# EDGAR Filing Document

**Accession Number:** 0001401564
**File Stem:** 0000939057-23-000010
**Filing Date:** 2023-1
**Character Count:** 58689
**Document Hash:** 84cfdf2036899768400532310cb62efa
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000939057-23-000010.hdr.sgml**: 20230126

**ACCESSION NUMBER**: 0000939057-23-000010

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230126

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230126

**DATE AS OF CHANGE**: 20230126

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** First Financial Northwest, Inc.
- **CENTRAL INDEX KEY:** 0001401564
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 260610707
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33652
- **FILM NUMBER:** 23556154

**BUSINESS ADDRESS:**
- **STREET 1:** 201 WELLS AVENUE SOUTH
- **CITY:** RENTON
- **STATE:** WA
- **ZIP:** 98057
- **BUSINESS PHONE:** (425) 255-4400

**MAIL ADDRESS:**
- **STREET 1:** 201 WELLS AVENUE SOUTH
- **CITY:** RENTON
- **STATE:** WA
- **ZIP:** 98057

#### SECURITIES AND EXCHANGE COMMISSION

#### WASHINGTON, D.C. 20549

#### FORM 8-K

#### CURRENT REPORT

#### PURSUANT TO SECTION 13 OR 15(d) OF THE

#### SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): **January 26, 2023**

**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Financial Northwest, Inc.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** 

(Exact name of registrant as specified in its charter)

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| | | |
|:---|:---|:---|
| **Washington**<br>| **001-33652**<br>| **26-0610707**<br>|
| State or other jurisdiction of<br> Incorporation | Commission<br> File Number | (I.R.S. Employer<br> Identification No.) |
| **201 Wells Avenue South, Renton, Washington** | **201 Wells Avenue South, Renton, Washington** | **98057**<br>|
| (Address of principal executive offices) | (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number (including area code) **(425) 255-4400**

<u>Not Applicable</u> <br> (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| Title of each class | Trading<br> Symbol(s) | Name of each exchange on<br> which registered |
| Common Stock, par value $0.01 per share<br>| FFNW<br>| The NASDAQ Stock Market LLC<br>|

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

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#### Item 2.02 Results of Operations and Financial Condition
On January 26, 2023, First Financial Northwest, Inc. (the "Company") issued its earnings release for the quarter and year ended December 31, 2022. A copy of the earnings release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

#### Item 9.01. Financial Statements and Exhibits
(d)&nbsp;&nbsp;&nbsp;&nbsp; Exhibits

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[99.1](ffnw8k12623exh991.htm)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [First Financial Northwest, Inc.'s earnings release dated January 26, 2023](ffnw8k12623exh991.htm)

104&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cover Page Interactive Data File (embedded within the Inline XBRL document)

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<u>SIGNATURES</u>

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

---

| | |
|:---|:---|
|  | FIRST FINANCIAL NORTHWEST, INC. |
| DATE: January 26, 2023 | By: <u>/s/ Richard P. Jacobson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> <br>|
|  | &nbsp;&nbsp;&nbsp;&nbsp; Richard P. Jacobson <br>&nbsp;&nbsp;&nbsp;&nbsp; Executive Vice President and <br> &nbsp;&nbsp;&nbsp;&nbsp; Chief Financial Officer  |

---

&nbsp;&nbsp;&nbsp;&nbsp;

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## Exhibit 99.1

**Exhibit 99.1**<br>

![](image0.jpg)

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.<br> Reports Net Income of $3.2 Million or $0.35 per Diluted Share for the Fourth Quarter<br> and $13.2 Million or $1.45 per Diluted Share for the Year Ended December 31, 2022**

Renton, Washington – January 26, 2023 - 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 December 31, 2022, of $3.2 million, or $0.35 per diluted share, compared to $3.9 million, or $0.43 per diluted share, for the quarter ended September 30, 2022, and $2.7 million, or $0.29 per diluted share, for the quarter ended December 31, 2021. For the year ended December 31, 2022, net income was $13.2 million, or $1.45 per diluted share, compared to net income of $12.2 million, or $1.29 per diluted share, for the year ended December 31, 2021.

The provision for loan losses was the primary reason for the decrease in net income for the quarter ended December 31, 2022, compared to the quarter ended September 30, 2022. As a result of the quarterly analysis of our loan portfolio, the Company recorded a provision for loan losses of $500,000 for the quarter ended December 31, 2022, compared to a $400,000 recapture of provision for loan losses for the quarter ended September 30, 2022. The provision in the current quarter was primarily attributable to growth in loans receivable, while the recapture in the prior quarter was primarily attributable to the net impact of changes in the loan portfolio mix, loan downgrades and changes in impairment status.

"Our residential lending division continued to exceed expectations, resulting in growth of $26.4 million in the quarter ended December 31, 2022, bringing year-to-date growth to $90.7 million in one-to-four family residential loan balances, despite a rapidly increasing interest rate environment throughout the year," noted Joseph W. Kiley III, President and CEO. "This growth was fairly evenly distributed between owner occupied homes and non-owner occupied investment properties, with growth of $48.5 million and $42.3 million, respectively. In addition, I am very proud of the efforts of our credit underwriting teams and the focus on credit quality throughout the bank, with nonperforming asset and loan delinquency balances approximating $200,000 on total loans receivable of $1.2 billion," continued Kiley.

"Finally, I am pleased to report that during a year when many financial institutions saw deterioration in their book value per share, ours increased to $17.57 at December 31, 2022, compared to $17.30 one year ago," concluded Kiley.

------

Highlights for the quarter and year ended December 31, 2022:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net loans receivable increased by $23.7 million in the quarter to $1.17 billion at December 31, 2022, on continued strength in one-to-four family residential, construction/land, and classic, collectible and other auto loans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Bank increased its reliance on brokered deposits to fund its asset growth in the quarter, while also increasing noninterest-bearing demand deposits by $1.1 million in the quarter and $2.2 million year over year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company's book value per share increased to $17.57 at December 31, 2022, compared to $17.30 at both September 30, 2022, and December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company repurchased 84,981 shares at an average price of $16.43 per share during the year, an amount equal to approximately 1.0% of shares outstanding at the beginning of 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company paid regular quarterly cash dividends to shareholders totaling $0.48 per share for the year, a 9.1% increase over the prior year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Bank's Tier 1 leverage and total capital ratios at December 31, 2022, were 10.3% and 15.6%, respectively compared to 10.4% and 15.5%, respectively, at September 30, 2022, and 10.3% and 15.5%, respectively at December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Credit quality remained strong as nonperforming assets declined to $193,000, or 0.01% of total assets, and there were only an additional $27,000 in loans over 30 days past due at December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Based on management's evaluation of the adequacy of the allowance for loan and lease losses ("ALLL") at December 31, 2022, the Bank recorded a $500,000 provision for loan losses during the quarter, reducing the recapture of provision for loan losses recognized during the year to $400,000. For the year ended December 31, 2021, the Bank recorded a $300,000 provision for loan losses.

Deposits totaled $1.17 billion at December 31, 2022, compared to $1.15 billion at September 30, 2022, and $1.16 billion at December 31, 2021. Total deposits increased $20.6 million for the quarter ended December 31, 2022, compared to the quarter ended September 30, 2022, primarily due to a $55.3 million increase in brokered deposits and $2.0 million increase in demand deposits, partially offset by decreases across all other deposit categories, particularly money market balances. Management continually considers alternatives to increase deposits to fund anticipated asset growth in addition to efforts through its branch network, including wholesale markets, brokered deposits and the national deposit market.

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

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Dec 31,<br> 2022** | **Sep 30,<br> 2022** | **Dec 31,<br> 2021** | **Three<br> Month<br> Change** | **One<br> Year<br> Change** |
| Deposits: | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
| &nbsp;&nbsp;&nbsp; Noninterest-bearing demand | $119944 | $118842 | $117751 | $1102 | $2193 |
| &nbsp;&nbsp;&nbsp; Interest-bearing demand | 96632 | 95767 | 97907 | 865 | (1275) |
| &nbsp;&nbsp;&nbsp; Savings | 23636 | 24625 | 23146 | (989) | 490 |
| &nbsp;&nbsp;&nbsp; Money market | 542388 | 572137 | 624543 | (29749) | (82155) |
| &nbsp;&nbsp;&nbsp; Certificates of deposit, retail | 262554 | 268528 | 294127 | (5974) | (31573) |
| &nbsp;&nbsp;&nbsp; Brokered deposits | 124886 | 69537 | - | 55349 | 124886 |
| Total deposits | $1170040 | $1149436 | $1157474 | $20604 | $12566 |

---

2<br>

------

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

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **Noninterest-**<br> **bearing** <br> **demand** | **Interest-**<br> **bearing** <br> **demand** | **Savings** | **Money** <br> **market** | **Certificates** <br> **of deposit,** <br> **retail** | **Brokered** <br> **deposits** | **Total** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
| King County |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Renton | $35123 | $45575 | $15515 | $279392 | $203463 | $- | $579068 |
| &nbsp;&nbsp;&nbsp; Landing | 3781 | 1720 | 143 | 18153 | 3771 | - | 27568 |
| &nbsp;&nbsp;&nbsp; Woodinville | 2925 | 3315 | 1181 | 15648 | 10428 | - | 33497 |
| &nbsp;&nbsp;&nbsp; Bothell | 3363 | 1041 | 49 | 6485 | 942 | - | 11880 |
| &nbsp;&nbsp;&nbsp; Crossroads | 14455 | 3082 | 226 | 30969 | 11667 | - | 60399 |
| &nbsp;&nbsp;&nbsp; Kent | 8162 | 11660 | 2 | 19549 | 1023 | - | 40396 |
| &nbsp;&nbsp;&nbsp; Kirkland | 10618 | 506 | 62 | 8310 | 25 | - | 19521 |
| &nbsp;&nbsp;&nbsp; Issaquah | 3342 | 1171 | 134 | 2474 | 3408 | - | 10529 |
| Total King County | 81769 | 68070 | 17312 | 380980 | 234727 | - | 782858 |
| Snohomish County |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Mill Creek | 6594 | 4005 | 911 | 15445 | 5443 | - | 32398 |
| &nbsp;&nbsp;&nbsp; Edmonds | 16619 | 6191 | 766 | 33904 | 7768 | - | 65248 |
| &nbsp;&nbsp;&nbsp; Clearview | 5456 | 6317 | 1653 | 23322 | 2906 | - | 39654 |
| &nbsp;&nbsp;&nbsp; Lake Stevens | 3936 | 5213 | 1390 | 36842 | 4674 | - | 52055 |
| &nbsp;&nbsp;&nbsp; Smokey Point | 2617 | 6330 | 1391 | 46486 | 6012 | - | 62836 |
|  Total Snohomish County | 35222 | 28056 | 6111 | 155999 | 26803 | - | 252191 |
| Pierce County |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; University Place | 2192 | 96 | 1 | 3953 | 672 | - | 6914 |
| &nbsp;&nbsp;&nbsp; Gig Harbor | 761 | 410 | 212 | 1456 | 352 | - | 3191 |
| Total Pierce County | 2953 | 506 | 213 | 5409 | 1024 | - | 10105 |
| Brokered deposits | - | - | - | - | - | 124886 | 124886 |
| Total deposits | $119944 | $96632 | $23636 | $542388 | $262554 | $124886 | $1170040 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** |
|  | **Noninterest-**<br> **bearing** <br> **demand** | **Interest-**<br> **bearing** <br> **demand** | **Savings** | **Money** <br> **market** | **Certificates** <br> **of deposit, <br> retail** | **Brokered** <br> **deposits** | **Total** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
| King County |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Renton | $36797 | $43129 | $16483 | $301912 | $209504 | $- | $607825 |
| &nbsp;&nbsp;&nbsp; Landing | 4345 | 2586 | 155 | 20301 | 4089 | - | 31476 |
| &nbsp;&nbsp;&nbsp; Woodinville | 3033 | 3714 | 1208 | 19514 | 9799 | - | 37268 |
| &nbsp;&nbsp;&nbsp; Bothell | 3287 | 1045 | 54 | 7307 | 1694 | - | 13387 |
| &nbsp;&nbsp;&nbsp; Crossroads | 13047 | 4225 | 49 | 38668 | 9228 | - | 65217 |
| &nbsp;&nbsp;&nbsp; Kent | 6323 | 13945 | 4 | 19843 | 1499 | - | 41614 |
| &nbsp;&nbsp;&nbsp; Kirkland | 9101 | 365 | 42 | 7297 | 25 | - | 16830 |
| &nbsp;&nbsp;&nbsp; Issaquah | 3396 | 1480 | 60 | 3037 | 2295 | - | 10268 |
| Total King County | 79329 | 70489 | 18055 | 417879 | 238133 | - | 823885 |
| Snohomish County |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Mill Creek | 7153 | 2727 | 904 | 23527 | 5626 | - | 39937 |
| &nbsp;&nbsp;&nbsp; Edmonds | 16209 | 6284 | 901 | 34719 | 8935 | - | 67048 |
| &nbsp;&nbsp;&nbsp; Clearview | 5143 | 5957 | 1662 | 26923 | 2873 | - | 42558 |
| &nbsp;&nbsp;&nbsp; Lake Stevens | 4977 | 5233 | 1471 | 40297 | 4975 | - | 56953 |
| &nbsp;&nbsp;&nbsp; Smokey Point | 3430 | 4452 | 1422 | 23527 | 7066 | - | 39897 |
|  Total Snohomish County | 36912 | 24653 | 6360 | 148993 | 29475 | - | 246393 |
| Pierce County |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; University Place | 1879 | 108 | 2 | 3883 | 670 | - | 6542 |
| &nbsp;&nbsp;&nbsp; Gig Harbor | 722 | 517 | 208 | 1382 | 250 | - | 3079 |
| Total Pierce County | 2601 | 625 | 210 | 5265 | 920 | - | 9621 |
| Brokered deposits | - | - | - | - | - | 69537 | 69537 |
| Total deposits | $118842 | $95767 | $24625 | $572137 | $268528 | $69537 | $1149436 |

---

------

Net loans receivable totaled $1.17 billion at December 31, 2022, compared to $1.14 billion at September 30, 2022, and $1.10 billion at December 31, 2021. During the quarter ended December 31, 2022, new originations of one-to-four family residential loans, construction/land and classic, collectible and other auto loans outpaced total loan repayments in the quarter. The average balance of net loans receivable totaled $1.15 billion for the quarter ended December 31, 2022, compared to $1.13 billion for the quarter ended September 30, 2022, and $1.11 billion for the quarter ended December 31, 2021. For the year ended December 31, 2022, the average balance of net loans receivable was $1.13 billion, compared to $1.10 billion for the year ended December 31, 2021.

The ALLL represented 1.29% of total loans receivable at December 31, 2022, compared to 1.27% at September 30, 2022, and 1.40% of total loans receivable at December 31, 2021.

There were $193,000 in nonperforming loans at December 31, 2022, compared to $232,000 at September 30, 2022, and none at December 31, 2021. There was no other real estate owned ("OREO") at December 31, 2022, September 30, 2022, or December 31, 2021.

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Dec 31,**<br> **2022** | **Sep 30,**<br>**2022** | **Dec 31,**<br>**2021** | **Three<br> Month**<br>**Change** | **One<br> Year**<br>**Change** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
| Nonperforming loans: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; One-to-four family residential | $─  | $39 | $─ | $(39) | $─  |
| &nbsp;&nbsp;&nbsp; Consumer | 193 | 193 | ─<br>| ─  | 193 |
| Total nonperforming loans | 193 | 232 | ─  | (39) | 193 |
| OREO | ─  | ─  | ─  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ─  | ─  |
| Total nonperforming assets <sup>(1)</sup> | $193 | $232 | $─ | $(39) | $193 |
| Nonperforming assets as a percent |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; of total assets | 0.01% | 0.02% | 0.00% |  |  |

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<sup>(1)</sup> 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 the Company's TDRs were performing in accordance with their restructured terms for the periods presented.

The Company accounts for certain loan modifications or restructurings as TDRs. In general, the modification or restructuring of a debt is considered a TDR if, for economic or legal reasons related to the borrower's financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. TDRs totaled $1.4 million at December 31, 2022, compared to $1.8 million at September 30, 2022, and $2.1 million at December 31, 2021. All TDRs were performing according to their modified repayment terms for the periods presented.

Net interest income totaled $12.5 million for the quarter ended December 31, 2022, compared to $12.7 million for the quarter ended September 30, 2022, and $11.6 million for the quarter ended December 31, 2021. The decrease in the current quarter compared to the quarter ended September 30, 2022, was primarily due to higher interest expense on deposits and other borrowings, primarily reflecting the continued increase in market interest rates due to the ongoing increases to the targeted federal funds rate, which increased 125 basis points during the fourth calendar quarter of 2022, and increased competition for deposits, partially offset by higher interest income on <br>

4<br>

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loans, including fees, and investments. For the year ended December 31, 2022, net interest income totaled $48.4 million, compared to $45.0 million for the year ended December 31, 2021, as the increase in interest income on loans and investments outpaced the increase in interest expense on liabilities.

Total interest income was $17.4 million for the quarter ended December 31, 2022, compared to $15.4 million for the quarter ended September 30, 2022, and $13.3 million for the quarter ended December 31, 2021. The increase in the current quarter compared to the prior quarters was primarily due to an improvement in the average loan yield to 5.19% from 4.77% and 4.44% for the quarters ended September 30, 2022, and December 31, 2021, respectively, due in large part to recent increases in short term interest rates that increased our returns from LIBOR and Prime based variable rate loans and variable rate investment securities.

Total interest expense was $4.9 million for the quarter ended December 31, 2022, compared to $2.7 million for the quarter ended September 30, 2022, and $1.7 million for the quarter ended December 31, 2021. The average cost of interest-bearing deposits was 1.51% for the quarter ended December 31, 2022, compared to 0.87% for the quarter ended September 30, 2022, and 0.53% for the quarter ended December 31, 2021. The increase from the quarter ended September 30, 2022, was due primarily to increased interest expense on money market balances and the continued use of higher cost brokered deposits and wholesale sources to meet our funding needs. Advances from the FHLB decreased to $145.0 million at December 31, 2022, compared to $150.0 million at September 30, 2022, and increased from $95.0 million at December 31, 2021. Currently, $95.0 million of our FHLB advances are tied to cash flow hedge agreements where the Bank pays a fixed rate and receives a variable rate in return to assist in the Bank's interest rate risk management efforts. These cash flow hedge agreements have a weighted average remaining term of 47 months and a weighted average fixed interest rate of 1.05%. The average cost of borrowings was 2.46% for the quarter ended December 31, 2022, compared to 1.48% for the quarter ended September 30, 2022, and 1.33% for the quarter ended December 31, 2021.

The net interest margin was 3.52% for the quarter ended December 31, 2022, compared to 3.65% for the quarter ended September 30, 2022, and 3.40% for the quarter ended December 31, 2021. The decrease in the net interest margin for the quarter ended December 31, 2022, compared to the quarter ended September 30, 2022, was due primarily to the cost of interest-bearing liabilities increasing more than the yields on interest-earnings assets, with a 70-basis point increase in the Company's average cost of interest-bearing liabilities to 1.63% from 0.93%, partially offset by a 48-basis point increase in the average yield on interest-earning assets to 4.91% from 4.43%.

Noninterest income for the quarter ended December 31, 2022, totaled $695,000, compared to $778,000 for the quarter ended September 31, 2022, and $1.1 million for the quarter ended December 31, 2021. The decrease in noninterest income for the quarter ended December 31, 2022, compared to the quarter ended September 30, 2022, was primarily due to lower wealth management revenue, and lower loan related fees. The decrease in the current quarter as compared to the quarter ended December 31, 2021, primarily reflects reduced loan fees, in addition to a reduction in wealth management revenue. For the year ended December 31, 2022, noninterest income declined $639,000 to $3.2 million, from $3.9 million for the year ended December 31, 2021, due primarily to lower loan related fees as loan prepayment penalties declined by $425,000, along with a decline of $182,000 in wealth management revenue in the year ended December 31, 2022, compared to the prior year.

Noninterest expense totaled $8.7 million for the quarter ended December 31, 2022, compared to $9.0 million for the quarter ended September 30, 2022, and $8.7 million for the quarter ended December 31, 2021. The decrease in noninterest expense for the quarter ended December 31, 2022, compared to the quarter ended September 30, 2022, was primarily due to a $440,000 decline in salaries and employee benefits due in part to the maturity of the Bank's Employee Stock Ownership Plan ("ESOP") in the quarter ended

<br> 5<br>

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September 30, 2022, resulting in no associated compensation expense for the quarter ended December 31, 2022, compared to $430,000 in the quarter ended September 30, 2022. Effective January 1, 2023, this ESOP benefit was replaced by a new profit-sharing contribution and other enhancements to the Bank's 401(k) plan for all eligible employees. The Company expects that the associated expenses will generally be in line with the previous ESOP related expenses. The decrease in noninterest expense for the quarter ended December 31, 2022, compared to the quarter ended December 31, 2021, primarily reflects the absence of expenses related to the matured ESOP, partially offset by higher other general and administrative expenses and professional fees. The increase year over year was due primarily to higher expenses across all categories except net OREO related expenses, regulatory assessments and data processing fees, which were lower.

*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: potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia's invasion of Ukraine, as well as increasing oil prices and supply chain disruptions, and any governmental or societal responses new COVID-19 variants; increased competitive pressures; changes in the interest rate environment; 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 <u>www.ffnwb.com</u> and on the SEC's website at <u>www.sec.gov</u>.*

*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 2022 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** | **Dec 31,<br> 2022** | **Sep 30,<br> 2022** | **Dec 31,<br> 2021** | **Three<br> Month<br> Change** | **One<br> Year<br> Change** |
| Cash on hand and in banks | $7722 | $9684 | $7246 | (20.3)% | 6.6% |
| Interest-earning deposits with banks | 16598 | 15227 | 66145 | 9.0 | (74.9) |
| Investments available-for-sale, at fair value | 217977 | 221278 | 168948 | (1.5) | 29.0 |
| Investments held-to-maturity, at amortized cost | 2444 | 2438 | 2432 | 0.2 | 0.5 |
|  Loans receivable, net of allowance of $15,227, <br> &nbsp;&nbsp;&nbsp;&nbsp;$14,726, and $15,657 respectively | 1167083 | 1143348 | 1103461 | 2.1 | 5.8 |
|  Federal Home Loan Bank ("FHLB") stock, at cost | 7512 | 7712 | 5465 | (2.6) | 37.5 |
| Accrued interest receivable | 6513 | 6261 | 5285 | 4.0 | 23.2 |
| Deferred tax assets, net | 2597 | 2355 | 850 | 10.3 | 205.5 |
| Premises and equipment, net | 21192 | 21608 | 22440 | (1.9) | (5.6) |
| Bank owned life insurance ("BOLI"), net | 36286 | 36064 | 35210 | 0.6 | 3.1 |
| Prepaid expenses and other assets | 12280 | 13605 | 3628 | (9.7) | 238.5 |
| Right of use asset ("ROU"), net | 3275 | 3260 | 3646 | 0.5 | (10.2) |
| Goodwill | 889 | 889 | 889 | 0.0 | 0.0 |
| Core deposit intangible, net | 548 | 582 | 684 | (5.8) | (19.9) |
| Total assets | $1502916 | $1484311 | $1426329 | 1.3% | 5.4% |
| **Liabilities and Stockholders' Equity** |  |  |  |  |  |
| Deposits |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Noninterest-bearing deposits | $119944 | $118842 | $117751 | 0.9% | 1.9% |
| &nbsp;&nbsp;&nbsp; Interest-bearing deposits | 1050096 | 1030594 | 1039723 | 1.9 | 1.0 |
| Total deposits | 1170040 | 1149436 | 1157474 | 1.8 | 1.1 |
| Advances from the FHLB | 145000 | 150000 | 95000 | (3.3) | 52.6 |
|  Advance payments from borrowers for taxes and <br> &nbsp;&nbsp;&nbsp;&nbsp;insurance | 3051 | 5033 | 2909 | (39.4) | 4.9 |
| Lease liability, net | 3454 | 3441 | 3805 | 0.4 | (9.2) |
| Accrued interest payable | 328 | 185 | 112 | 77.3 | 192.9 |
| Other liabilities | 20683 | 18326 | 9150 | 12.9 | 126.0 |
| Total liabilities | 1342556 | 1326421 | 1268450 | 1.2 | 5.8 |
| **Commitments and contingencies** |  |  |  |  |  |
| Stockholders' Equity |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred stock, $0.01 par value; authorized <br> &nbsp;&nbsp;&nbsp;&nbsp;10,000,000 shares; no shares issued or <br> &nbsp;&nbsp;&nbsp;&nbsp;outstanding | - | - | - | n/a | n/a |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common Stock, $.01 par value; authorized<br>90,000,000 shares; issued and outstanding<br> 9,127,595 shares at December 31 2022, <br> 9,127,595 shares at September 30 2022,<br> and 9,125,759 shares at December 31, 2021 | 91 | 91 | 91 | 0.0 | 0.0 |
| &nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | 72424 | 72295 | 72298 | 0.2 | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 95059 | 92928 | 86162 | 2.3 | 10.3 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive (loss) <br> &nbsp;&nbsp;&nbsp;&nbsp;income, net of tax | (7214) | (7424) | 174 | (2.8) | (4246.0) |
| &nbsp;&nbsp;&nbsp;&nbsp; Unearned Employee Stock Ownership Plan <br> &nbsp;&nbsp;&nbsp;&nbsp;("ESOP") shares | - | - | (846) | n/a | (100.0) |
| Total stockholders' equity | 160360 | 157890 | 157879 | 1.6 | 1.6 |
| Total liabilities and stockholders' equity | $1502916 | $1484311 | $1426329 | 1.3% | 5.4% |

---

7<br>

------

Consolidated Income Statements

(Dollars in thousands, except share data)

(Unaudited)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** | | |
|  | **Dec 31,<br> 2022** | **Sep 30,<br> 2022** | **Dec 31,<br> 2021** |<br>**Three<br> Month<br> Change** |<br>**One<br> Year<br> Change** |
| Interest income |  |  |  |  |  |
| &nbsp;&nbsp; Loans, including fees | $15042 | $13618 | $12398 | 10.5% | 21.3% |
| &nbsp;&nbsp; Investments | 2032 | 1609 | 804 | 26.3 | 152.7 |
| &nbsp;&nbsp; Interest-earning deposits with banks | 205 | 125 | 19 | 64.0 | 978.9 |
| &nbsp;&nbsp; Dividends on FHLB Stock | 89 | 83 | 85 | 7.2 | 4.7 |
| Total interest income | 17368 | 15435 | 13306 | 12.5 | 30.5 |
| Interest expense |  |  |  |  |  |
| &nbsp;&nbsp; Deposits | 3972 | 2326 | 1390 | 70.8 | 185.8 |
| &nbsp;&nbsp; FHLB advances and other borrowings | 928 | 392 | 340 | 136.7 | 172.9 |
| Total interest expense | 4900 | 2718 | 1730 | 80.3 | 183.2 |
| Net interest income | 12468 | 12717 | 11576 | (2.0) | 7.7 |
|  Provision (recapture of provision) for loan <br> &nbsp;&nbsp;&nbsp;&nbsp;losses | 500 | (400) | 600 | (225.0) | (16.7) |
|  Net interest income after provision <br> &nbsp;&nbsp;&nbsp;&nbsp;(recapture of provision) for loan losses | 11968 | 13117 | 10976 | (8.8) | 9.0 |
| Noninterest income |  |  |  |  |  |
| &nbsp;&nbsp; Net gain on sale of investments | 27 | - | 32 | n/a | (15.6) |
| &nbsp;&nbsp; BOLI income | 222 | 243 | 216 | (8.6) | 2.8 |
| &nbsp;&nbsp; Wealth management revenue | 36 | 89 | 104 | (59.6) | (65.4) |
| &nbsp;&nbsp; Deposit related fees | 231 | 245 | 218 | (5.7) | 6.0 |
| &nbsp;&nbsp; Loan related fees | 172 | 195 | 551 | (11.8) | (68.8) |
| &nbsp;&nbsp; Other | 7 | 6 | 5 | 16.7 | 40.0 |
| Total noninterest income | 695 | 778 | 1126 | (10.7) | (38.3) |
| Noninterest expense |  |  |  |  |  |
| &nbsp;&nbsp; Salaries and employee benefits | 4977 | 5417 | 5374 | (8.1) | (7.4) |
| &nbsp;&nbsp; Occupancy and equipment | 1155 | 1188 | 1154 | (2.8) | 0.1 |
| &nbsp;&nbsp; Professional fees | 607 | 549 | 477 | 10.6 | 27.3 |
| &nbsp;&nbsp; Data processing | 634 | 675 | 689 | (6.1) | (8.0) |
| &nbsp;&nbsp; Regulatory assessments | 108 | 105 | 100 | 2.9 | 8.0 |
| &nbsp;&nbsp; Insurance and bond premiums | 111 | 112 | 110 | (0.9) | 0.9 |
| &nbsp;&nbsp; Marketing | 77 | 92 | 37 | (16.3) | 108.1 |
| &nbsp;&nbsp; Other general and administrative | 997 | 876 | 775 | 13.8 | 28.6 |
| Total noninterest expense | 8666 | 9014 | 8716 | (3.9) | (0.6) |
|  Income before federal income tax provision | 3997 | 4881 | 3386 | (18.1) | 18.0 |
| Federal income tax provision | 771 | 935 | 643 | (17.5) | 19.9 |
| Net income | $3226 | $3946 | $2743 | (18.2)% | 17.6% |
| Basic earnings per share | $0.35 | $0.44 | $0.30 |  |  |
| Diluted earnings per share | $0.35 | $0.43 | $0.29 |  |  |
|  Weighted average number of common shares <br> &nbsp;&nbsp;&nbsp;&nbsp;outstanding | 9073323 | 8981037 | 9129724 |  |  |
|  Weighted average number of diluted shares <br> &nbsp;&nbsp;&nbsp;&nbsp;outstanding | 9149044 | 9068541 | 9273502 |  |  |

---

------

Consolidated Income Statements

(Dollars in thousands, except share data)

(Unaudited)

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | |
|  | **2022** | **2021** |<br> **One** <br> **Year** <br> **Change** |
| Interest income |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans, including fees | $52935 | $50170 | 5.5% |
| &nbsp;&nbsp;&nbsp;&nbsp; Investments | 5627 | 3224 | 74.5 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest-earning deposits with banks | 386 | 72 | 436.1 |
| &nbsp;&nbsp;&nbsp;&nbsp; Dividends on FHLB Stock | 318 | 332 | (4.2) |
| Total interest income | 59266 | 53798 | 10.2 |
| Interest expense |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | 8955 | 7216 | 24.1 |
| &nbsp;&nbsp;&nbsp;&nbsp; FHLB advances and other borrowings | 1934 | 1603 | 20.6 |
| Total interest expense | 10889 | 8819 | 23.5 |
| Net interest income | 48377 | 44979 | 7.6 |
| (Recapture of provision) provision for loan losses | (400) | 300 | (233.3) |
| Net interest income after (recapture of provision) provision for loan losses | 48777 | 44679 | 9.2 |
| Noninterest income |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net gain on sale of investments | 27 | 32 | (15.6) |
| &nbsp;&nbsp;&nbsp;&nbsp; BOLI income | 1004 | 1107 | (9.3) |
| &nbsp;&nbsp;&nbsp;&nbsp; Wealth management revenue | 312 | 494 | (36.8) |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposit related fees | 936 | 872 | 7.3 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loan related fees | 919 | 1265 | (27.4) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other | 25 | 92 | (72.8) |
| Total noninterest income | 3223 | 3862 | (16.5) |
| Noninterest expense |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | 21133 | 20237 | 4.4 |
| &nbsp;&nbsp;&nbsp;&nbsp; Occupancy and equipment | 4776 | 4557 | 4.8 |
| &nbsp;&nbsp;&nbsp;&nbsp; Professional fees | 2339 | 1899 | 23.2 |
| &nbsp;&nbsp;&nbsp;&nbsp; Data processing | 2678 | 2692 | (0.5) |
| &nbsp;&nbsp;&nbsp;&nbsp; Regulatory assessments | 403 | 456 | (11.6) |
| &nbsp;&nbsp;&nbsp;&nbsp; Insurance and bond premiums | 464 | 451 | 2.9 |
| &nbsp;&nbsp;&nbsp;&nbsp; Marketing | 303 | 154 | 96.8 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other general and administrative | 3495 | 2921 | 19.7 |
| Total noninterest expense | 35591 | 33367 | 6.7 |
| Income before federal income tax provision | 16409 | 15174 | 8.1 |
| Federal income tax provision | 3169 | 2925 | 8.3 |
| Net income | $13240 | $12249 | 8.1% |
| Basic earnings per share | $1.47 | $1.31 |  |
| Diluted earnings per share | $1.45 | $1.29 |  |
| Weighted average number of common shares outstanding | 9006369 | 9340997 |  |
| Weighted average number of diluted shares outstanding | 9102283 | 9454495 |  |

---

9<br>

------

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **September 30, 2022** | **September 30, 2022** | **December 31, 2021** | **December 31, 2021** |
|  | **Amount** | **Percent** | **Amount** | **Percent** | **Amount** | **Percent** |
|  | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) |
| Commercial real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp; Residential: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Other multifamily | $126895 | 10.7% | $132755 | 11.4% | $130146 | 11.6% |
| &nbsp;&nbsp;&nbsp;&nbsp; Total multifamily residential | 126895 | 10.7 | 132755 | 11.4 | 130146 | 11.6 |
| &nbsp;&nbsp; Non-residential: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Office | 84315 | 7.1 | 84768 | 7.3 | 90727 | 8.1 |
| &nbsp;&nbsp;&nbsp; Retail | 132595 | 11.2 | 137417 | 11.9 | 138463 | 12.4 |
| &nbsp;&nbsp;&nbsp; Mobile home park | 25420 | 2.2 | 23531 | 2.0 | 20636 | 1.8 |
| &nbsp;&nbsp;&nbsp; Hotel / motel | 55471 | 4.7 | 56715 | 4.9 | 64854 | 5.8 |
| &nbsp;&nbsp;&nbsp; Nursing home | 12365 | 1.0 | 12452 | 1.2 | 12713 | 1.1 |
| &nbsp;&nbsp;&nbsp; Warehouse | 19783 | 1.7 | 19934 | 1.7 | 17724 | 1.6 |
| &nbsp;&nbsp;&nbsp; Storage | 33876 | 2.9 | 34069 | 2.9 | 32990 | 2.9 |
| &nbsp;&nbsp;&nbsp; Other non-residential | 44057 | 3.6 | 44600 | 3.9 | 41310 | 3.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-residential | 407882 | 34.4 | 413486 | 35.8 | 419417 | 37.5 |
| &nbsp;&nbsp; Construction/land: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; One-to-four family residential | 52836 | 4.5 | 41606 | 3.6 | 34677 | 3.1 |
| &nbsp;&nbsp;&nbsp; Multifamily | 15501 | 1.3 | 15500 | 1.3 | 37194 | 3.3 |
| &nbsp;&nbsp;&nbsp; Commercial | - | 0.0 | - | 0.0 | 6189 | 0.6 |
| &nbsp;&nbsp;&nbsp; Land development | 9783 | 0.8 | 15518 | 1.3 | 15395 | 1.4 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total construction/land | 78120 | 6.6 | 72624 | 6.2 | 93455 | 8.4 |
| One-to-four family residential: |  |  |  |  |  |  |
| &nbsp;&nbsp; Permanent owner occupied | 233785 | 19.8 | 221212 | 19.1 | 185320 | 16.6 |
| &nbsp;&nbsp; Permanent non-owner occupied | 242051 | 20.5 | 228223 | 19.7 | 199796 | 17.8 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total one-to-four family residential | 475836 | 40.3 | 449435 | 38.8 | 385116 | 34.4 |
| Business: |  |  |  |  |  |  |
| &nbsp;&nbsp; Aircraft | 2086 | 0.1 | 2335 | 0.2 | 6079 | 0.5 |
| &nbsp;&nbsp; Small Business Administration ("SBA") | 509 | 0.1 | 520 | 0.1 | 839 | 0.1 |
| &nbsp;&nbsp; Paycheck Protection Plan ("PPP") | 785 | 0.1 | 1209 | 0.1 | 10849 | 1.0 |
| &nbsp;&nbsp; Other business | 27991 | 2.4 | 27990 | 2.4 | 28823 | 2.5 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total business | 31371 | 2.7 | 32054 | 2.8 | 46590 | 4.1 |
| Consumer: |  |  |  |  |  |  |
| &nbsp;&nbsp; Classic, collectible and other auto | 53705 | 4.6 | 47141 | 4.1 | 35861 | 3.2 |
| &nbsp;&nbsp; Other consumer | 8350 | 0.7 | 10478 | 0.9 | 8951 | 0.8 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total consumer | 62055 | 5.3 | 57619 | 5.0 | 44812 | 4.0 |
| Total loans | 1182159 | 100.0% | 1157973 | 100.0% | 1119536 | 100.0% |
| Less: |  |  |  |  |  |  |
| &nbsp;&nbsp; Deferred loan (costs) fees, net | (151) |  | (101) |  | 418 |  |
| &nbsp;&nbsp; ALLL | 15227 |  | 14726 |  | 15657 |  |
| Loans receivable, net | $1167083 |  | $1143348 |  | $1103461 |  |
| Concentrations of credit: <sup>(1)</sup> |  |  |  |  |  |  |
| Construction loans as % of total capital | 53.1% |  | 49.1% |  | 59.7% |  |
|  Total non-owner occupied commercial<br> real estate as % of total capital | 346.9% |  | 354.6% |  | 384.0% |  |

---

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

------

Key Financial Measures<br> (Unaudited)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **At or For the Quarter Ended**  | **At or For the Quarter Ended**  | **At or For the Quarter Ended**  | **At or For the Quarter Ended**  | **At or For the Quarter Ended**  |
|  | **Dec 31,**<br> **2022** | **Sep 30,**<br>**2022** | **Jun 30,**<br>**2022** | **Mar 31,**<br>**2022** | **Dec 31,**<br>**2021** |
|  | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** |
|  **<u>Performance Ratios</u>: <sup>(1)</sup>** |  |  |  |  |  |
|  Return on assets | 0.86% | 1.06% | 0.79% | 0.93% | 0.76% |
|  Return on equity | 8.04 | 9.88 | 7.11 | 8.33 | 6.79 |
|  Dividend payout ratio | 34.29 | 27.40 | 38.51 | 33.20 | 36.67 |
|  Equity-to-assets ratio | 10.67 | 10.64 | 10.78 | 11.15 | 11.07 |
|  Tangible equity ratio <sup>(2)</sup> | 10.58 | 10.55 | 10.69 | 11.05 | 10.97 |
|  Net interest margin | 3.52 | 3.65 | 3.53 | 3.43 | 3.40 |
|  Average interest-earning assets to average interest-<br> &nbsp;&nbsp;&nbsp;&nbsp;bearing liabilities | 117.93 | 119.08 | 120.21 | 119.59 | 119.08 |
|  Efficiency ratio | 65.84 | 66.80 | 72.62 | 70.96 | 68.62 |
|  Noninterest expense as a percent of average total <br> &nbsp;&nbsp;&nbsp;&nbsp;assets | 2.30 | 2.43 | 2.60 | 2.46 | 2.42 |
|  Book value per common share | $17.57 | $17.30 | $17.26 | $17.32 | $17.30 |
|  Tangible book value per share <sup>(2)</sup> | 17.41 | 17.14 | 17.09 | 17.15 | 17.13 |
|  **<u>Capital Ratios:</u> <sup>(3)</sup>** |  |  |  |  |  |
|  Tier 1 leverage ratio | 10.31% | 10.43% | 10.53% | 10.51% | 10.34% |
|  Common equity tier 1 capital ratio | 14.37 | 14.24 | 14.22 | 14.08 | 14.23 |
|  Tier 1 capital ratio | 14.37 | 14.24 | 14.22 | 14.08 | 14.23 |
|  Total capital ratio | 15.62 | 15.49 | 15.47 | 15.33 | 15.48 |
|  **<u>Asset Quality Ratios:</u> <sup>(4)</sup>** |  |  |  |  |  |
|  Nonperforming loans as a percent of total loans | 0.02% | 0.02% | 0.00% | 0.02% | 0.00% |
|  Nonperforming assets as a percent of total assets | 0.01 | 0.02 | 0.00 | 0.01 | 0.00 |
|  ALLL as a percent of total loans | 1.29 | 1.27 | 1.33 | 1.33 | 1.40 |
|  Net (recoveries) charge-offs to average loans <br> &nbsp;&nbsp;&nbsp;&nbsp;receivable, net | (0.00) | (0.00) | 0.00 | (0.00) | 0.00 |
|  **<u>Allowance for Loan Losses:</u>** |  |  |  |  |  |
|  ALLL, beginning of the quarter | $14726 | $15125 | $15159 | $15657 | $15057 |
| &nbsp;&nbsp;&nbsp;&nbsp; Provision (recapture of provision) | 500 | (400) | - | (500) | 600 |
| &nbsp;&nbsp;&nbsp;&nbsp; Charge-offs | - | - | (37) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp; Recoveries | 1 | 1 | 3 | 2 | - |
|  ALLL, end of the quarter | $15227 | $14726 | $15125 | $15159 | $15657 |

---

<sup>(1)</sup> Performance ratios are calculated on an annualized basis.

<sup>(2)</sup> Tangible equity and tangible assets exclude goodwill and core deposit intangible assets. Tangible equity, tangible assets, tangible equity ratio and tangible book value per share are non-GAAP financial measures. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalents.

<sup>(3)</sup> Capital ratios are for First Financial Northwest Bank only.

<sup>(4)</sup> Loans are reported net of undisbursed funds.

------

Key Financial Measures<br> (Unaudited)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Quarter Ended** | **For the Quarter Ended** | **For the Quarter Ended** | **For the Quarter Ended** | **For the Quarter Ended** |
|  | **Dec 31,**<br> **2022** | **Sep 30,**<br> **2022** | **Jun 30,**<br> **2022** | **Mar 31,**<br> **2022** | **Dec 31,**<br> **2021** |
|  | | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | |
| **<u>Average Yields and Costs:</u> <sup>(1)</sup>** |  |  |  |  |  |
| Yield on loans | 5.19% | 4.77% | 4.41% | 4.36% | 4.44% |
| Yield on investments | 3.64 | 2.90 | 2.33 | 1.96 | 1.79 |
| Yield on interest-earning deposits | 3.31 | 2.02 | 0.67 | 0.15 | 0.13 |
| Yield on FHLB stock | 4.58 | 5.56 | 4.82 | 5.49 | 5.89 |
| &nbsp;&nbsp;&nbsp; Yield on interest-earning assets | 4.91% | 4.43% | 4.04% | 3.90% | 3.91% |
| Cost of interest-bearing deposits | 1.51% | 0.87% | 0.55% | 0.50% | 0.53% |
| Cost of borrowings | 2.46 | 1.48 | 1.21 | 1.28 | 1.33 |
| &nbsp;&nbsp;&nbsp; Cost of interest-bearing liabilities | 1.63% | 0.93% | 0.61% | 0.56% | 0.61% |
| Cost of total deposits | 1.36% | 0.78% | 0.49% | 0.44% | 0.48% |
| Cost of funds | 1.48 | 0.84 | 0.55 | 0.51 | 0.55 |
| **<u>Average Balances:</u>** |  |  |  |  |  |
| Loans | $1150181 | $1132233 | $1117079 | $1115428 | $1108836 |
| Investments | 221180 | 220244 | 198819 | 171685 | 178500 |
| Interest-earning deposits | 24608 | 24565 | 22010 | 49857 | 56800 |
| FHLB stock | 7710 | 5923 | 5905 | 5467 | 5726 |
| &nbsp;&nbsp;&nbsp; Total interest-earning assets | $1403679 | $1382965 | $1343813 | $1342437 | $1349862 |
| Interest-bearing deposits | $1040357 | $1056079 | $1013080 | $1027507 | $1032090 |
| Borrowings | 149946 | 105272 | 104835 | 95000 | 101522 |
| &nbsp;&nbsp;&nbsp; Total interest-bearing liabilities | 1190303 | 1161351 | 1117915 | 1122507 | 1133612 |
| Noninterest-bearing deposits | 121518 | 125561 | 131415 | 122175 | 119142 |
| &nbsp;&nbsp;&nbsp; Total deposits and borrowings | $1311821 | $1286912 | $1249330 | $1244682 | $1252754 |
| Average assets | $1496125 | $1470816 | $1431003 | $1424054 | $1430199 |
| Average stockholders' equity | 159120 | 158515 | 158349 | 158756 | 160183 |

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<sup>(1)</sup> Yields and costs are annualized.

12<br>

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Key Financial Measures<br> (Unaudited)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **At or For the Year Ended December 31,** | **At or For the Year Ended December 31,** | **At or For the Year Ended December 31,** | **At or For the Year Ended December 31,** | **At or For the Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
|  | | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | |
|  **<u>Performance Ratios:</u>** |  |  |  |  |  |
|  Return on assets | 0.91% | 0.86% | 0.63% | 0.80% | 1.21% |
|  Return on equity | 8.34 | 7.65 | 5.50 | 6.73 | 9.86 |
|  Dividend payout ratio | 32.65 | 33.59 | 45.45 | 33.65 | 21.53 |
|  Equity-to-assets ratio | 10.67 | 11.07 | 11.26 | 11.65 | 12.28 |
|  Tangible equity ratio <sup>(1)</sup> | 10.58 | 10.97 | 11.15 | 11.53 | 12.13 |
|  Net interest margin | 3.54 | 3.35 | 3.15 | 3.19 | 3.56 |
|  Average interest-earning assets to average interest-<br> &nbsp;&nbsp;&nbsp;&nbsp;bearing liabilities | 119.18 | 118.59 | 115.62 | 113.44 | 114.28 |
|  Efficiency ratio | 68.97 | 68.32 | 72.39 | 70.66 | 66.88 |
|  Noninterest expense as a percent of average total assets | 2.44 | 2.35 | 2.39 | 2.35 | 2.40 |
|  Book value per common share | $17.57 | $17.30 | $16.05 | $15.25 | $14.35 |
|  Tangible book value per share <sup>(1)</sup> | 17.41 | 17.13 | 15.88 | 15.07 | 14.17 |
|  **<u>Capital Ratios:</u> <sup>(2)</sup>** |  |  |  |  |  |
|  Tier 1 leverage ratio | 10.31% | 10.34% | 10.29% | 10.27% | 10.37% |
|  Common equity tier 1 capital ratio | 14.37 | 14.23 | 14.32 | 13.13 | 13.43 |
|  Tier 1 capital ratio | 14.37 | 14.23 | 14.32 | 13.13 | 13.43 |
|  Total capital ratio | 15.62 | 15.48 | 15.57 | 14.38 | 14.68 |
|  **<u>Asset Quality Ratios:</u> <sup>(3)</sup>** |  |  |  |  |  |
|  Nonperforming loans as a percent of total loans | 0.02% | 0.00% | 0.19% | 0.01% | 0.07% |
|  Nonperforming assets as a percent of total assets | 0.01 | 0.00 | 0.18 | 0.04 | 0.10 |
|  ALLL as a percent of total loans | 1.29 | 1.40 | 1.36 | 1.18 | 1.29 |
|  Net charge-offs (recoveries) to average loans receivable, <br> &nbsp;&nbsp;&nbsp;&nbsp;net | 0.00 | (0.02) | (0.00) | (0.02) | (0.45) |
|  **<u>Allowance for Loan Losses:</u>** |  |  |  |  |  |
|  ALLL, beginning of the year | $15657 | $15174 | $13218 | $13347 | $12882 |
| &nbsp;&nbsp;&nbsp; (Recapture of provision) provision | (400) | 300 | 1900 | (300) | (4000) |
| &nbsp;&nbsp;&nbsp; Charge-offs | (37) | - | (2) | - | - |
| &nbsp;&nbsp;&nbsp; Recoveries | 7 | 183 | 58 | 171 | 4465 |
|  ALLL, end of the year | $15227 | $15657 | $15174 | $13218 | $13347 |

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<sup>(1)</sup> Tangible equity and tangible assets exclude goodwill and core deposit intangible assets. Tangible equity, tangible, tangible equity ratio and tangible book value per share are non-GAAP financial measures. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalents.

<sup>(2)</sup> Capital ratios are for First Financial Northwest Bank only.

<sup>(3)</sup> Loans are reported net of undisbursed funds.

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Key Financial Measures (continued)

(Unaudited)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **2018** |
|  | | (Dollars in thousands) | (Dollars in thousands) | (Dollars in thousands) | |
| **<u>Average Yields and Costs:</u>** |  |  |  |  |  |
| Yield on loans | 4.69% | 4.57% | 4.69% | 5.15% | 5.13% |
| Yield on investments | 2.77 | 1.83 | 2.39 | 3.11 | 2.92 |
| Yield on interest-earning deposits | 1.28 | 0.12 | 0.21 | 2.15 | 1.74 |
| Yield on FHLB stock | 5.08 | 5.29 | 4.85 | 5.42 | 5.24 |
| &nbsp;&nbsp;&nbsp; Yield on interest-earning assets | 4.33% | 4.01% | 4.36% | 4.88% | 4.83% |
| Cost of interest-bearing deposits | 0.87% | 0.71% | 1.42% | 1.90% | 1.35% |
| Cost of borrowings | 1.70 | 1.39 | 1.31 | 2.09 | 1.92 |
| &nbsp;&nbsp;&nbsp; Cost of interest-bearing liabilities | 0.95% | 0.78% | 1.41% | 1.92% | 1.46% |
| Cost of total deposits | 0.77% | 0.64% | 1.32% | 1.81% | 1.28% |
| Cost of funds | 0.86 | 0.71 | 1.32 | 1.84 | 1.39 |
| **<u>Average Balances:</u>** |  |  |  |  |  |
| Loans | $1128835 | $1098772 | $1120889 | $1061367 | $995810 |
| Investments | 203165 | 176110 | 133584 | 139354 | 141100 |
| Interest-earning deposits | 30176 | 60482 | 25108 | 13634 | 11628 |
| FHLB stock | 6256 | 6271 | 6600 | 6684 | 8748 |
| &nbsp;&nbsp;&nbsp; Total interest-earning assets | $1368432 | $1341635 | $1286181 | $1221039 | $1157286 |
| Interest-bearing deposits | $1034351 | $1015852 | $987069 | $946484 | $828965 |
| Borrowings | 113890 | 115466 | 125392 | 129899 | 183667 |
| &nbsp;&nbsp;&nbsp; Total interest-bearing liabilities | 1148241 | 1131318 | 1112461 | 1076383 | 1012632 |
| Noninterest-bearing deposits | 125166 | 112484 | 75388 | 48434 | 49461 |
| &nbsp;&nbsp;&nbsp; Total deposits and borrowings | $1273407 | $1243802 | $1187849 | $1124817 | $1062093 |
| Average assets | $1455739 | $1421476 | $1361604 | $1294164 | $1227396 |
| Average stockholders' equity | 158685 | 160041 | 155587 | 154092 | 151145 |

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#### Non-GAAP Financial Measures
In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains non-GAAP financial measures that include tangible equity, tangible assets, tangible book value per share, and the tangible equity ratio. The Company believes that these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of goodwill and core deposit intangible, net and provides an alternative view of the Company's performance over time and in comparison to the Company's competitors. Non-GAAP financial measures have limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation and are not a substitute for other measures in this earnings release that are presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

The following tables provide a reconciliation between the GAAP and non-GAAP measures:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** |
|  | **Dec 31,** <br> **2022** | **Sep 30,** <br> **2022** | **Jun 30,** <br> **2022** | **Mar 31,** <br> **2022** | **Dec 31,** <br> **2021** |
|  | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) |
| Tangible equity to tangible assets and tangible book value per share: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity (GAAP) | $160360 | $157890 | $156896 | $157757 | $157879 |
| &nbsp;&nbsp;&nbsp;&nbsp; Less: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 889 | 889 | 889 | 889 | 889 |
| &nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible, net | 548 | 582 | 616 | 650 | 684 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible equity (Non-GAAP) | $158923 | $156419 | $155391 | $156218 | $156306 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total assets (GAAP) | $1502916 | $1484311 | $1454768 | $1415054 | $1426329 |
| &nbsp;&nbsp;&nbsp;&nbsp; Less: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 889 | 889 | 889 | 889 | 889 |
| &nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible, net | 548 | 582 | 616 | 650 | 684 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible assets (Non-GAAP) | $1501479 | $1482840 | $1453263 | $1413515 | $1424756 |
|  &nbsp;&nbsp;&nbsp;&nbsp; Common shares outstanding at period end | 9127595 | 9127595 | 9091533 | 9107977 | 9125759 |
| &nbsp;&nbsp;&nbsp;&nbsp; Equity-to-assets ratio (GAAP) | 10.67% | 10.64% | 10.78% | 11.15% | 11.07% |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible equity ratio (Non-GAAP) | 10.58 | 10.55 | 10.69 | 11.05 | 10.97 |
| &nbsp;&nbsp;&nbsp;&nbsp; Book value per common share (GAAP) | $17.57 | $17.30 | $17.26 | $17.32 | $17.30 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible book value per share (Non-GAAP) | 17.41 | 17.14 | 17.09 | 17.15 | 17.13 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** | **2019** | **20158** |
|  | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) |
| Tangible equity to tangible assets and tangible book value per share:  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity (GAAP) | $160360 | $157879 | $156302 | $156319 | $153738 |
| &nbsp;&nbsp;&nbsp;&nbsp; Less: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 889 | 889 | 889 | 889 | 889 |
| &nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible | 548 | 684 | 824 | 968 | 1116 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible equity (Non-GAAP) | $158923 | $156306 | $154589 | $154462 | $151733 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total assets (GAAP) | 1502916 | 1426329 | 1387669 | 1341885 | 1252424 |
| &nbsp;&nbsp;&nbsp;&nbsp; Less: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 889 | 889 | 889 | 889 | 889 |
| &nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible | 548 | 684 | 824 | 968 | 1116 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible assets (Non-GAAP) | $1501479 | $1424756 | $1385956 | $1340028 | $1250419 |
|  &nbsp;&nbsp;&nbsp;&nbsp; Common shares outstanding at period end | 9127595 | 9125759 | 9736875 | 10252953 | 10710656 |
| &nbsp;&nbsp;&nbsp;&nbsp; Equity-to-assets ratio (GAAP) | 10.67% | 11.07% | 11.26% | 11.65% | 12.28% |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible equity ratio (Non-GAAP) | 10.58 | 10.97 | 11.15 | 11.53 | 12.13 |
| &nbsp;&nbsp;&nbsp;&nbsp; Book value per common share (GAAP) | $17.57 | $17.30 | $16.05 | $15.25 | $14.35 |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible book value per share (Non-GAAP) | 17.41 | 17.13 | 15.88 | 15.07 | 14.17 |

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16<br>

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