, March 31, 2016, and June 30, 2015, $16.8 million, $14.7 million, and $7.6 million respectively, of commercial real estate loans were not included in the construction/land development category because the Company classifies raw land or buildable lots (where it does not intend to finance the construction) as commercial real estate land loans.

 
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures
                     
    At or For the Quarter Ended
    Jun 30,   Mar 31,   Dec 31,   Sep 30,   Jun 30,
      2016       2016       2015       2015       2015  
            (Dollars in thousands, except per share data)        
Performance Ratios:                    
Return on assets     0.60 %     0.76 %     0.86 %     1.01 %     1.00 %
Return on equity     3.41       4.34       4.87       5.50       5.28  
Dividend payout ratio      51.81       42.04       36.86       33.33       35.29  
Equity-to-assets ratio     16.96       18.01       17.42       17.78       18.80  
Interest rate spread     3.49       3.31       3.18       3.22       3.26  
Net interest margin     3.63       3.46       3.33       3.38       3.42  
Average interest-earning assets to average 
  interest-bearing liabilities		     118.96       118.86       119.77       120.33       120.01  
Efficiency ratio     68.29       69.88       66.04       66.34       61.50  
Noninterest expense as a percent of average total assets     2.53       2.41       2.17       2.22       2.06  
Book value per common share   $    12.71     $    12.52     $   12.40     $ 12.32     $   12.20  
                     
Capital Ratios: (1)                    
Tier 1 leverage ratio     12.02 %     11.81 %     11.61 %     11.74 %     11.70 %
Common equity tier 1 capital ratio     14.42       15.55       16.36       16.57       17.26  
Tier 1 capital ratio     14.42       15.55       16.36       16.57       17.26  
Total capital ratio     15.67       16.80       17.62       17.83       18.52  
                     
Asset Quality Ratios: (2)                    
Nonperforming loans as a percent of total loans     0.14       0.14       0.16       0.35       0.36  
Nonperforming assets as a percent of total assets     0.34       0.47       0.48       0.68       0.72  
ALLL as a percent of total loans     1.30       1.30       1.36       1.48       1.58  
ALLL as a percent of nonperforming loans     935.30       898.92       872.17       417.70       439.05  
Net charge-offs (recoveries) to average loans
  receivable, net		     (0.01 )     (0.02 )     (0.03 )     (0.04 )     (0.09 )
                     
Allowance for Loan Losses:                    
ALLL, beginning of the quarter   $   9,471     $    9,463     $    10,146     $   10,603     $  10,508  
Provision (Recapture of provision)        600          (100 )        (900 )       (700 )        (500 )
Charge-offs      -          (19 )            -         (22 )      -  
Recoveries        63          127          217         265          595  
ALLL, end of the quarter   $    10,134     $   9,471     $    9,463     $   10,146     $    10,603  
                     
Nonperforming Assets:                    
Nonperforming loans: (2) (3)                    
Nonaccrual loans   $    894     $    923     $    954     $   2,429     $    2,415  
Nonaccrual TDRs        189         131         131             -           -  
Total nonperforming loans        1,083         1,054         1,085         2,429         2,415  
OREO       2,331         3,405         3,663         4,235         4,416  
Total nonperforming assets   $   3,414     $   4,459     $   4,748     $   6,664     $   6,831  
                     
Performing TDRs   $   36,680     $   38,878     $   42,128     $   46,606     $   47,606  
                     
(1) Capital ratios are for First Financial Northwest Bank only.                
(2) Loans are reported net of undisbursed funds.                    
(3) There were no loans 90 days or more past due and still accruing interest.