FIRST FINANCIAL NORTHWEST, INC.

201 WELLS AVENUE SOUTH

RENTON, WASHINGTON 98057

(425) 255-4400

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 25, 2014

~~NOTICE OF ANNUAL MEETING OF SHAREHOLDERS~~

~~TO BE HELD ON May ___, 2012~~

Notice is hereby given that the annual meeting of shareholders of First Financial Northwest, Inc. will be held at the ~~Carco Theatre,~~Renton Community Center, located at ~~1717~~1715 SE Maple Valley Highway, Renton, Washington, on ~~__________, May ___, 2012,~~Wednesday, June 25, 2014, at 9:00 a.m., local time, for the following purposes:

Proposal 1.

Election of ~~three~~two directors for a term of three ~~years;~~years and one director for a term of one year;

Proposal 2.

An advisory (non-binding) vote to approve our executive compensation as disclosed in this Proxy Statement; and

Proposal 3.

Ratification of the appointment of Moss Adams LLP as our independent auditor for ~~2012.~~2014.

We will also consider and act upon such other business as may properly come before the meeting, or any adjournment or postponement thereof. As of the date of this notice, we are not aware of any other business to come before the annual meeting.

The Board of Directors has fixed the close of business on ~~March 30, 2012,~~April 28, 2014, as the record date for the annual meeting. This means that shareholders of record at the close of business on that date are entitled to receive notice of, and to vote at the meeting and any adjournment thereof. To ensure that your shares are represented at the meeting, please take the time to vote by signing, dating and mailing the enclosed ~~white~~ proxy card, which is solicited on behalf of the Board of Directors, and mail it promptly in the enclosed envelope. Alternatively, you may vote by telephone or the Internet by following the instructions on the ~~white~~ proxy card. The proxy will not be used if you attend and vote at the annual meeting in person. Regardless of the number of shares you own, your vote is very important. Please act today.

	BY ORDER OF THE BOARD OF DIRECTORS


	/s/ JOANN E. LEE

	JOANN E. LEE
	SECRETARY

Renton, Washington

~~April __, 2012~~May 8, 2014

~~IMPORTANT: The prompt return of proxies will save us the expense of further requests for proxies in order to ensure a quorum. A~~ ~~white proxy card and~~ pre-addressed envelope are enclosed for your convenience. No postage is required if mailed in the United States. You may also vote by telephone or the Internet by following the instructions on the white proxy card.

IMPORTANT: The prompt return of proxies will save us the expense of further requests for proxies in order to ensure a quorum. A proxy card and pre-addressed envelope are enclosed for your convenience. No postage is required if mailed in the United States. You may also vote by telephone or the Internet by following the instructions on the proxy card.

PROXY STATEMENT

FIRST FINANCIAL NORTHWEST, INC.

201 WELLS AVENUE SOUTH

RENTON, WASHINGTON 98057

(425) 255-4400

~~ANNUAL MEETING OF SHAREHOLDERS~~

~~May ___, 2012~~

ANNUAL MEETING OF SHAREHOLDERS

JUNE 25, 2014

The Board of Directors of First Financial Northwest, Inc. is using this Proxy Statement to solicit proxies from our shareholders for use at the annual meeting of shareholders. We are first mailing this Proxy Statement and ~~white~~ proxy card to our shareholders on or about ~~April __, 2012.~~May 8, 2014.

The information provided in this Proxy Statement relates to First Financial Northwest, Inc. and its wholly-owned subsidiary, First Savings Bank Northwest. First Financial Northwest, Inc. may also be referred to as “First Financial” and First Savings Bank Northwest may also be referred to as “First Savings Bank” or the “Bank.” References to “we,” “us” and “our” refer to First Financial and, as the context requires, First Savings Bank.

~~INFORMATION ABOUT THE ANNUAL MEETING~~

INFORMATION ABOUT THE ANNUAL MEETING

Time and Place of the Annual Meeting

Our annual meeting will be held as follows:

~~Date:~~ ~~__________, May ___, 2012~~

Date:

Wednesday, June 25, 2014

Time:

9:00 a.m., local time

Place:

~~Carco Theatre, 1717~~Renton Community Center, 1715 SE Maple Valley Highway, Renton, Washington

Matters to Be Considered at the Annual Meeting

At the meeting, you will be asked to consider and vote upon the following proposals:

Proposal 1.

Election of ~~three~~two directors for a term of three ~~years;~~years and one director for a term of one year;

Proposal 2.

An advisory (non-binding) vote to approve our executive compensation as disclosed in this Proxy Statement; and

Proposal 3.

Ratification of the appointment of Moss Adams LLP as our independent auditor for ~~2012.~~2014.

We also will transact any other business that may properly come before the annual meeting. As of the date of this Proxy Statement, we are not aware of any other business to be presented for consideration at the annual meeting other than the matters described in this Proxy Statement.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on ~~May ___, 2012~~June 25, 2014

Our Proxy Statement and ~~2011~~2013 Annual Report to Shareholders are available at http://www.snl.com/irweblinkx/GenPage.aspx?IID=4087275&GKP=203202.The following materials are available for review:

•·	Proxy Statement;

•·	~~White~~ proxy card; and

•·	~~2011~~2013 Annual Report to Shareholders.

Directions to attend the annual meeting, where you may vote in person, can be found online at http://rentonwa.gov/living/default.aspx?id=~~156.~~2818.

Who is Entitled to Vote?

We have fixed the close of business on ~~March 30, 2012,~~April 28, 2014, as the record date for shareholders entitled to receive notice of and to vote at our annual meeting. Only holders of record of First Financial’s common stock on that date are entitled to receive notice of and to vote at the annual meeting. You are entitled to one vote for each share of First Financial common stock you own, unless you own more than 10 percent of First Financial’s outstanding shares. As provided in our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10 percent of First Financial’s outstanding shares are not entitled to any vote in respect of the shares held in excess of the 10 percent limit unless our Board of Directors has granted permission in advance. On ~~March 30, 2012,~~April 28, 2014, there were ~~18,805,168~~16,454,139 shares of First Financial common stock outstanding and entitled to vote at the annual meeting.

How Do I Vote at the Annual Meeting?

Proxies are solicited to provide all shareholders ~~of record~~ on the voting record date an opportunity to vote on matters scheduled for the annual meeting and described in these materials. This question provides voting instructions for shareholders of record. You are a shareholder of record if your shares of First Financial common stock are held in your name. If you are a beneficial owner of First Financial common stock held by a broker, bank or other nominee (i.e., in “street name”), please see the instructions in the following question.

Shares of First Financial common stock can only be voted if the shareholder is present in person or by proxy at the annual meeting. To ensure your representation at the annual meeting, we recommend you vote by sending in the ~~white~~ proxy card even if you plan to attend the annual meeting. You can also vote by telephone or the Internet by following the instructions on the ~~white~~ proxy card. You can always change your vote at the meeting if you are a shareholder of record.

Voting instructions are included on your ~~white~~ proxy card. Shares of First Financial common stock represented by properly executed proxies will be voted by the individuals named on the ~~white~~ proxy card in accordance with the shareholder’s instructions. Where properly executed proxies are returned to us with no specific instruction as how to vote at the annual meeting, the persons named in the proxy will vote the shares “FOR” the election of each of our director nominees, “FOR” advisory approval of the compensation of our executive compensation as disclosed in this Proxy Statement and “FOR” the ratification of the appointment of Moss Adams LLP as our independent auditor. If any other matters are properly presented at the annual meeting for action, the persons named in the enclosed proxy and acting thereunder will have the discretion to vote on these matters in accordance with their best judgment. We do not currently expect that any other matters will be properly presented for action at the annual meeting.

~~You may have received a communication from Joseph Stilwell and a group of funds he controls (the “Stilwell~~ Group”) asking you to vote using their green proxy card. We urge you not to vote using the green proxy card. Please vote by using the enclosed white proxy card, which is solicited on behalf of First Financial’s Board of Directors, and discard the green proxy card from the Stilwell Group. If you have already voted using the green proxy card from the Stilwell Group, you may change your vote by promptly signing, dating and returning the enclosed white proxy card or following the instructions on the white proxy card to vote by telephone or the Internet. Only the latest dated proxy card or vote you submit will be counted.

You may receive more than one ~~white~~ proxy card depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In this case, you will receive three separate ~~white~~ proxy cards to vote.

What if My Shares Are Held in Street Name?

If you are the beneficial owner of shares held in “street name” by a broker, your broker, as the record holder of the shares, is required to vote the shares in accordance with your instructions. If you do not give instructions to your broker, your broker may ~~nevertheless~~ vote the shares with respect to discretionary items, but will not be permitted to vote

your shares with respect to non-discretionary items, pursuant to current industry practice. In the case of non-discretionary items, the shares not voted will be treated as “broker non-votes.” The proposal to elect directors and the advisory vote to approve executive compensation are considered non-discretionary items; therefore, you must provide instructions to your broker in order to have your shares voted on these proposals.

If your shares are held in street name, you will need proof of ownership to be admitted to the annual meeting. A recent brokerage statement or letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares of common stock held in street name in person at the annual meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

How Will My Shares of Common Stock Held in the Employee Stock Ownership Plan Be Voted?

We maintain the First Financial Northwest, Inc. Employee Stock Ownership Plan (“ESOP”) for the benefit of our employees. Each participant may instruct the trustee how to vote the shares of First Financial common stock allocated to his or her account under the ESOP by completing the voting instruction sheet distributed by the administrator. If a participant properly executes the voting instruction sheet, the administrator will instruct the trustee to vote the participant’s shares in accordance with the participant’s instructions. Unallocated shares of First Financial common stock held in the ESOP will be voted by the trustee in the same proportion as shares for which the trustee has received voting instructions. Allocated shares for which proper voting instructions are not received shall be voted by the trustee in the manner directed by the administrator. The administrator of the ESOP is Crowe Horwath.

How Many Shares Must Be Present to Hold the Meeting?

A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of at least a majority of the shares of First Financial common stock entitled to vote at the annual meeting as of the record date will constitute a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

What if a Quorum Is Not Present at the Meeting?

If a quorum is not present at the scheduled time of the meeting, a majority of the shareholders present or represented by proxy may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the adjourned meeting is set to be held 120 days or more after the original meeting. An adjournment will have no effect on the business that may be conducted at the meeting.

Vote Required to Approve Proposal 1: Election of Directors

Directors are elected by a plurality of the votes cast, in person or by proxy, at the annual meeting by holders of First Financial common stock. Our Nominating and Corporate Governance Committee has nominated, and our Board of Directors has ratified, the nomination of three ~~nominees~~candidates for election as directors. ~~As described on page 10 under “Contested Election,” the Stilwell Group intends to nominate two people for election as directors. Only,~~ ~~the three nominees for election as directors who receive the highest number of votes actually cast will be elected.~~

Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or withheld from each nominee. Votes that are withheld and broker non-votes will have no effect on the outcome of the election because the three nominees receiving the greatest number of votes will be elected. Our Board of Directors unanimously recommends that you vote “FOR” the election of each of its director ~~nominees on the white proxy card.~~nominees.

Even if Joseph Stilwell is elected by shareholders, his service on the Board is dependent on regulatory approval. Any new director added to our Board of Directors must receive approval from the Board of Governors of the Federal Reserve (“Federal Reserve”). Although Spencer L. Schneider, one of the Stilwell Group’s nominees, had received prior approval to serve on the Board, he served for five weeks and resigned abruptly. Mr. Schneider may need to re-apply for

approval to serve on the Board and there is no guarantee that the Federal Reserve would again grant its approval. In addition, each of our current directors also serves as a director of our primary subsidiary, First Savings Bank Northwest. Mr. Stilwell would need the additional approval of the Federal Deposit Insurance Corporation (“FDIC”) and the Washington Department of Financial Institutions (“Washington DFI”) in order to serve on the Bank’s Board of Directors. Mr. Schneider had also received the approval of the FDIC and the Washington DFI to serve on the Bank’s Board, served for five weeks and resigned abruptly. Mr. Schneider may need to re-apply for approval to serve on the Bank’s Board and, again, there is no guarantee that the FDIC and the Washington DFI would again grant their approval.

Vote Required to Approve Proposal 2: Advisory Approval of Executive Compensation

Approval of the advisory (non-binding) vote on executive compensation requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the annual meeting. Abstentions ~~will have the same effect as a vote against the proposal~~ and broker non-votes will have no effect on the proposal. Our Board of Directors unanimously recommends that you vote “FOR” approval of the compensation of our named executive ~~officers on the white proxy card.~~officers.

Vote Required to Approve Proposal 3: Ratification of the Appointment of the Independent Auditor

Ratification of the appointment of Moss Adams LLP as our independent auditor for the fiscal year ending December 31, ~~2012,~~2014, requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the annual meeting. Abstentions ~~are not affirmative votes and, therefore,~~ will have ~~the same~~no effect ~~as a vote against~~on the proposal. Our Board of Directors unanimously recommends that you vote “FOR” the ratification of the appointment of the independent ~~auditor on the white proxy card.~~auditor.

May I Revoke My Proxy?

You may revoke your proxy before it is voted by:

•·	submitting a new proxy with a later date;

•·	notifying the Secretary of First Financial in writing (or if you hold your shares in street name, your broker, bank or other nominee) before the annual meeting that you have revoked your proxy; or

•·	voting in person at the annual meeting.

If you plan to attend the annual meeting and wish to vote in person, we will give you a ballot at the annual meeting. However, if your shares are held in street name, you must bring a validly executed proxy from the nominee indicating that you have the right to vote your shares.

~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT~~

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of ~~March 30, 2012,~~April 28, 2014, the voting record date, information regarding share ownership of:

•·	those persons or entities (or groups of affiliated ~~person~~persons or entities) known by management to beneficially own more than five percent of First Financial’s common stock other than directors and executive officers;

•

·	each director and director nominee of First Financial;

•·	each executive officer of First Financial or any of its subsidiaries named in the Summary Compensation Table appearing under “Executive Compensation” ~~below~~above (known as “named executive officers”); and

•

·	all current directors and executive officers of First Financial and its subsidiaries as a group.

Persons and groups who beneficially own in excess of five percent of First Financial’s common stock are required to file with the Securities and Exchange Commission (“SEC”), and provide us a copy of the report disclosing their ownership pursuant to the Securities Exchange Act of 1934. To our knowledge, no other person or entity, other than the ones set forth below, beneficially owned more than five percent of the outstanding shares of First Financial’s common stock as of the close of business on the voting record date.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock if he or she has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, shares held in the ESOP, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power. In addition, in computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to outstanding options that are currently exercisable or exercisable within 60 days after ~~the voting record date~~April 28, 2014, are included in the number of shares beneficially owned by the person and are deemed outstanding for the purpose of calculating the person’s percentage ownership. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

As of April 28, 2014, the voting record date, there were ~~18,805,168~~16,454,139 shares of First Financial common stock outstanding.

	Number of Shares		Percent of Shares
Name	Beneficially Owned (1)		Outstanding (%)

Beneficial Owners of More Than 5%

First Financial Northwest, Inc. Employee Stock Ownership Plan	1,463,293	(2)	8.89
201 Wells Avenue South
Renton, Washington 98057

First Financial Northwest Foundation	1,375,700	(3)	8.36
P.O. Box 419
Renton, Washington 98057

Craig A. White	1,362,500	(4)	8.28
136 Heber Avenue, Suite 204
Park City, Utah 84060

Joseph Stilwell	1,328,100	(5)	8.07
111 Broadway, 12th Floor
New York, New York 10006

Dimensional Fund Advisors LP	899,916	(6)	5.47
Palisades West, Building One, 6300 Bee Cave Road
Austin, Texas 78746

Directors

Joann E. Lee	172,940	(7)	1.05
Gary F. Kohlwes	217,540	(8)	1.32
Robert L. Anderson	157,740	(9)	*
Gary F. Faull	171,940		1.04
Daniel L. Stevens	--		*
Joseph W. Kiley III**	53,346		*
Kevin D. Padrick	100,000	(10)	*
Richard P. Jacobson**	25,000		*

Named Executive Officers

Herman L. Robinson	76,198	(11)	*
Simon Soh	58,944		*
Ronnie Clariza	88,962		*
Victor Karpiak***	54,527		*
Kari A. Stenslie***	34,115		*

All Executive Officers and Directors as a Group (13 persons)	1,211,252		7.37

(Footnotes appear on following page)

Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding (%)

Beneficial Owners of More Than 5%

First Financial Northwest, Inc. Employee Stock Ownership Plan 1,663,892 (2) 8.85
201 Wells Avenue South
Renton, Washington 98057

First Financial Northwest Foundation 1,535,400 (3) 8.16
P.O. Box 419
Renton, Washington 98057

Craig A. White 1,362,500 (4) 7.25
136 Heber Avenue, Suite 204
Park City, Utah 84060

Joseph Stilwell 1,603,298 (5) 8.53
111 Broadway, 12th Floor

New York, New York 10006

O-Cap Partners, L.P. 964,603 (6) 5.13
c/o Mr. Lloyd Jagai
712 Fifth Avenue, 26th Floor

New York, New York 10019

Directors

Victor Karpiak (7) 253,796 (8) 1.35
Joann E. Lee 133,764 (9) *
Gary F. Kohlwes 175,564 (10) *
Robert L. Anderson 118,564 (11) *
Gerald Edlund 143,564 (12) *
Gary F. Faull 132,764 *
M. Scott Gaspard (7)(13) 81,896 *
Daniel L. Stevens -- *

Named Executive Officers

Kari A. Stenslie 75,447 *
Roger Elmore 101,884 *
Herman Robinson 52,999 (14) *

All Executive Officers and Directors as a Group (11 persons) 1,270,242 6.75

~~____________~~

*	Less than one percent of shares outstanding.
**	Also a named executive officer.
***	Former officer.
(1)	For directors and executive officers, includes shares of restricted stock, as to which the holders have voting but not dispositive power. The amounts shown also include the following number of shares ~~which~~that the indicated individuals have the right to acquire within 60 days of the voting record date through the exercise of stock options granted pursuant to the 2008 Equity Incentive Plan: ~~Mr. Karpiak, 58,764 shares;~~ Ms. Lee, ~~58,764 shares;~~ Dr. Kohlwes, ~~58,764~~Mr. Anderson and Mr. Faull, 97,940 shares each; Mr. Kiley, 10,000 shares; Mr. ~~Anderson, 58,764~~Padrick, 100,000 shares (granted pursuant to the terms of the Stock Option Agreement discussed in note 10 below); Mr. Robinson, 40,000 shares; Mr. ~~Edlund, 58,764~~Soh, 10,000 shares; ~~Mr. Faull, 58,764 shares; Mr. Gaspard, 30,000 shares; Ms. Stenslie, 30,000 shares; Mr. Elmore, 30,000;~~ and Mr. ~~Robinson, 10,000~~Clariza, 50,000 shares; and all executive officers and directors as a group, 601,760 shares.
(2)	The ESOP has sole voting power with respect to ~~1,213,172~~987,467 shares, shared voting power with respect to ~~450,720~~475,826 shares and sole dispositive power with respect to ~~1,663,892~~1,463,293 shares.
(3)	We established the First Financial Northwest Foundation in connection with the mutual to stock conversion of First Savings Bank ~~(previously known as First Savings Bank of Renton)~~ for the purpose of furthering our commitment to the local community. Shares of common stock held by the Foundation will be voted in the same proportion as all other shares of common stock on all proposals considered by First Financial’s shareholders.
(4)	Based solely on a Schedule 13D dated January ~~20,~~28, 2008, regarding shares owned as of that ~~date.~~date, reporting sole voting and dispositive power over the shares.
~~(Footnotes continue on following page)~~

(5)	Based solely on a Schedule ~~13D/A~~13F dated February ~~24, 2012.~~10, 2014, regarding shares owned as of December 31, 2013. According to that filing, Joseph Stilwell is the managing member of Stilwell Value LLC. Stilwell Value LLC is the general partner of Stilwell Activist Fund, L.P., Stilwell Activist Investments, L.P., Stilwell Associates, L.P., Stilwell Value Partners I, L.P., Stilwell Value Partners II, L.P., Stilwell Value Partners III, L.P., Stilwell Value Partners IV, L.P., Stilwell Value Partners V, L.P., Stilwell Value Partners VI, L.P., and Stilwell Value Partners VII, L.P., (together the “Value Funds”). Joseph Stilwell is also the general partner of Stilwell Partners L.P.~~, Stilwell Associates, L.P., Stilwell Associates Insurance Fund~~ (“SPLP” and, together with the Value Funds, the “Funds”). The securities reported in the Form 13F are held by one or more of ~~The S.A.L.I. Multi-Series Fund L.P., Stilwell Value LLC, Stilwell Advisers LLC and Joseph Stilwell have shared voting and dispositive power over~~ the ~~shares reported.~~Funds.
(6)	Based solely on a Schedule 13D dated ~~January 18, 2012. According to that filing, O-CAP Management, L.P., O-CAP Advisors, LLC, O-CAP GP, LLC, Michael E. Olshan~~February 10, 2014, regarding shares owned as of December 31, 2013, reporting sole voting power over 868,473 shares and ~~Jared S. Sturdivant have shared voting and~~sole dispositive power over 964,603 shares, O-CAP Partners, L.P. has shared voting and dispositive power over 571,226 shares, and O-CAP Offshore Master Fund, L.P. and O-CAP Offshore Fund, Ltd. have shared voting and dispositive power over 393,377899,916 shares.
(7)	~~Also a named executive officer of First Financial.~~
~~(8)~~	~~Includes 25,000 shares owned solely by his spouse, all of which~~ ~~were~~ ~~pledged~~ ~~in connection with a loan to purchase the shares~~.
~~(9)~~	Includes 15,000 shares owned solely by her spouse.
~~(10)~~(8)	Includes 25,000 shares owned solely by his spouse, as well as ~~5,400~~8,200 shares owned as custodian for a minor.
~~(11)~~(9)	Includes 25,000 shares held jointly with his spouse.
~~(12)~~(10)	~~Includes 3,100 shares owned solely by his spouse, 16,600 shares held jointly with his spouse~~ Represents stock options granted under the Stock Option Agreement (“Agreement”) between Mr. Padrick and ~~23,000 shares owned by companies he~~Stilwell Value LLC dated as of March 15, 2013. The Agreement provides that the stock options awarded to Mr. Padrick vested immediately and ~~his spouse control.~~
~~(13)~~	~~Mr. Gaspard resigned effective December 31, 2011, to become President of~~will expire on the ~~Washington Financial League. On December 22, 2011, he was appointed as~~earlier of: (1) a ~~director~~change in control of First Financial, as defined in the Agreement; (2) March 15, 2016 or such other date mutually agreed to by the parties pursuant to the Agreement; and (3) in the event Mr. Padrick resigns or is removed from First ~~Savings Bank, effective January 1, 2012.~~Financial’s Board of Directors.
~~(14)~~(11)	Includes 500 shares owned solely by his spouse.

~~PROPOSAL 1 – ELECTION OF DIRECTORS~~

PROPOSAL 1 – ELECTION OF DIRECTORS

Our Board of Directors currently consists of eight members and is divided into three classes. Approximately one-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. ~~In December 2011, Robert W. McLendon and Harry A. Blencoe~~Effective September 1, 2013, Victor Karpiak retired and ~~M. Scott Gaspard and Daniel L. Stevens were~~Richard P. Jacobson was appointed to fill the ~~vacancies.~~vacancy. Mr. Jacobson was recommended as a director by an independent director of First Financial. In January ~~2012,~~2014, Mr. Anderson notified the Board of Directors ~~voted to increase its size from eight to nine directors and appointed Spencer L. Schneider,~~that he will retire at the ~~request~~annual meeting of ~~Joseph Stilwell,~~shareholders and will not seek reelection. The Board has amended First Financial’s Bylaws to ~~fill the vacancy created by the increase in~~reduce the size of the ~~Board. On February 15, 2012,~~Board from eight to seven members, effective upon Mr. Schneider resigned and the Board voted to decrease its size to eight directors. Messrs. Gaspard and Stevens were recommended as directors by First Financial’s Nominating and Corporate Governance Committee.Anderson’s retirement.

The table below sets forth information regarding each director of First Financial and each Board nominee for director. The Nominating and Corporate Governance Committee of the Board of Directors selects nominees for election as directors. All of our nominees currently serve as First Financial directors. Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. It is intended that the proxies solicited on behalf of the Board of Directors (other than proxies in which the vote is withheld as to the nominee) will be voted at the annual meeting for the election of the nominees identified in the table below. If a nominee is unable to stand for election, the Board of Directors will select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected.

We believe it is important for the Board of Directors to have input from management in overseeing our operations and in setting our policies and procedures. As a result, First Financial’s bylaws require that the President of First Financial also be a director. The Board of Directors has not determined what action it may take, if any, in the event Mr. Karpiak, the President of First Financial, is not re-elected by the shareholders to the Board of Directors, but it is anticipated that if this occurs the Board would amend the bylaws to remove this requirement.

The Board of Directors recommends a vote “FOR” the election of ~~Victor Karpiak, M. Scott Gaspard~~Gary F. Kohlwes, Joseph W. Kiley III and ~~Daniel L. Stevens on the white proxy card.~~Richard P. Jacobson.

Name	Age as of December 31, 2011	Year First Elected or Appointed Director (1)	Term to Expire	Age as of December 31, 2013	Year First Elected or Appointed Director (1)	Term to Expire

BOARD NOMINEES

Victor Karpiak	57	1998	2015
M. Scott Gaspard	58	2011	2015
Daniel L. Stevens	68	2011	2015
Gary F. Kohlwes				77	1977	2017 (2)
Joseph W. Kiley III				58	2012	2017 (2)
Richard P. Jacobson				50	2013	2015 (2)

DIRECTORS CONTINUING IN OFFICE

Daniel L. Stevens				70	2011	2015
Gary F. Faull	67	1999	2013	69	1999	2016
Joann E. Lee	56	2005	2013	58	2005	2016
Gary F. Kohlwes	75	1977	2014
Robert L. Anderson	78	1980	2014
Gerald Edlund	75	1985	2014
Kevin D. Padrick				58	2013	2016

~~___________~~

____________
(1)	~~Includes~~For years prior to 2007, includes prior service on the Board of Directors of First Savings Bank (previously known as First Savings Bank of Renton).
(2)	Assuming election or reelection.

Information Regarding Nominees for Election. Set forth below is the principal occupation of each nominee for director. All nominees have held their present positions for at least five years unless otherwise indicated.

~~Victor Karpiak~~Dr. Gary F. Kohlwes isserves as Chairman of ~~the Board, President and Chief Executive Officer of~~ First Financial, First Financial Diversified and First Savings Bank, positions he has held since March 20, 2013, September 1, 2013 and September 1, 2013, respectively. He is also Chairman of First Financial’s Audit/Compliance/Risk Committee and has served as a director of First Financial, First Financial Diversified and the Bank since the companies were established in 2007 as part of the mutual to stock conversion process. ~~Mr. Karpiak also served as Chief Financial Officer from 2007 until February 2008.~~ Prior to the conversion, he held the same positions with our predecessors, First Financial Holdings, MHC, First Financial of Renton and First Savings Bank of Renton. Before his appointment as President of First Savings Bank of Renton in 1999, he served as Executive Vice President and Chief Financial Officer. Mr. Karpiak has served as President and Chief Financial Officer of First Financial Holdings, MHC and First Financial of Renton since they were established in 2002. In January 2005, he was appointed Chairman of the Board and Chief Executive Officer of First Financial Holdings, MHC, First Financial of Renton and First Savings Bank of Renton. He has ~~been with~~served as a director of First Savings Bank since 1977. ~~Mr. Karpiak~~He was appointed in 1982 to the board position of Secretary, a position he held until May 2011. Dr. Kohlwes retired in 1997 after 40 years in education with the last 23 years as Superintendent of Public Schools for the Renton School District. Since 1963, he has also owned, operated and managed a commercial fishing business in Naknek, Alaska. Dr. Kohlwes is a member of the Board of Directors of Washington Pacific Insurance, SPA, a UW Medicine Board member and Valley Medical Center Trustee. He is a past president and a current member of the Renton Rotary Club, past President and founding director of the Renton Community Foundation and a past elected Commissioner of Valley Medical Center. In addition, Dr. Kohlwes is a Trustee of the First Financial Northwest Foundation and serves as its Executive Director.

Joseph W. Kiley III has served as President and Chief Executive Officer of First Financial and First Financial Diversified since September 1, 2013, a director of First Financial and ~~Chairman~~First Financial Diversified since December 31, 2012, and President, Chief Executive Officer and director of First Savings Bank since September 17, 2012. He previously served as President, Chief Executive Officer and director of Frontier Bank, F.S.B., Palm Desert, California, and its holding company, Western Community Bancshares, Inc. Mr. Kiley has over 20 years of executive experience at banks, thrifts and their holding companies that includes serving as president, chief executive officer, chief financial officer and director. Mr. Kiley holds a Bachelor of Science degree in Business Administration (Accounting) from the California State University, Chico and is a former California certified public accountant. Mr. Kiley is an active member of the Renton Rotary and is a director with the Greater Renton Chamber of Commerce, a past director and Resource Development Chairman of Renton River Days, a director and Secretary of the Senior Housing Assistance Group, a member of the Renton Rotary Club, and a member and past President of the Kiwanis Club of Renton.Commerce.

~~M. Scott Gaspard~~Richard P. Jacobson has served as Chief Operating Officer of First Savings Bank since July 9, 2013, and as Chief Financial Officer of First Financial Northwest, First Financial Diversified and the Bank since August 9, 2013. He was appointed as a director of First Financial, First Financial Diversified and First Savings Bank effective September 1, 2013. Mr. Jacobson served as ~~of January 1, 2012. Mr. Gaspard is President of the Washington Financial League,~~ a ~~trade association representing community bankers in the State of Washington. From January 1, 2009 until December 31, 2011, he was Senior Vice President, External Affairs of~~consultant to First Financial ~~Northwest~~from April 30, 2010 to April 6, 2012.

Subsequently he worked as a mortgage loan originator in Palm Desert, California from July 2012 to July 2013. Previously, he had been employed by Horizon Financial Corp. and ~~First Savings Bank. Prior to that, he was Senior Vice President, Manager of Government~~Horizon Bank, Bellingham, Washington for 23 years, and ~~Industry Relations at Washington Mutual, Inc. from 2003 until December 31, 2008. Before that, Mr. Gaspard~~had served as ~~an officer of the Washington Financial League from 1979 to 2003, becoming~~ President, ~~in 1981. Mr.~~ ~~Gaspard is a director for the statewide, non-profit Washington Community Reinvestment Association. He is the former Chair~~Chief Executive Officer and current trustee of the Northwest Financial Association's Employee Benefit Trust, a multi-state multiple employer trust providing benefit plans for banks, thrifts and credit unions in Washington and Oregon. Mr. Gaspard previously served as national president of the State Association of Trade Executives and as a director of ~~America's Community Bankers (now part~~Horizon Financial Corp. and Horizon Bank from January 2008 to January 2010. Mr. Jacobson also served as Chief Financial Officer of ~~the American Bankers Association).~~Horizon Financial Corp. and Horizon Bank from March 2000 until October 2008. Between 1985 and 2008, Mr. ~~Gaspard~~Jacobson served in several other positions at Horizon Financial Corp. and Horizon Bank, and spent two years as a Washington state licensed real estate appraiser from 1992 to 1994. Mr. Jacobson received his ~~Bachelor of Science,~~Bachelor’s degree in Business Administration (Finance) from the University of ~~Puget Sound.~~Washington. In addition, Mr. Jacobson graduated with honors from the American Banker Association’s National School of Banking. Mr. Jacobson is a past president of the Whatcom County North Rotary club and has served on the boards of his church, the United Way, Boys and Girls Club and Junior Achievement.

Information Regarding Incumbent Directors. The present principal occupation and other business experience during the last five years of each director continuing in office is set forth below.

Daniel L. Stevens was appointed as a director of First Financial, First Financial Diversified and First Savings Bank effective as of January 1, 2012. Mr. Stevens is Chairman of the Board of Home Federal Bancorp, Inc. and Home Federal Bank, Boise, Idaho, positions he has held since 2004 and 1999, respectively. He served as President and Chief Executive Officer of Home Federal Bancorp, Inc. from 2004 to January 2008. He also served as Chief Executive Officer of Home Federal Bank from 1995 to January 2008, and as President of Home Federal Bank from 1995 to September 2006. Mr. Stevens worked in the financial services industry for over 35 years and served as an executive officer or chief executive officer

for four other mutual and stock thrifts during his career. He is past Vice Chairman of the Board of Directors of the Federal Home Loan Bank of Seattle. He served as the Chairman of the Audit Committee and a member of the Financial Operations Committee of the Federal Home Loan Bank of Seattle. Mr. Stevens was a director of the Federal Home Loan Bank of Seattle from 1996 until 2004. He served as a director of America’s Community Bankers, served on America’s Community Bankers’ Federal Home Loan Bank System Committee, chaired the America’s Community Bankers Credit Union Committee, and was First Vice Chair of America’s Community Bankers COMPAC Board of Governors until the merger of America’s Community Bankers and the American Bankers Association in 2007. He is a Past Chairman of the Board of the Idaho Bankers Association, a past Chairman of the Board of Directors and Executive Committee of the Boise Metro Chamber of Commerce, and a former director of the Midwest Conference of Community Bankers. He is the former director of the Boise State University Foundation, and past Chairman of the United Way of Treasure Valley and the Nampa Neighborhood Housing Services Board of Directors.

~~Information Regarding Incumbent Directors.~~ ~~The present principal occupation and other business experience during the last five years of each director continuing in office is set forth below.~~

Gary F. Faull serves as a director of First Financial, First Financial Diversified and First Savings Bank, positions held since the companies were established in 2007 as part of the mutual to stock conversion process. Prior to the conversion, he served as a director of First Financial Holdings, MHC, First Financial of Renton and First Savings Bank of Renton. Mr. Faull has served as a director of ~~First Savings~~the Bank since 1999. He is an attorney and has been self-employed since 1974 in the law firm of Gary F. Faull Law Offices. Mr. Faull is a member of the Renton Rotary Club, the Greater Renton Chamber of Commerce, Veterans of Foreign Wars, having served in Vietnam and earning a Bronze Star and a Combat Infantryman’s Badge, a past director of the Renton Community Foundation and a past president of the South King County Bar Association. Mr. Faull is also a Trustee of the First Financial Northwest Foundation and serves as its Secretary.

Joann E. Lee serves as a director of First Financial, First Financial Diversified and ~~Compensation Committee~~First Savings Bank, as well as Chair of First ~~Financial~~Financial’s Compensation and ~~First Savings Bank,~~Awards Committee, positions held since the companies were established in 2007 as part of the mutual to stock conversion process. She was appointed Secretary of First Financial asin May 2011 and of ~~May 2011.~~First Savings Bank on September 1, 2013. Ms. Lee is also the Board’s designated Financial Expert serving on the ~~Audit~~Audit/Compliance/Risk Committee. Prior to the conversion, she served as a director of First Financial Holdings, MHC, First Financial of Renton and First Savings Bank of Renton since 2005. Ms. Lee is a Certified Public Accountant and has been the owner of Joann Lee & Associates, CPAs since 2002. Prior to that, Ms. Lee spent 11 years as a Certified Public Accountant, including an ~~eight year~~eight-year career with the independent public accounting firm of RSM McGladrey. She also served as their Director of the Small Business Division, Puget Sound Region. Ms. Lee is a past president and current Board member of the Renton Rotary Club, and past member of Renton YMCA Board of Directors. She is also a member of the Renton Communities in Schools, Greater Renton Chamber of Commerce and a past president and director of the Renton Technical College Foundation. In addition

Ms. Lee serves as a Trustee of the First Financial Northwest Foundation and serves as its Treasurer.

~~Dr. Gary F. Kohlwes~~Kevin D. Padrick serves as a director and Audit Committee Chairman of First Financial and First Savings Bank, positions held since the companies were established in 2007 as part of the mutual to stock conversion process. Prior to the conversion, he held the same positions with First Financial Holdings, MHC, First Financial of Renton and First Savings Bank of Renton. He has served as a director of First Savings Bank since 1977 and was appointed in 1982 to the board position of Secretary, a position he continues to hold. Dr. Kohlwes retired in 1997 after 40 years in education with the last 23 years as Superintendent of Public Schools for the Renton School District. He also was actively engaged as an owner/operator of a commercial fishing business in Naknek, Alaska, since 1963, an operation he continues to oversee. Dr. Kohlwes is a member of the Board of Directors of Washington Pacific Insurance, SPA. He is a past president and a current member of the Renton Rotary Club, past President and founding director of the Renton Community Foundation and a past elected Commissioner of Valley Medical Center. In addition, Dr. Kohlwes is a Trustee of the First Financial Northwest Foundation and serves as its Executive Director.

~~Robert L. Anderson~~ serves as a director and Chairman of the Nominating/Corporate Governance Committee of First Financial and First Savings Bank, positions held since the companies were established in 2007 as part of the mutual to stock conversion process. Prior to the conversion, he served as a director of First Financial, ~~Holdings, MHC,~~ First Financial ~~of Renton~~Diversified and First Savings Bank effective as of ~~Renton.~~March 14, 2013. Mr. ~~Anderson has served as a director of First Savings Bank of Renton since 1980 and as Secretary of First Financial Diversified since it was established in 1980 as Savren Service~~

~~Corporation. He~~Padrick is a ~~retired attorney who, prior~~lawyer and Senior Principal and co-founder of Obsidian Finance Group, LLC, a hybrid financial advisory and investment firm based in Lake Oswego, Oregon. Prior to ~~his retirement in 1992, served as~~founding Obsidian Finance Group, LLC, Mr. Padrick was a ~~senior~~ partner inwith the law firm, ~~of Anderson, Jackson & Stephens. During his professional career, Mr. Anderson was elected as a director on~~Miller Nash, LLP, where he chaired the ~~Renton School District’s Board of Directors.~~insolvency department and represented debtors, secured and unsecured creditors, and creditors’ committees. He is a past president of the Kiwanis Club of Renton and the South King County Bar Association. Mr. Anderson is also a past director of the Ocean Shores Library Board and is currently a member of the Ocean Shores Kiwanis and the Associated Arts of Ocean Shores. Mr. Anderson received ~~his~~ Bachelor of ~~Arts~~Science degrees in mathematics and psychology, and Master of Business Administration and Juris Doctor degrees from the University of ~~Washington and his Juris Doctor Degree from the University of Washington School of Law.~~

~~Gerald Edlund~~ serves as a director of First Financial and First Savings Bank, positions held since the companies were established in 2007 as part of the mutual to stock conversion process. Prior to the conversion, he served as a director of First Financial Holdings, MHC, First Financial of Renton and First Savings Bank of Renton. Mr. Edlund has served as a director of First Savings Bank since 1985 and served as Secretary of First Financial Holdings, MHC, since it was established in 2002 until the conversion. Mr. Edlund graduated from the University of Washington with a degree in Landscape Architecture. He has been a registered landscape architect in the State of Washington since 1973 and a member of Amercian Society of Landscape Architects since 1975. As President of Edlund Associates, Inc., a landscape design/construction firm, since 1980, he has been responsible for site design, construction, budget development and project management of commercial, municipal and residential projects. He has a broad knowledge of the building and construction industry in the area of site design and development. Mr. Edlund is a member of the New Horizon School Board, a member and past president of the Renton Rotary Club and a member of the Allied Arts of Renton. He was a member of the City of Renton Arts Commission for 24 years and served on the King County Open Space Citizens’ Oversight Committee.Santa Clara.

~~Contested Election~~

~~Joseph Stilwell and a group of funds he controls have nominate~~ ~~d two people~~ ~~to stand for election to the~~ ~~First Financial~~ ~~Board of Directors at the annual meeting.~~YOUR BOARD OF DIRECTORS URGES YOU TO RETURN ONLY THE WHITE PROXY CARD WHICH IS ENCLOSED OR TO VOTE BY TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE WHITE PROXY CARD, AND TO VOTE “FOR” THE ELECTION OF EACH OF THE BOARD’S NOMINEES.

The Board of Directors, on the advice of counsel, believes that the Stilwell Group’s proxy solicitation and other recent actions may be in violation of federal banking law because the Stilwell Group has failed to either make the applicable commitments or the required regulatory filings under the control regulations of the Federal Reserve. The Federal Reserve’s control rules generally prohibit any company from controlling a savings association without seeking and obtaining prior regulatory approval to become a savings and loan holding company. Investors seeking to avoid regulation and oversight as a savings and loan holding company are required to remain passive as to their involvement and influence over the management and policies of a savings and loan holding company, and the Federal Reserve has established specific passivity standards and related commitments to allow an investor to potentially qualify as a passive investor exempt from the control rules.

The Stilwell Group has not sought advance regulatory approval from the Federal Reserve. Furthermore, First Financial believes the conduct and publicly expressed intent of the Stilwell Group would not enable it to qualify as a passive investor under the Federal Reserve’s rules. The Stilwell Group’s recent actions that raise concerns under the Federal Reserve’s control rules include: (1) mounting a proxy contest to elect two of its nominees to our Board of Directors; (2) demanding various actions or changes in the executive management, policies and business decisions of First Financial; (3) demanding to have Mr. Schneider placed on various Board committees of First Financial and its subsidiary, First Savings Bank; (4) owning in excess of 5% of First Financial’s common stock while taking or demanding the actions described above; and (5) other actions that have the intent and effect of exerting a controlling influence over the management and policies of First Financial. These actions are inconsistent with the Federal Reserve’s established rules and guidance on permissible passive investments that are exempt from advance regulatory approval.

We have requested guidance from the Federal Reserve and plan to await a final determination from them before considering the Stilwell Group’s nominees. Therefore, we urge you to elect the directors recommended by the Board, by completing the enclosed white proxy card and returning it in the enclosed postage-paid envelope, and not signing or

~~returning any other proxy sent to you by other parties. You may also vote by telephone or Internet by following the instructions on the white proxy card.~~

~~Background and Contacts with the Stilwell Group~~

This section sets forth a chronology of material discussions and contacts that First Financial and its representatives had with the principals and representatives of the Stilwell Group from September 12, 2011, which is the date that the Stilwell Group filed its Schedule 13D stating it intended to seek Board representation, through April __, 2012.

•	On September 15, 2011, John F. Breyer, Jr. of Breyer & Associates PC, Counsel to First Financial (“Company Counsel”), had discussion with Spencer L. Schneider regarding the Schedule 13D that was filed by the Stilwell Group on September 12, 2011.

•	From September 19, 2011 through September 29, 2011, Company Counsel had further discussion with Mr. Schneider conveying First Financial’s goals and stating that these goals were not inconsistent with those of the Stilwell Group.

•

On October 5, 2011, a meeting was convened in Renton, Washington at First Financial’s office in connection with Mr. Stilwell’s request that Mr. Schneider be added to First Financial’s and First Savings Bank’s Boards of Directors. In addition to Mr. Schneider, the meeting was attended by Company Counsel, Mr. Victor Karpiak of First Financial and Ms. Megan Parisi and Ms. Nina Nikpour, as representatives of Mr. Stilwell.

•	~~On October 6 and 11, 2011, Company Counsel had follow-up discussions with Mr. Schneider on the required regulatory applications to become a director of First Financial and First Savings Bank.~~

•

On October 14, 2011, Company Counsel provided draft resolutions to Mr. Schneider for his review. The resolutions were to be submitted to First Financial’s Board in connection with the regulatory applications Mr. Schneider needed to complete to become a director of First Financial and First Savings Bank.

•	~~On October 19, 2011, First Financial’s Board met and adopted resolutions authorizing Company Counsel and First Financial management to assist Mr. Schneider in completing his regulatory applications.~~

•	~~On October 28, 2011, Mr. Schneider contacted Company Counsel regarding the required Federal Reserve, FDIC and Washington DFI application forms for his appointment as a director.~~

•

On October 30, 2011, Mr. Schneider contacted Company Counsel commenting on the difficult disclosure issues that needed to be addressed in his applications and requested that Company Counsel review his applications. Mr. Schneider also questioned the need for filing the required applications and related financial information. Company Counsel explained the reasons the applications and related financial information are required and sent Mr. Schneider comments on his applications.

•	~~On November 2, 3 and 7, 2011, Mr. Schneider followed up with Company Counsel on questions he had on his comments on the application materials.~~

•

On November 7, 2011, Mr. Schneider emailed Company Counsel additional questions regarding the Federal Reserve, FDIC and Washington DFI applications. Company Counsel responded to Mr. Schneider’s questions and provided Mr. Schneider the form to be used to request confidential treatment for portions of his application materials. Mr. Schneider advised Company Counsel of the filing of an amended Schedule 13D by the Stilwell Group to reflect the addition of another Stilwell fund to the Stilwell Group.

•

On November 8, 2011, Company Counsel had discussions with Mr. Schneider about additional information to be included in his application materials. Company Counsel provided Mr. Schneider with these additional application materials as well as contact information for submitting these materials to the Federal Reserve, FDIC and Washington DFI.

•

On November 9, 2011, Company Counsel received materials from Mr. Schneider for his application, assembled the application materials, emailed Mr. Schneider the copies to be filed, received Mr. Schneider’s authorization for filing, and sent the filings via overnight mail to the Federal Reserve, the FDIC and the Washington DFI on behalf of Mr. Schneider.

•	~~On November 14, 2011, Company Counsel exchanged emails with Mr. Schneider regarding FDIC forms that were missing from Mr. Schneider’s filing.~~

•	~~On November 15, 2011, Company Counsel exchanged emails with Mr. Schneider regarding the name check form and fingerprint card required by the FDIC.~~

•	~~On November 16, 2011, Company Counsel sent a follow-up email to Mr. Schneider regarding the Federal Reserve application and telephone calls received by Mr. Schneider from the Federal Reserve.~~

•	On November 17, 2011, Company Counsel had discussion with Mr. Schneider and prepared a letter on his behalf to transmit additional application materials to the Federal Reserve, FDIC and Washington DFI.

•

On November 18, 2011, Company Counsel received an email from Mr. Schneider that the Federal Reserve had accepted his application. Company Counsel confirmed to Mr. Schneider that the acceptance was not an approval. The Federal Reserve also requested confirmation from Mr. Schneider of certain information included in his application, which required correction. Company Counsel received an email from Mr. Schneider regarding supplementary materials to be provided to the Federal Reserve, FDIC and Washington DFI.

•

On November 21, 2011, Company Counsel sent the Federal Reserve Mr. Schneider’s fingerprint card in connection with the application materials being processed for Mr. Schneider’s appointment as a director of First Financial. Similarly, Company Counsel sent the FDIC and the Washington DFI additional materials (i.e., name check form and consent for release of information and fingerprint card) on Mr. Schneider’s behalf in connection with the application materials being processed for Mr. Schneider’s appointment as a director of First Savings Bank.

•	On November 28, 2011, Company Counsel received an email sent by the Federal Reserve to Mr. Schneider that indicated the Federal Reserve had received all of the required materials in connection with Mr. Schneider’s appointment as a director of First Financial.

•	~~On December 1, 2011, Company Counsel followed-up with the Federal Reserve regarding Mr. Schneider’s application materials.~~

•	On December 9, 2011, Company Counsel emailed Mr. Schneider a letter received from the Federal Reserve-San Francisco notifying Company Counsel that the Federal Reserve was extending its review of Mr. Schneider’s application materials.

•

On December 12, 2011, Company Counsel emailed Mr. Schneider a letter received from the FDIC deeming his application complete. Mr. Schneider required clarification of the FDIC letter and also informed Company Counsel that he had spoken with the Federal Reserve examiner regarding supplemental information that he would be filing in connection with his pending application.

•	~~On December 13, 2011, Mr. Schneider emailed supplemental information to the Federal Reserve and FDIC regarding his application, with a copy of the email provided to the Washington DFI.~~

•	~~On December 14, 2011, Mr. Schneider emailed Company Counsel a copy of the Washington DFI approval of his appointment as a director of First Savings Bank.~~

•	~~On December 15, 2011, Company Counsel received the FDIC’s approval of Mr. Schneider’s appointment as a director of First Savings Bank.~~

•

On December 19 and December 20, 2011, Mr. Schneider emailed Company Counsel inquiring if any additional actions could be taken to obtain Federal Reserve approval in light of the non-objections received from the FDIC and Washington DFI. Company Counsel placed a call to the Federal Reserve on December 20, 2011 regarding Mr. Schneider’s request.

•

On December 23, 2011, Mr. Schneider emailed Company Counsel the Federal Reserve approval letter. Mr. Karpiak notified Mr. Schneider that his appointment was being placed on the agenda for the Board’s January 25, 2012 meeting and requested that Mr. Schneider email a copy of his Federal Reserve application (without financials) to support the Board of Director’s review of his qualifications as a director of First Financial.

•

On December 24, 2011, Company Counsel emailed Messrs. Karpiak and Gaspard regarding two concerns that Mr. Schneider had: (1) preparation of a nondisclosure agreement (“NDA”) to allow him to share information he receives as a director with Mr. Stilwell while he is on the Board; and (2) Mr. Stilwell’s disappointment that Mr. Schneider’s appointment to the Board was delayed until February 2012. Mr. Schneider indicated that he and Mr. Stilwell did not want to wait until the January 2012 regularly scheduled Board meeting to be appointed as a director and would prefer a special Board meeting be called that he could attend.

•	~~On December 28, 2011, Mr. Schneider emailed Company Counsel a draft of the NDA for review.~~

•	~~On January 9, 2012, Company Counsel sent comments on the NDA to Mr. Schneider for review.~~

•	~~On January 10, 2012, Mr. Schneider sent the revised NDA with additional comments to Company Counsel.~~

•

On January 11, 2012, First Financial’s and Bank’s Boards of Directors voted to approve the appointment of Mr. Schneider to the respective Boards. First Financial signed and returned the NDA to Mr. Schneider. Following the special Board meeting, Director Gaspard and Mr. Karpiak held a conference call with Mr. Schneider to welcome him to the Board and provide him with confidential information about specific matters the Board was addressing.

•

On January 12, 2012, Company Counsel and Mr. Schneider exchange emails regarding the timing of First Financial’s press release announcing Mr. Schneider’s appointment to First Financial and Bank’s Boards. Company Counsel reminded Mr. Schneider that in connection with his appointment as a director he would need to file a Form 3 with the SEC within 10 days of his appointment and offered to provide him with standard information regarding his reporting obligations as a director of First Financial. Company Counsel prepared and sent Mr. Schneider a draft Form 3 for his review.

•

Mr. Schneider emailed Mr. Karpiak and requested copies of Board packages for the past four meetings and any other relevant materials. Mr. Schneider also emailed Mr. Karpiak’s assistant to request that the materials be sent to him via overnight mail and also provided to him via email. Mr. Karpiak’s assistant provided Mr. Schneider with electronic access, including access codes, to the Board material. Mr. Karpiak’s assistant also indicated to Mr. Schneider that the requested materials would be sent to him via overnight mail. Mr. Schneider responded that the December Board minutes were not included

in the items posted securely online. The assistant apologized and indicated that paper copies would be included in his materials being sent via overnight mail and that December had now been posted to the secure online site.

•	On January 13, 2012, Mr. Schneider contacted Mr. Karpiak asking to push the January 25, 2012 Board meeting back two days. As a result of scheduling conflicts, the date of the meeting could not be rescheduled.

•

On January 16, 2012, Mr. Schneider emailed Mr. Karpiak’s assistant for contact information (including email addresses) for First Financial’s Board members. The assistant responded that she was out of the office until the following day and provided a contact at First Financial from whom Mr. Schneider could obtain the requested information. Company Counsel had further discussion with Mr. Schneider on materials he is receiving from First Financial and his Form 3 reporting requirements.

•

On January 17, 2012, Mr. Schneider emailed Mr. Karpiak regarding his January 16, 2012 request for contact information for the Board, requesting that Mr. Karpiak “assist me in getting this simple information sent to me by someone by email.” Mr. Karpiak’s assistant, apologizing for the delay, provided Mr. Schneider with the requested information. Mr. Schneider also contacted Mr. Karpiak to indicate that he would need to dial into the Board meeting scheduled for January 25, 2012. Mr. Schneider emailed Mr. Karpiak, copying First Financial’s Board members, regarding where he could locate “any reference to board discussions on evaluating the alternative of finding a merger partner.”

•

On January 18, 2012, Mr. Karpiak indicated to Mr. Schneider that the Board only had informal discussions on his request to evaluate alternatives of finding a merger partner and that nothing would be referenced in Board materials. Mr. Schneider asked Mr. Karpiak to provide a summary of the discussion and any materials First Financial’s investment banker had provided. Mr. Schneider also requested that the matter be discussed further (as offered by Mr. Karpiak) at the January 25, 2012 Board meeting. Mr. Schneider requested the Executive Committee minutes for the past four months. Mr. Karpiak’s assistant provided these minutes to Mr. Schneider.

•	~~On January 19, 2012, Mr. Schneider emailed Company Counsel regarding the NDA indicating that there may be more people from the Stilwell Group that need to be included.~~

•	On January 23, 2012, Mr. Schneider emailed Mr. Karpiak’s assistant to indicate that he would need to dial into the Board meeting scheduled for January 25, 2012 and requesting dial-in information. The assistant also provided Mr. Schneider information for receiving Board fees.

•

On January 25, 2012, Mr. Schneider called into the Board meeting that he was not able to attend. As offered by Mr. Karpiak, an executive session was held to discuss merger and acquisition activity in the Company’s market area and to schedule a date for the investment banker to make a presentation to the Board.

•

On February 6, 2012, Mr. Schneider requested that Mr. Karpiak’s assistant provide him with a schedule of the Compensation and Governance Committee meetings and information on the expected duration of the scheduled February 15, 2012 meeting. The assistant suggested to Mr. Schneider that he contact the chairs of each committee for further information and provided the general time frame for the February 15, 2012 meeting. Mr. Schneider requested that the assistant provide him with minutes for all Compensation and Governance committee meetings since January 2011. The assistant emailed Mr. Schneider the approved and draft minutes for the Compensation and Governance committees.

•	On February 10, 2012, Mr. Schneider asked when he could expect the board packet for the February 15, 2012 meeting and requested that the materials be delivered via overnight mail for Saturday delivery. Mr. Karpiak’s assistant emailed Mr. Schneider that Board materials would now

be provided to Board members electronically through iPads supplied by First Financial. Mr. Schneider told Mr. Karpiak this is repulsive. Mr. Schneider requested the minutes from the Board meeting that approved the iPads. Mr. Schneider and Company Counsel had an email exchange regarding the need for the iPads.

•

On February 12, 2012, Company Counsel emailed Mr. Karpiak regarding a telephone call he received from Mr. Schneider in which Mr. Schneider stated he was upset because the draft annual meeting proxy materials indicated that he was only being nominated for a one-year term instead of a three-year term. Mr. Schneider indicated that he wanted revised board materials sent out on February 13, 2012 to reflect that he would be nominated for a three-year term.

•

On February 13, 2012, Mr. Schneider requested a copy of the employment material referenced in the December 16, 2011 Compensation Committee minutes. Mr. Karpiak’s assistant provided these materials to Mr. Schneider via email along with a copy of the Consent Order that had been previously requested. Mr. Karpiak emailed the Board and indicated that he would propose that Mr. Schneider’s proposed term be changed from a one-year term to a three-year term.

•

On February 15, 2012, the Board meeting was held and Mr. Schneider demanded that the Board take three actions: (1) remove the pictures of past directors from the walls of the building; (2) serve no refreshments and only hard candies at the annual meeting of shareholders; and (3) immediately terminate the Director Emeritus Policy. Mr. Schneider then told the Board he would step out of the room so they could discuss his demands and determine how to proceed. The Board discussed the demands and invited Mr. Schneider to rejoin the meeting. The Board suggested that these items be placed on the agenda for the March Board meeting (due to legal concerns regarding termination of the Director Emeritus Policy) and Mr. Schneider refused and resigned immediately. The Stilwell Group filed materials with the SEC indicating Mr. Schneider’s resignation.

•	~~On February 16, 2012, Mr. Schneider sent a formal resignation letter to Mr. Karpiak.~~

•	On February 17, 2012, First Financial issued a press release regarding Mr. Schneider’s resignation. Company Counsel provided notice to Mr. Schneider that a Form 8-K was being filed with the SEC regarding his resignation.

•	~~On February 22, 2012, Mr. Stilwell sent a letter to First Financial demanding a copy of First Financial’s shareholder list.~~

•	On February 24, 2012, the Stilwell Group filed an amended Schedule 13D with the SEC reporting its ownership as 8.5% of First Financial’s outstanding common stock. The filing was also filed with the SEC as proxy soliciting materials.

•	On February 28, 2012, First Financial provided Mr. Stilwell’s counsel, Mr. Schneider, a copy of First Financial’s shareholder list and related materials he had requested. Mr. Stilwell filed a letter with the SEC that was sent to First Financial’s shareholders as soliciting materials.

•	On March 29, 2012 the Company received from Stilwell Value Partners, III, L.P. a Notice of Intent to Nominate Joseph Stilwell and Spencer Schneider as directors at the Company’s 2012 Annual Meeting of Shareholders.

Director Qualifications and Experience

The following table identifies the experience, qualifications, attributes and skills that the Nominating Committee considered in making its decision to nominate directors to our Board. The fact that a particular attribute was not considered does not mean that the director lacks such an attribute.

	~~Anderson~~	~~Edlund~~	Faull	~~Gaspard~~Jacobson	~~Karpiak~~Kiley	Kohlwes	Lee	Padrick	Stevens
Experience, Qualification, Skill or Attribute
Professional standing in chosen field	✓	✓	✓	✓	✓	✓	✓	✓
Expertise in financial services or related industry				✓	✓		✓	✓	✓
Certified public accountant or financial expert		✓	✓		✓		✓
Attorney	✓		✓				✓
Civic and community involvement	✓	✓	✓	✓	✓	✓	✓
Leadership and team building skills	✓	✓	✓	✓	✓	✓	✓	✓
Diversity by race, gender or culture					✓		✓
Specific skills/knowledge:
Finance	✓	✓	✓		✓	✓	✓	✓
Technology					✓		✓
Marketing	✓	✓	✓				✓	✓	✓
Public affairs	✓			✓	✓		✓
Human resources	✓	✓	✓	✓	✓	✓	✓
~~Human resources~~Governance		✓	✓	✓		✓	✓	✓	✓
~~Governance~~	✓			✓	✓	✓		✓
Compensation	✓	✓	✓		✓	✓	✓	✓

~~MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS~~

~~AND CORPORATE GOVERNANCE MATTERS~~

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

AND CORPORATE GOVERNANCE MATTERS

Board of Directors

The Boards of Directors of First Financial and First Savings Bank conduct their business through board and committee meetings. During the fiscal year ended December 31, ~~2011,~~2013, the Board of Directors of First Financial held 13 meetings and the Board of Directors of the Bank held 1312 meetings. No director of First Financial or the Bank attended fewer than 75 percent of the total meetings of the boards and committees on which that person served during this period.

Committees and Committee Charters

The Board of Directors of First Financial has standing ~~Audit,~~Audit/Compliance/Risk, Compensation and Awards, Nominating and Corporate Governance, ~~Executive~~ and ~~Awards~~Executive committees. The Board has adopted written charters for the ~~Audit,~~Audit/Compliance/Risk, Compensation and Awards, and Nominating and Corporate Governance committees, copies of which are available on our website at www.fsbnw.com.

~~Audit~~Audit/Compliance/Risk Committee. The ~~Audit~~Audit/Compliance/Risk Committee consists of Directors Kohlwes (Chair), Faull and Lee. The Committee meets at least quarterly to oversee the integrity of the financial reporting process, ~~financial statement~~external and internal audits, third party credit reviews, determination of the adequacy of the allowance for loan and ~~systems~~lease losses and the system of internal ~~controls.~~control. The Committee also appoints the independent auditor and retains service providers for internal audit and third party credit reviews, and reviews the ~~audit report~~various reports prepared by the independent ~~auditor.~~auditor and the other service providers it appoints. The ~~Audit~~Audit/Compliance/Risk Committee met 1517 times during the year ended December 31, ~~2011.~~2013.

Each member of the ~~Audit~~Audit/Compliance/Risk Committee is “independent” in accordance with the requirements for companies listed on Nasdaq. In addition, the Board of Directors has determined that Ms. Lee meets the definition of “audit committee financial expert,” as defined by the SEC.

Compensation and Awards Committee. The Compensation and Awards Committee consists of Directors Lee (Chair), Kohlwes, Anderson, ~~Edlund~~Padrick, Faull and ~~Faull.~~Stevens. The Committee meets at least twice a year to provide oversight regarding personnel, compensation and benefits related matters. The Committee is also responsible for evaluating First Financial’s Chief Executive Officer and making recommendations to the full Board regarding director compensation. Each member of the Committee is “independent,” in accordance with the requirements for companies listed on Nasdaq. This Committee met ~~three~~six times during the year ended December 31, ~~2011.~~2013.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, which currently consists of Directors Anderson (Chair), ~~Edlund, Lee~~Padrick and Kohlwes, assures that we maintain the highest standards and best practices in all critical areas relating to the management of the business of First Financial. The Committee also selects nominees for the election of directors and assesses Board and committee membership needs. The Committee meets at least twice a year. Each member of the Committee is “independent,” in accordance with the requirements for companies quoted on Nasdaq. This Committee met ~~three~~five times during the year ended December 31, ~~2011.~~2013.

Only those nominations made by the Nominating and Corporate Governance Committee or properly presented by shareholders will be voted upon at the annual meeting. In its deliberations for selecting candidates for nominees as director, the Committee considers the candidate’s knowledge of the banking business, including regulatory and compliance matters, strategic planning, finance, accounting and ~~finance and accounting~~overall best industry practices. The Committee also considers the candidate’s involvement in community, business and civic affairs, and whether the candidate would provide for adequate representation of First Savings Bank’s market area. Any nominee for director made by the Committee must be highly qualified with regard to some or all these attributes. The Committee strives to have a Board with diverse experience in areas relevant to First Financial’s business. In searching for qualified director candidates to fill vacancies on the Board, the Committee solicits its current Board of Directors for names of potentially qualified candidates. Additionally, the Committee may ~~request that members~~use the services of ~~the Board of Directors pursue their own business contacts for the names of potentially~~a professional search firm to solicit qualified candidates. The Committee would then consider the potential pool of director candidates, select the candidate it believes best meets the then-current needs of the Board, and conduct a thorough investigation of the proposed candidate’s background to ensure there is no past history that would cause the candidate not to be qualified to serve as one of our directors. Although the Nominating and Corporate Governance Committee charter does not specifically provide for the consideration of shareholder nominees for directors, the Committee will consider director candidates recommended by a shareholder that are submitted in accordance with our Articles of Incorporation. Because our Articles of Incorporation provide a process for shareholder nominations, the Committee did not believe it was necessary to provide for shareholder nominations of directors in its charter. If a shareholder submits a proposed nominee, the Committee would consider the proposed nominee, along with any other proposed nominees recommended by members of our Board of Directors, in the same manner in which the Committee would evaluate its nominees for director. For a description of the proper procedure for shareholder nominations, see “Shareholder Proposals” in this Proxy Statement.

As noted above, the Nominating and Corporate Governance Committee considers a number of criteria when selecting new members of the Board. Those criteria as well as having strong personal attributes, including a record of achievement and an understanding of diverse backgrounds and experience, are considered to provide for diversity on our Board of Directors. These diversity factors are considered when the Nominating and Corporate Governance Committee and Board are seeking to fill a vacancy or new seat on the Board.

~~Awards Committee.~~ The Awards Committee consists of Directors Lee (Chair), Kohlwes and Anderson, and is responsible for making awards under the 2008 Equity Incentive Plan and administering the Plan. The Committee did not meet during the year ended December 31, 2011.

Executive Committee. The Executive Committee, consisting of ~~Directors Karpiak (Chairman)~~Director Kiley (Chair) and any two non-employee directors, acts for the Board of Directors when formal Board action is required between regular meetings. The Committee has the authority to exercise all powers of the full Board of Directors, except that it does not have the power to act in place of the Audit, Compensation, or Nominating and Corporate Governance committees. The Executive Committee ~~met three times~~did not meet during the year ended December 31, ~~2011.~~2013.

Leadership Structure

~~The~~In 2013, the Board decided to separate the roles of ~~Directors believes that our~~Chairman and Chief Executive Officer ~~is best situated~~with the role of Chairman now being filled by an independent director to ~~serve as Chairman because he is the director most familiar with our business and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy.~~provide more independent oversight. To supplement information flow, the entire Management Committee, which represents all business lines, attends each Board Meeting. The Board recognizes that independent directors and management have different perspectives and roles in developing our strategy. Our independent directors bring experience, oversight and expertise from outside First Financial and the financial services industry, while the Chief Executive Officer brings ~~company-specific experience and~~a wealth of banking expertise. The Board believes that separating the ~~combined role~~roles of Chairman and Chief Executive Officer promotes a more dynamic strategic development and ~~execution and facilitates information flow between management and the Board,~~provides independent oversight, which are ~~essential~~important to effective governance.

One of the key responsibilities of the Board is to develop strategic direction and hold management accountable for the execution of that strategy once it is developed. ~~The Board believes that combining the role of Chairman and Chief Executive Officer is in the best interest of shareholders because it provides the appropriate measures for strategic development.~~ To provide oversight and balance to management, the Board has established a practice of holding executive sessions consisting of non-management directors as needed. ~~Although~~The non-management directors also meet with independent service providers, such as the ~~Board does not have~~independent auditor, credit reviewer and internal auditor, as needed. The Chairman, or in his absence, a lead independent director, ~~an independent director is appointed to facilitate~~facilitates each executive session and ~~as facilitator has the responsibility of~~is responsible for consulting with the ~~Chairman and~~ Chief Executive Officer, acting as a liaison between management and the non-management directors.

Board Involvement in Risk Management Process

The Board of Directors and committees take an active role in overseeing management of First Financial’s risks. The Board regularly reviews information regarding our asset quality, liquidity, operations and regulatory standings, as well as the risks associated with each. The Compensation ~~Committee~~ and Awards Committee ~~are~~is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. To mitigate excessive risk taking by management, all incentive compensation plans remain strictly subjective and awards are made at the Committee’s sole discretion based on overall corporate performance, peer group data, management’s collective contribution and individual performance measurements. The ~~Audit~~Audit/ Compliance/Risk Committee oversees management of financial risks, ~~inclusive of~~including reviewing audited financial statements, engaging independent external auditors and internal auditors, and conducting discussions with management regarding quarterly and annual public filings. Our Nominating and Corporate Governance Committee manages risks associated with the independence of the Board of Directors and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about these risks.

As a result of First Savings Bank’s improved financial condition, the Bank’s Board of Directors changed its committee structure in 2013. The revised committee structure is intended to increase the Board’s oversight of the risk typically associated with the growth of the Bank. In recent years, the focus has been on the oversight of the Bank’s asset quality and resolving regulatory matters, which had required the Bank to suppress its growth. Now that the Bank is positioned for growth, additional emphasis will be placed on: (1) lending oversight through the Directors’ Loan Committee; (2) asset/liability management through a newly formed Bank Investments and Asset Liability Committee; and (3) asset classification and loan loss estimates through a newly formed Bank Internal Asset Review Committee. It is expected that these new Bank Board committees will provide more independent Board oversight and will reduce the scope and frequency of meetings of the First Financial’s Audit/Compliance/Risk Committee.

Corporate Governance

We are committed to establishing and maintaining high standards of corporate governance. Our executive officers and Board of Directors have worked together to establish a comprehensive set of corporate governance

initiatives that they believe will serve the long-term interests of our shareholders and employees. These initiatives are intended to comply with the provisions contained in the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted thereunder, and the Nasdaq rules. Our Board of Directors will continue to evaluate and improve our corporate governance principles and policies as necessary and as required.

Director Independence. Our common stock is listed on the Nasdaq Global Select Market. In accordance with Nasdaq requirements, at least a majority of our directors must be independent directors. The Board has determined that six of our eight directors are independent, as defined by Nasdaq. Directors Kohlwes, Faull, Lee, ~~Edlund,~~ Anderson, Stevens and ~~Stevens~~Padrick are all independent.

Code of Business Conduct and Ethics. On ~~May 18, 2011,~~June 19, 2013, the Board of Directors approved the Code of Business Conduct and Ethics. The Code is applicable to each of our directors, officers, including the principal executive officer and senior financial officers, and employees and requires individuals to maintain the highest standards of

professional conduct. A copy of the Code of Business Conduct and Ethics is available on our website at www.fsbnw.com.

Shareholder Communication with the Board of Directors. The Board of Directors welcomes communication from shareholders. Shareholders may send communications to the Board of Directors, First Financial Northwest, Inc., 201 Wells Avenue South, Renton, Washington 98057. Shareholders should indicate clearly the director or director(s) to whom the communication is being sent so that each communication may be forwarded appropriately.

Annual Meeting Attendance by Directors. First Financial encourages, but does not require, its directors to attend the annual meeting of shareholders. All directors attended last year’s annual meeting of shareholders.

Transactions with Related Persons. First Savings Bank has followed a policy of granting loans to officers and directors ~~which~~that fully complies with all applicable federal regulations. Loans to directors and executive officers are made in the ordinary course of business and on the same terms and conditions as those of comparable transactions with all customers prevailing at the time, in accordance with our underwriting guidelines, and do not involve more than the normal risk of collectibility or present other unfavorable features.

All loans made to our directors and executive officers are subject to federal regulations restricting loans and other transactions with affiliated persons of First Savings Bank. Loans and available lines of credit to all directors and executive officers and their associates totaled approximately ~~$545,000~~$548,000 at December 31, ~~2011,~~2013, which was less than ~~0.30~~one percent of our equity at that date. All loans to directors and executive officers were performing in accordance with their terms at December 31, ~~2011.~~2013. Total deposits of directors and executive officers were approximately ~~$3.5~~$1.9 million at December 31, ~~2011.~~2013.

We recognize that transactions between First Financial, First Financial Diversified or First Savings Bank and any of its directors or executive officers can present potential or actual conflicts of interest and create the appearance that these decisions are based on considerations other than ~~the~~our best ~~interest of First Savings Bank.~~interests. Therefore, as a general matter, and in accordance with the ~~Bank’s~~First Financial Code of Business Conduct and Ethics Policy, ~~for Employees, Officers and Directors,~~ it is our preference to avoid such transactions. Nevertheless, we recognize that there are situations where such transactions may be in, or may not be inconsistent with, ~~the~~our best ~~interests of First Savings Bank.~~interests. Accordingly, ~~the Bank has~~we have adopted an informal policy ~~which~~that requires ~~its~~the Compensation and Awards Committee to review and, if appropriate, to approve or ratify any such transaction. In the event that a member of the Committee is a participant in the transaction, then that member is required to abstain from the discussion, approval or ratification process. Pursuant to the policy, the Committee will review any transaction in which First ~~Savings~~Financial or the Bank is or will be a participant and the amount involved exceeds $120,000, and in which any of the directors or executive officers had, has or will have a direct or indirect material interest. After its review, the Committee will only approve or ratify those transactions that are in, or are not inconsistent with, ~~the~~our best interests, ~~of First Financial and First Savings Bank,~~ as the Committee determines in good faith.

Director Edlund is a principal in the firm Edlund Associates, Inc., which is a landscape architecture company that provides design/building services. His company has a landscape maintenance contract with First Savings Bank pursuant to which the company was paid $28,761 in 2011.

DIRECTORS’ COMPENSATION

~~DIRECTORS’ COMPENSATION~~

The following table shows the compensation paid to our ~~non-employee~~ directors for the year ended December 31, ~~2011. Directors who are employees of First Financial or any of its subsidiaries are not compensated for their services as directors; accordingly, compensation information for Victor Karpiak,~~2013, other than Joseph W. Kiley III, who is our President and Chief Executive Officer, Richard P. Jacobson, our Chief Operating Officer and Chief Financial Officer, and Victor Karpiak, our former President and Chief Executive Officer, whose compensation is included in the section entitled “Executive Compensation.” The directors did not receive any stock ~~or option~~ awards ~~and we did not offer any~~or non-equity incentive compensation during this ~~period;~~period, nor did they participate in a pension plan or receive above-market earnings on deferred compensation; therefore, these columns have been omitted from the table.

Name	Fees Earned or Paid in Cash ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)(1)	Total ($)	Fees Earned or Paid in Cash ($)	Option Awards ($)	All Other Compensation ($)(1)	Total ($)

Robert L. Anderson	41,650	--	8,250	49,900	46,400	--	278	46,678
Harry A. Blencoe (2)	33,750	(3)	53,725 (4)	87,475
Gerald Edlund	42,900	--	41,511 (5)	84,411
Gary F. Faull	50,600	--	17,250	67,850	56,000	--	13,860	69,860
Gary F. Kohlwes	55,250	--	18,750	74,000	61,150	--	13,860	75,010
Joann E. Lee	47,600	--	17,250	64,850	54,500	--	9,360	63,860
Robert W. McLendon (2)	36,600	--	1,500	38,100
Kevin D. Padrick (2)					34,617	296,810 (3)	13,500	344,927
Daniel L. Stevens					44,225	--	18,000	62,225
M. Scott Gaspard (4)					4,700	--	--	4,700

Involuntary
Termination
($)
Involuntary Termination Following Change in Control ($) Early Retirement ($) Normal Retirement ($) Disability ($) Death ($)

Victor Karpiak
Employment Agreement (1) 792,600 1,184,937 -- -- -- --
Pension Plan -- -- 1,463,572 1,364,577 -- --
Supplemental Retirement Agreement -- -- -- -- -- --
Equity Incentive Plan (2) -- -- -- -- -- --

Kari A. Stenslie
Severance Agreement -- 538,200 -- -- -- --
Pension Plan (3) -- -- -- -- -- --
Equity Incentive Plan (2) -- -- -- -- -- --

Roger Elmore
Severance Agreement -- 523,250 -- -- -- --
Pension Plan -- -- 99,323 248,072 -- --
Equity Incentive Plan (2) -- -- -- -- -- --

M. Scott Gaspard (4)

Severance Agreement -- -- -- -- -- --
Pension Plan -- -- 64,845 58,512 -- --
Equity Incentive Plan (2) -- -- -- -- -- --

Herman Robinson
Employee Severance Compensation Plan -- 200,000 -- -- -- --
Pension Plan (5) -- -- -- 15,299 -- --
Equity Incentive Plan (6) 18,700 93,500 -- -- -- 93,500

~~___________~~

	Involuntary Termination ($)	Involuntary Termination Following Change in Control ($)	Annual Early Retirement Benefit ($)		Annual Normal Retirement Benefit ($)	Disability ($)	Death ($)

Joseph W. Kiley III
Employment Agreement	425,000	1,270,750	--		--	212,500	35,417
Supplemental Retirement Agreement	--	--	--		28,000	--	200,000
Equity Incentive Plan	--	414,800	--		--	414,800	414,800

Richard P. Jacobson
Employment Agreement	264,000	789,360	--		--	132,000	22,000
Equity Incentive Plan	--	259,250	--		--	259,250	259,250

Herman L. Robinson
Severance Agreement		200,000	--		--	--	--
Pension Plan	--	--	--	(1)	3,667	--	44,004	(2)
Equity Incentive Plan	--	132,736	--		--	132,736	132,736

Simon Soh
Pension Plan	--	--	1,276	(3)	2,385	--	15,312
Equity Incentive Plan	--	265,472	--		--	265,472	265,472

Ronnie Clariza
Pension Plan	--	--	3,679	(3)	15,525	--	44,148

Victor Karpiak
Supplemental Retirement Agreement	--	--	--		78,000	--	200,000
Pension Plan	--	--	131,445	(3)	233,925	--	1,777,340

Kari A. Stenslie
Pension Plan	--	--	7,472	(3)	14,233	--	89,664

_________

(1)	~~Assumes two years remaining on Agreement.~~

~~(2)~~

~~The exercise price of unvested stock options and the value of restricted stock exceeded the closing price of First Financial’s common stock on December 31, 2011.~~

~~(3)~~

~~Ms. Stenslie is not yet eligible for early retirement benefits under the Pension Plan as it requires five years’ employment prior to vesting.~~

~~(4)~~

~~Resigned effective December 31, 2011.~~

~~(5)~~

Mr. Robinson has reached normal retirement age for purposes of the Pension Plan.

~~(6)~~(2)

~~Represents~~Does not include active service death benefit, which was terminated effective April 1, 2013.

(3)

Under the ~~difference between~~terms of the ~~option exercise price of $4.03 per share and~~Pension Plan, the ~~market value of $5.90 per share at December 31, 2011.~~executive may elect an early retirement benefit upon retirement prior to age 65, or may elect to have the full retirement benefit paid when the executive attains age 65.

Employment ~~Agreement for Chief Executive Officer.~~Agreements. ~~Victor Karpiak’s~~The employment ~~agreement provides~~agreements with Joseph W. Kiley III and Richard P. Jacobson provide for payments in the event of disability, death or termination. If ~~Mr. Karpiak~~either executive becomes entitled to benefits under the terms of our then-current disability plan, if any, or becomes otherwise unable to fulfill his duties under the employment agreement, he shall be entitled to receive such group and other disability benefits as are then provided for executive employees. In the event of ~~Mr. Karpiak’s~~either executive’s disability, his employment agreement will not be suspended, except that the obligation to pay his salary shall be reduced in accordance with the amount of any disability income benefits he receives such that, on an after-tax basis, he realizes from the sum of disability income benefits and his salary the same amount as he would realize on an after-tax basis from his salary if he had not become disabled. Upon a resolution adopted by a majority of the disinterested members of the Board of Directors or an authorized committee, we may discontinue payment of ~~Mr. Karpiak’s~~the executive’s salary beginning six months after a determination that he has become entitled to benefits under

the disability plan or is otherwise unable to fulfill his duties under the employment agreement. If Mr. Karpiak’s disability does not constitute a disability within the meaning of Section 409A of the Internal Revenue Code, then payments under the employment agreement will not begin until the earlier of the executive’s death or the sixth month anniversary of his separation from service.

In the event of either Mr. ~~Karpiak’s~~Kiley’s or Mr. Jacobson’s death while employed under ~~the~~an employment agreement and prior to any termination of employment, we will pay to his estate, or such person as he may have previously designated, the salary ~~which~~that was not previously paid to him and ~~which~~that he would have earned if he had continued to be employed under the agreement through the last day of the month in which he died, together with the benefits provided under the employment agreement through that date.

~~Mr. Karpiak’s~~The employment ~~agreement~~agreements also ~~provides~~provide for benefits in the event of ~~his~~either Mr. Kiley’s or Mr. Jacobson’s involuntary termination. If Mr. ~~Karpiak’s~~Kiley’s or Mr. Jacobson’s employment is terminated for any reason other than cause, or change in control, or he terminates his own employment because of a material diminution of or interference with his duties, responsibilities or benefits, including any of the following actions unless consented to:

(1) a requirement that he be based at any place other than Renton, Washington, or within a radius of 35 miles from the location of First Financial’s administrative offices; (2) a material demotion; (3) a material reduction in the number or seniority of personnel reporting to ~~him or a material reduction in the frequency with which, or in the nature of the matters with respect to which such personnel are to report to~~ him; (4) a 20 percent or more reduction in his ~~salary or a material adverse change in his perquisites, benefits or vacation;~~base salary; (5) a material permanent increase in the required hours of work or his workload; or (6) the failure of the ~~Boards~~First Savings Bank Board of Directors to elect ~~him~~Mr. Kiley as President and Chief Executive Officer ~~or any action by~~of the ~~Boards removing him from this office,~~Bank, we must pay ~~to Mr. Karpiak during the remaining term of~~certain benefits. The executive would receive his ~~employment agreement the~~ salary at the rate in effect immediately prior to the date of termination over the one-year period beginning on his date of termination. We would also be required to provide ~~Mr. Karpiak~~the executive during the ~~remaining term~~one-year period beginning on his date of ~~his agreement~~termination substantially the same group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance (if any) for the benefit of ~~Mr. Karpiak~~the executive and his dependents and beneficiaries who would have been eligible for such benefits if he had not suffered involuntary termination.

If Mr. ~~Karpiak’s~~Kiley’s or Mr. Jacobson’s employment is terminated during the year following the effective date of a change in control of First Financial or First Savings Bank, or he terminates his own employment following a change in control for any of the reasons listed in the previous paragraph, we must pay him a lump sum equal to 299 percent of his base amount (as defined in Section 280G of the Internal Revenue Code) and must provide, during the ~~remaining term~~one-year period beginning on his date of ~~the employment agreement~~termination, substantially the same group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance (if any) for the benefit of the executive and his dependents and beneficiaries who would have been eligible for such benefits if he had not suffered involuntary termination.

Section 280G of the Internal Revenue Code provides that severance payments that equal or exceed three times the individual’s base amount are deemed to be “excess parachute payments” if they are conditioned upon a change in control. Individuals are subject to a 20 percent excise tax on the amount of such excess parachute payments. If excess parachute payments are made, First Financial ~~Northwest~~ and First Savings Bank would not be entitled to deduct the amount of such excess payments. Mr. ~~Karpiak’s~~Kiley’s and Mr. Jacobson’s employment ~~agreement~~agreements provides that severance and other payments that are subject to a change in control will be reduced to the extent necessary to ensure that no amounts payable to the executive will be considered excess parachute payments.

Severance Agreement. We have entered into a severance agreement with Mr. ~~Elmore and Ms. Stenslie.~~Robinson. If First Savings Bank terminates ~~an executive’s~~his employment, other than for cause, or ~~an executive~~he terminates his ~~or her~~ own employment within 12 months following a change in control of First Financial or First Savings Bank for any of the reasons described above in the discussion of Messrs. Kiley’s and Jacobson’s employment agreements, Mr. ~~Karpiak’s employment agreement, the executive~~Robinson would be entitled to payment and benefits. The agreements require that First Savings Bank: (1) pay ~~the executive’s~~his salary through the day of termination, including the pro rata portion of any incentive award; (2) pay for the remaining term of the agreement ~~the executive’s~~his life, health and disability coverage; and (3) pay in a lump sum an amount equal to ~~299~~100 percent of ~~the executive’s~~his base amount (as defined in Section 280G of the Internal Revenue Code). Any payments to ~~an executive under the severance agreement~~Mr. Robinson are subject to reduction pursuant to Section 280G of the Internal Revenue Code to avoid excess parachute payments.

~~Employee Severance Compensation Plan.~~First Savings Bank previously established the First Savings Bank Northwest Employee Severance Compensation Plan to provide eligible employees with severance pay benefits in the event of a change in control of First Savings Bank or First ~~Financial. Mr. Robinson is covered by~~Financial based on length of employment and position. In 2013, the Compensation and Awards Committee recommended the elimination of this plan. ~~Potential benefits under~~Subsequently, the ~~plan are based on an employee’s position with First Savings Bank.~~

~~Under~~Board of Directors eliminated the plan, in the event of a change in control of First Savings Bank or First Financial Northwest, eligible employees who are terminated or who terminate their employment within one year for reasons specified under the severance plan will be entitled to receive a severance payment. If a participant whose employment has terminated has completed at least one year of service, the participant will be entitled to a cash severance payment equal to three months for service of one to two years, six months for service of two to three years, and six months plus one month for each year of continuous employment over three years up to a maximum of one and one-half times the participant’s annual compensation. A participant who is an assistant vice president of First Savings Bank prior to the change in control will receive a minimum payment equal to one-half of the participant’s annual compensation. Individuals who are vice presidents and above of First Savings Bank prior to the change in control will receive a minimum payment equal to the participant’s annual compensation.plan.

Equity Incentive Plan. The 2008 Equity Incentive Plan provides for accelerated vesting of awards in the event of a recipient’s death or disability, or a change in control. The plan provides that with respect to outstanding and unvested stock options, stock appreciation rights and restricted stock awards, the vesting date shall be accelerated to the date of the recipient’s death or disability, or the earliest date of the change in control.

Compensation and Awards Committee Interlocks and Insider Participation

The members of the Compensation and Awards Committee are Directors Lee, Kohlwes, Anderson, ~~Edlund~~Faull, Padrick and ~~Faull.~~Stevens. None of the members of the Compensation and Awards Committee of the First Financial Board of Directors has served as an officer or employee of First Financial or any of its subsidiaries or had any relationships otherwise requiring disclosure.

~~PROPOSAL 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION~~

PROPOSAL 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), we are required to include in this Proxy Statement and present at the meeting a non-binding shareholder resolution to approve the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the compensation of First Financial’s executives as disclosed in this Proxy Statement. The proposal will be presented at the annual meeting in the form of the following resolution:

RESOLVED, that the shareholders approve the compensation of First Financial Northwest, Inc.’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related material in First Financial’s Proxy Statement for the ~~2012~~2014 annual meeting of shareholders.

This vote will not be binding on our Board of Directors or Compensation and Awards Committee and may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty on the Board. It will also not affect any compensation paid or awarded to any executive. The Compensation and Awards Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.

The purpose of our compensation policies and procedures is to attract, retain and motivate key executives of proven ability who are critical to our future success. As discussed in the Compensation Discussion and Analysis section, the Compensation and Awards Committee believes that the executive compensation for ~~2011~~2013 is reasonable and appropriate, reflecting the peer group data range between the 50th and 75th percentile for base salaries. The subjective approach taken by the Committee, which focuses on fair compensation, without introducing incentive clauses and their unintended consequences, has effectively fulfilled the objective of retaining and attracting key executives with proven ability. During this challenging economic period, our compensation program was modified with a reduction of some benefits and the elimination of all bonuses; however, it still enabled us to replace certain management personnel with highly

experienced individuals greatly contributing to improved asset quality and earnings. The fair compensation model committed to by the Compensation and Awards Committee encourages a culture of teamwork with recognition that the performance of ~~the Company~~First Financial is shared by all. This, in turn, has proven to promote longevity with limited personnel turnover creating efficiencies that are aligned with the long-term interests of shareholders. The Compensation and Awards Committee will continue to review all elements of the executive compensation program and take any steps it deems necessary to continue to fulfill objectives outlined in the Compensation Discussion and Analysis.

The Board of Directors recommends that you vote “FOR” approval of the compensation of our named executive officers as disclosed in this Proxy Statement.

~~AUDIT COMMITTEE REPORT~~

AUDIT/COMPLIANCE/RISK COMMITTEE REPORT

The ~~Audit~~Audit/Compliance/Risk Committee of the First Financial Board of Directors reports as follows with respect to First Financial’s audited financial statements for the fiscal year ended December 31, ~~2011:~~2013:

•·	the ~~Audit~~Audit/Compliance/Risk Committee has completed its review and discussion of the ~~2011~~2013 audited financial statements with management;

•·

the ~~Audit~~Audit/Compliance/Risk Committee has discussed with the independent auditor, Moss Adams LLP, the matters required to be discussed by Statement on Auditing Standards ~~(��~~(“SAS”) No. 61, Communication with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T;

•·

the ~~Audit~~Audit/Compliance/Risk Committee has received written disclosures and the letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the ~~Audit~~Audit/Compliance/Risk Committee concerning independence, and has discussed with the independent auditor the independent auditor’s independence; and

•·

the ~~Audit~~Audit/Compliance/Risk Committee has, based on its review and discussions with management of the ~~2011~~2013 audited financial statements and discussions with the independent auditor, recommended to the Board of Directors that First Financial’s audited financial statements for the year ended December 31, ~~2011,~~2013, be included in its Annual Report on Form 10-K.

The foregoing report is provided by the following directors, who constitute the ~~Audit~~Audit/Compliance/Risk Committee:

~~Audit~~Audit/Compliance/Risk Committee:

Dr. Gary F. Kohlwes (Chairman)

Joann E. Lee

Gary F. Faull

This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under such acts.

~~SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE~~

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act requires our directors and executive officers, and persons who own more than 10 percent of First Financial’s common stock to report their initial ownership of the common stock and any subsequent changes in that ownership to the SEC. Directors, executive officers and greater than 10 percent shareholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. The SEC has established filing deadlines for these reports and we are required to disclose in this Proxy Statement any late filings or

failures to file. Based solely on our review of the copies of such forms we have received and written representations provided to us by the above referenced persons, we believe that, during the fiscal year ended December 31, ~~2011,~~2013, all filing requirements applicable to our reporting officers, directors and greater than 10 percent shareholders were properly and timely complied ~~with.~~with, except for one late filing on Form 3 covering one transaction by Mr. Clariza.

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
~~(Amendment No. 1)~~


Filed by the registrant ■[X]
Filed by a party other than the registrant ☐[ ]


Check the appropriate box:
■[ ]	Preliminary proxy statement
☐[ ]	Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
☐[X]	Definitive proxy statement
☐[ ]	Definitive additional materials
☐[ ]	Soliciting material pursuant to § 240.14a-12


FIRST FINANCIAL NORTHWEST, INC.
(Name of registrant as specified in its charter)


(Name of person(s) filing proxy statement, if other than the registrant)


Payment of filing fee (Check the appropriate box):
■[X]	No fee required.
☐[ ]	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)	Title of each class of securities to which transaction applies:
N/A
(2)	Aggregate number of securities to which transactions applies:
N/A
(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
N/A
(4)	Proposed maximum aggregate value of transaction:
N/A
(5)	Total fee paid:
N/A
☐[ ]	Fee paid previously with preliminary materials:
N/A
☐[ ]	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)	Amount previously paid:
N/A
(2)	Form, schedule or registration statement no.:
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(3)	Filing party:
N/A
(4)	Date filed:
N/A

	Sincerely,

	/s/~~Victor Karpiak~~ Gary F. Kohlwes

	~~Victor Karpiak~~Gary F. Kohlwes
	Chairman

Pay Element	What It Rewards	Purpose

Base Salary	Core competence in the executive’s role relative to skills, experience and contributions to First Financial and First Savings Bank	Provide fixed compensation based on competitive market price

~~Pay Element~~	~~What It Rewards~~	~~Purpose~~

Annual Incentive Compensation	Contributions toward First Savings Bank’s achievement of specified pre-tax profit	Provides annual performance based cash incentive compensation

Long-term Incentive (Equity-based) Compensation	Management development through retention and attracting new talent	Provides resources for implementation of corporate objectives, goals and growth strategies

Retirement Benefits	Executive officers are eligible to participate in employee benefit plans available to our eligible employees, including both ~~tax-qualified~~tax- qualified and nonqualified retirement plans

	The Chief Executive Officer has a supplemental retirement agreement ~~which~~that entitles him to additional retirement benefits subject to meeting certain minimum age and service requirements	Provides a long-term incentive for the retention of key officers

Additional Benefits and Perquisites	Executives participate in employee benefit plans, including pay protection via disability pay, generally available to our employees, including medical insurance	These benefits are a part of our broad-based total compensation program

	The Chief Executive Officer ~~receives~~and the Chief Financial Officer/Chief Operating Officer receive a car allowance	Assists in executive responsiveness for community based travel requirements

	Joann E. Lee (Chair)	~~Dr.~~ Gary F. ~~Kohlwes~~Faull
	Robert L. Anderson	~~Gerald Edlund~~Dr. Gary F. Kohlwes
	~~Gary F. Faull~~Kevin D. Padrick	Daniel L. Stevens

(1)	Unless otherwise noted, consists of ~~reimbursements~~dividends received on restricted stock, a stipend for travel to and from, and attendance at conferences and training sessions. For directors who live outside of Washington, also includes a travel stipend for attendance at Board meetings.
(2)	~~Messrs. Blencoe and McLendon submitted their resignations~~Mr. Padrick was appointed to the Board effective ~~December 31, 2011.~~March 14, 2013.
(3)	~~The present~~ Represents the grant date fair value of ~~Director Blencoe’s supplemental retirement agreement (described below) decreased~~100,000 stock options granted under the Stock Option Agreement (“Agreement”) between Mr. Padrick and Stilwell Value LLC dated as of March 15, 2013. The Agreement provides that the stock options awarded to Mr. Padrick vested immediately and will expire on the earlier of: (1) a change in control of First Financial, as defined in the Agreement; (2) March 15, 2016 or such other date mutually agreed to by ~~$14,248~~the parties pursuant to the Agreement; and (3) in ~~2011 and~~ the ~~present value~~event Mr. Padrick resigns or is removed from First Financial’s Board of ~~his pension plan decreased by $7,000.~~Directors.
(4)	~~Represents compensation received pursuant to Director Blencoe’s supplemental retirement agreement.~~
~~(5)~~	Director Edlund is a principal in Edlund Associates, Inc., a landscape design/construction firm; represents $28,761 in indirect compensation received through his firm pursuant to a landscape maintenance contract and $12,750 in reimbursements.Mr. Gaspard resigned effective March 20, 2013.

Name and Principal Position	Year	Salary ($)	Stock Awards ($)(1)	Option Awards ($)(1)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2)	All Other Compensation ($)(3)	Total ($)

Victor Karpiak	2011	396,300	--	--	578,476	42,211	1,016,987
Chairman, President and	2010	396,300	--	--	267,513	40,792	704,605
Chief Executive Officer	2009	388,500	--	--	363,408	98,093	850,001

Kari A. Stenslie	2011	180,000	--	--	39,000	30,540	249,540
Vice President and	2010	175,000	--	--	20,000	24,713	219,713
Chief Financial Officer	2009	158,000	--	--	11,000	33,649	202,649

Roger Elmore	2011	175,000	--	--	58,000	31,075	264,075
Senior Vice President and	2010	170,000	--	--	23,000	25,149	218,149
Chief Administrative Officer	2009	162,000	--	--	19,000	50,666	231,666

M. Scott Gaspard (4)	2011	191,250	--	--	46,000	29,170	266,420
Senior Vice President and	2010	191,250	--	--	30,000	29,089	250,339
External Affairs Officer	2009	197,767	267,200	107,360	23,000	20,688	616,015

Herman Robinson (5)	2011	200,000	--	--	16,000	21,559	237,559
Senior Vice President and	2010	108,637	128,960	64,000	--	1,615	303,212
Chief Lending Officer

(1)	Represents the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board Accounting Standards Topic 718, “Compensation - Stock Compensation.” For a discussion of valuation assumptions, see Note 1110 of the Notes to Consolidated Financial Statements in First Financial’s Annual Report on Form 10-K for the year ended December 31, ~~2011.~~2013.
(2)	~~Reflects~~Unless noted otherwise, reflects the increase in actuarial present values of each executive officer’s accumulated benefits under our Pension Plan and, with respect to ~~Mr.~~Messrs. Kiley and Karpiak, our Supplemental Retirement Plan. These values are set according to accounting requirements and do not reflect any increases in the officer’s benefit upon retirement.
(3)	Please see the table below for more information on the other compensation paid to our named executive officers in ~~2011. Amounts~~2013.
(4)	Mr. Kiley was hired effective September 17, 2012.
(5)	Mr. Jacobson was hired effective July 9, 2013.
(6)	Mr. Soh was not a named executive officer in ~~2010 and 2009 have been recalculated to be consistent with 2011 presentation. Previously, the amount First Financial had expensed for the ESOP loan payment~~2011.
(7)	Mr. Clariza was ~~included,~~not a named executive officer in ~~addition to the~~2012 or 2011.
(8)	The present value of the ~~ESOP shares allocated during the period.~~ accumulated benefit under Mr. Clariza’s pension plan account decreased by $17,000 in 2013.
(9)	Mr. Karpiak retired effective September 1, 2013.
(10)	Ms. Stenslie was separated from First Financial effective September 15, 2013.
(11)	The ~~recalculated figures appropriately include only the~~present value of the ~~ESOP shares allocated.~~accumulated benefit under Ms. Stenslie’s pension plan account decreased by $14,000 in 2013.

~~(4)~~	Mr. Gaspard resigned effective December 31, 2011, to become President of the Washington Financial League. On December 22, 2011, he was appointed as a director of First Financial and First Savings Bank, effective January 1, 2012.
~~(5)~~	~~Mr. Robinson was hired effective June 1, 2010.~~

Name	401(k) Plan Contribution ($)	ESOP Contribution ($)	Company Car Allowance ($)	Total ($)	401(k) Plan Contribu- tion ($)	ESOP Contribu- tion ($)	Company Car Allow- ance ($)	Housing ($)	Dividends on Unvested Restricted Stock ($)	Severance Compen- sation ($)	Board Fees ($)	Total ($)

Joseph W. Kiley III					--	--	10,800	25,500	5,600	--	--	37,100
Richard P. Jacobson					1,177	--	2,500	4,000	2,000	--	--	13,177
Herman L. Robinson					5,295	40,271	--	--	1,792	--	--	47,358
Simon Soh					5,444	35,915	--	--	3,584	--	--	44,943
Ronnie Clariza					3,894	23,522	--	--	512	--	--	27,928
Victor Karpiak	5,944	30,267	6,000	42,211	1,574	--	--	--	768	103,500	28,550	134,932
Kari A. Stenslie	4,153	26,387	--	30,540	3,808	--	--	--	512	45,002	--	49,322
Roger Elmore	5,249	25,826	--	31,075
M. Scott Gaspard	2,016	27,154	--	29,170
Herman Robinson	5,076	16,483	--	21,559

Name	Grant Date	All Other Stock Awards: Number of Shares of Stock or Units (#)	All Other Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)

Joseph W. Kiley III	09/18/13	--	50,000	10.69	229,192

Richard P. Jacobson	07/17/13	25,000	--	--	272,000
	07/17/13	--	60,000	10.88	178,086

Herman L. Robinson	--	--	--	--	--

Simon Soh	--	--	--	--	--

Ronnie Clariza	--	--	--	--	--

Victor Karpiak	--	--	--	--	--

Kari A. Stenslie	--	--	--	--	--

		Option Awards (1)				Stock Awards (1)			Option Awards (1)				Stock Awards (1)
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expira- tion Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expira- tion Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)

Joseph W. Kiley III								09/18/13	--	50,000	10.69	09/18/23	--	--
								09/19/12	10,000	40,000	8.01	09/19/22	40,000	414,800

Richard P. Jacobson								07/17/13	--	60,000	10.88	07/17/23	25,000	259,250

Herman L. Robinson								06/23/10	30,000	20,000	4.03	06/23/20	12,800	132,736

Simon Soh								10/17/12	10,000	40,000	8.14	10/17/22	25,600	265,472

Ronnie Clariza								07/03/08	50,000	--	9.78	07/03/18	--	--

Victor Karpiak	07/03/08	58,764	39,176	9.78	07/03/18	–	–	--	--	--	--	--	--	--
	08/21/08	–	–	–	--	38,400	226,560

Kari A. Stenslie	07/03/08	30,000	20,000	9.78	07/03/18	–	–	--	--	--	--	--	--	--
	09/10/08	–	–	–	--	12,800	75,520

Roger Elmore	07/03/08	30,000	20,000	9.78	07/03/18	–	–
	09/10/08	–	–	–	--	12,800	75,520

M. Scott Gaspard	01/21/09	30,000	20,000	8.35	01/21/19	–	–
	01/21/09	–	–	–	--	12,800	75,520

Herman Robinson	06/23/10	10,000	40,000	4.03	06/23/20	–	–
	06/23/10	–	–	–	--	25,600	151,040

	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)

Joseph W. Kiley III	--	--	10,000	106,100
Richard P. Jacobson	--	--	--	--
Herman L. Robinson	--	--	6,400	65,344
Simon Soh	--	--	6,400	68,096
Ronnie Clariza	--	--	6,400	70,272
Victor Karpiak	97,940	80,752	19,200	201,792
Kari A. Stenslie	50,000	52,922	6,400	70,272

Name	Plan Name	Number of Years Credited Service (#)(1)	Present Value of Accumulated Benefit ($)(2)	Payments During Last Fiscal Year ($)	Plan Name	Number of Years Credited Service (#)(1)	Present Value of Accumulated Benefit ($)(2)	Payments During Last Fiscal Year ($)

Joseph W. Kiley III					Supplemental Retirement Agreement	1.25	246,550	--

Richard P. Jacobson					--	--	--	--

Herman L. Robinson					Pension Plan	1.83	48,000	--

Simon Soh					Pension Plan	1.58	15,000	--

Ronnie Clariza					Pension Plan	8.67	47,000	--

Victor Karpiak	Pension Plan	30.833	1,593,000	--	Pension Plan	32.08	1,686,000	--
	Supplemental Retirement Agreement	15.000	896,792	--	Supplemental Retirement Agreement	15.00	877,705	--

Kari A. Stenslie	Pension Plan	2.833	70,000	--	Pension Plan	4.08	95,000	--

Roger Elmore	Pension Plan	6.167	122,000	--

M. Scott Gaspard	Pension Plan	29.917 (3)	99,000	--

Herman Robinson	Pension Plan	0.583	16,000	--

(1)	For the Pension Plan, reflects years credited, and for the supplemental retirement agreement, reflects benefit period.
(2)	Pension Plan accumulated benefits are based on the present value of accumulated future payments over an anticipated post retirement life of 20 years using a ~~4.40~~4.95 percent discount rate. Supplemental retirement agreement accumulated benefits reflect the present value of 180 future annual payments at the eligibility date using a 2.5 percent discount rate.
~~(3)~~	~~Mr. Gaspard previously participated in the plan through another employer.~~

	Involuntary Termination ($)		Involuntary Termination Following Change in Control ($)		Early Retirement ($)		Normal Retirement ($)		Disability ($)		Death ($)

Victor Karpiak
Employment Agreement (1)		792,600		1,184,937		--		--		--		--
Pension Plan		--		--		1,463,572		1,364,577		--		--
Supplemental Retirement Agreement		--		--		--		--		--		--
Equity Incentive Plan (2)		--		--		--		--		--		--

Kari A. Stenslie
Severance Agreement		--		538,200		--		--		--		--
Pension Plan (3)		--		--		--		--		--		--
Equity Incentive Plan (2)		--		--		--		--		--		--

Roger Elmore
Severance Agreement		--		523,250		--		--		--		--
Pension Plan		--		--		99,323		248,072		--		--
Equity Incentive Plan (2)		--		--		--		--		--		--

M. Scott Gaspard (4)
Severance Agreement		--		--		--		--		--		--
Pension Plan		--		--		64,845		58,512		--		--
Equity Incentive Plan (2)		--		--		--		--		--		--

Herman Robinson
Employee Severance Compensation Plan		--		200,000		--		--		--		--
Pension Plan (5)		--		--		--		15,299		--		--
Equity Incentive Plan (6)		18,700		93,500		--		--		--		93,500

	Years Ended				Years Ended December 31,
	December 31,				2013	2012
	2011		2010
Audit Fees	$	310,000	$	284,000	$312,000	$306,000
Audit-Related Fees		22,000		11,500	21,000	21,000
Tax Fees		78,000		49,500	29,000	50,000
All Other Fees		--		--	--	--

~~Name~~		~~Business Address~~

~~Robert L. Anderson~~		~~c/o First Financial Northwest, Inc.~~SECRETARY ~~201 Wells Avenue South, Renton, Washington 98057~~

~~Gerald Edlund~~		~~Edlund Associates, Inc.~~ ~~15005 SE 171~~st ~~Street, Renton, Washington 98058~~

~~Gary F. Faull~~		~~Gary F. Faull Law Offices~~ ~~321 Burnett Avenue South, Suite 201, Renton, Washington 98057~~

~~M. Scott Gaspard~~		~~Washington Financial League~~ ~~1501 Capitol Avenue South, Olympia, Washington 98501~~

~~Victor Karpiak~~		~~First Financial Northwest, Inc.~~ ~~201 Wells Avenue South, Renton, Washington 98057~~

~~Gary F. Kohlwes~~		~~c/o First Financial Northwest, Inc.~~ ~~201 Wells Avenue South, Renton, Washington 98057~~

~~Joann E. Lee~~		~~Joann Lee & Associates, CPAs,~~ ~~555 South Renton Village Place, Suite 770, Renton, Washington 98057~~

~~Daniel L. Stevens~~		~~c/o First Financial Northwest, Inc.~~ ~~201 Wells Avenue South, Renton, Washington 98057~~

~~Name~~		~~Principal Occupation~~

~~Roger Elmore~~		~~Senior Vice President and Chief Administrative Officer~~
~~Herman Robinson~~		~~Senior Vice President and Chief Lending Officer~~
~~Kari A. Stenslie~~		~~Vice President and Chief Financial Officer~~
~~Amy Farnham~~		~~Assistant Vice President, Investor Relations~~
~~Marva Bradley~~		~~Vice President, Deposit~~
~~Lonnie Malmassari~~		~~Assistant Vice President, Deposit~~

	~~Number of Shares~~	~~Percent of Shares~~
~~Name~~	~~Beneficially Owned (1)~~	~~Outstanding (%)~~

~~Amy Farnham~~	~~5,357~~	*
~~Marva Bradley~~	~~57,126~~	*
~~Lonnie Malmassari~~	~~17,482~~	*

~~Name~~	~~Date~~	~~Number~~ ~~of Shares~~	~~Transaction Description~~

~~Roger Elmore~~	~~12/31/11~~	~~4,468~~	~~Acquisition – ESOP allocation~~
	~~09/12/11~~	~~1,885~~	~~Disposition – Surrender of shares for tax withholding~~
	~~12/31/10~~	~~4,377~~	~~Acquisition – ESOP allocation~~

~~Gary F. Faull~~	~~12/14/10~~	~~1,500~~	~~Acquisition – Open market purchase~~
	~~05/12/10~~	~~1,000~~	~~Acquisition – Open market purchase~~

~~M. Scott Gaspard~~	~~12/31/11~~	~~4,602~~	~~Acquisition – ESOP allocation~~
	~~12/31/10~~	~~5,294~~	~~Acquisition – ESOP allocation~~
	~~12/08/10~~	~~10,000~~	~~Acquisition – Open market purchase~~

~~Victor Karpiak~~	~~12/31/11~~	~~5,130~~	~~Acquisition – ESOP allocation~~
	~~02/24/11~~	~~5,762~~	~~Acquisition – Open market purchase~~
	~~12/31/10~~	~~5,579~~	~~Acquisition – ESOP allocation~~
	~~11/16/10~~	~~7,261~~	~~Acquisition – Open market purchase~~
	~~05/07/10~~	~~5,000~~	~~Acquisition – Open market purchase~~
	~~03/09/10~~	~~4,302~~	~~Acquisition – Open market purchase~~

~~Gary F. Kohlwes~~	~~12/16/10~~	~~2,400~~	~~Acquisition – Open market purchase~~
	~~12/15/10~~	~~4,200~~	~~Acquisition – Open market purchase~~
	~~12/14/10~~	~~3,500~~	~~Acquisition – Open market purchase~~
	~~12/13/10~~	~~2,500~~	~~Acquisition – Open market purchase~~
	~~03/09/10~~	~~2,400~~	~~Acquisition – Open market purchase~~

		FOR	WITHHELD

1.	The election as director of the nominees listed below (except as marked to the contrary below).	[ ]	[ ]


	Three-year term:
	Gary F. Kohlwes
	Joseph W. Kiley III

	One-year term:
	Richard P. Jacobson

	INSTRUCTIONS: To withhold your vote for any individual nominee, write the nominee’s name on the line below.

		FOR	AGAINST	ABSTAIN

2.	Advisory (non-binding) approval of the compensation of our named executive officers.	[ ]	[ ]	[ ]

3.	The ratification of the appointment of Moss Adams LLP as the independent auditor for the year ending December 31, 2014.	[ ]	[ ]	[ ]

4.	In their discretion, upon such other matters as may
	properly come before the meeting.

The Board of Directors recommends a vote “FOR” all of the proposals.