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Employee Benefits
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Employee Benefits

Note 14. Employee Benefits

The Company has defined contribution plans, defined benefit plans, and a postretirement benefit plan.

Defined Contribution Plans

The Bank of Hawaii Retirement Savings Plan (the “Savings Plan”) has three Company contribution components in addition to employee contributions: 1) 401(k) matching, as described below; 2) a 3% fixed amount based on eligible compensation; and 3) a discretionary value-sharing contribution.

Under the 401(k) matching component, participating employees may contribute up to 50% of their eligible compensation (within federal limits) to the Savings Plan. The Company makes matching contributions on behalf of participants equal to $1.25 for each $1.00 contributed by participants, up to 2% of the participants’ eligible compensation, and $0.50 for every $1.00 contributed by participants over 2%, up to 5% of the participants’ eligible compensation. A 3% fixed contribution and a discretionary value-sharing contribution, that is linked to the Company’s financial goals, are made regardless of whether the participating employee contributes to the Savings Plan and are invested in accordance with the participant’s selection of investment options available under the Savings Plan. The Company also has a non-qualified savings plan which covers certain employees with compensation exceeding Internal Revenue Service (“IRS”) limits on pay amounts in the allocation of the Savings Plan’s benefits. Total expense for all components of the Company’s defined contribution plans was $12.0 million for the year ended December 31, 2024 and $13.2 million for the years ended December 31, 2023 and 2022.

Defined Benefit Plans

The Company has two defined benefit plans (the “Pension Plans”). In 1995, the Company froze its non-contributory, qualified defined benefit retirement plan (the “Retirement Plan”) and the excess retirement plan (the “Excess Plan”), which covered employees of the Company and participating subsidiaries who met certain eligibility requirements. Beginning January 1, 2001, the Pension Plans no longer provided for compensation increases in the determination of benefits. The projected benefit obligation is equal to the accumulated benefit obligation due to the frozen status of the Pension Plans.

The assets of the Retirement Plan primarily consist of equity and fixed income mutual funds.

The Excess Plan is a non-qualified excess retirement benefit plan which covers certain employees of the Company and participating subsidiaries with compensation exceeding IRS limits on pay amounts applicable to the Pension Plan’s benefit formula. The Excess Plan has no plan assets. The Excess Plan’s projected benefit obligation and accumulated benefit obligation were $2.4 million and $2.6 million for December 31, 2024 and 2023, respectively.

Postretirement Benefit Plan

The Company’s postretirement benefit plan provides retirees hired before January 1, 2012, with medical and dental insurance coverage. For eligible participants that retired before 2008 and met certain age requirements, the Company and retiree share in the cost of providing postretirement benefits where both the employer and retiree pay a portion of the insurance premiums. Eligible participants who retired before 2008 who did not meet certain age requirements continued on the Company’s benefit plans, but pay for their full insurance premiums. Participants who retired on or after January 1, 2008, who had medical or dental coverage under the Company’s plans immediately before retirement and meet certain age and years of service requirements as of December 31, 2008, are also eligible to participate in the Company’s benefit plans, but must pay for their full insurance premiums. Retirees age 65 and older are provided with a Medicare supplemental plan subsidy. Most employees of the Company who have met certain eligibility requirements are covered by this plan. Participants who retired on or after January 1, 2008, who met certain age and/or years of service requirements, are eligible for the Health Reimbursement Account (“HRA”) program. The HRA program provides retirees with an initial credit based on years of service. Thereafter, an annual credit up to a maximum of $1,200 is provided into the HRA. The retiree may use the HRA for medical, vision, prescription drug and dental premiums, co-payments, and medically necessary health care expenses that are not covered by any medical or dental insurance program or flexible health spending account.

The plan provides access-only coverage for employees hired on or after January 1, 2012. These retirees continue on the medical and dental plan until age 65 paying the full premium. As of December 31, 2024 and 2023, the Company had no segregated assets to provide for postretirement benefits.

The following table provides a reconciliation of changes in benefit obligation and fair value of plan assets, as well as the funded status recognized in the Company’s consolidated statements of condition for the Pension Plans and postretirement benefit plan for the years ended December 31, 2024 and 2023.

 

 

 

Pension Benefits

 

 

Postretirement Benefits

 

(dollars in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Benefit Obligation at Beginning of Year

 

$

78,568

 

 

$

84,454

 

 

$

23,314

 

 

$

21,929

 

Service Cost

 

 

—

 

 

 

—

 

 

 

438

 

 

 

376

 

Interest Cost

 

 

4,078

 

 

 

4,468

 

 

 

1,242

 

 

 

1,186

 

Purchase

 

 

—

 

 

 

(4,115

)

 

 

—

 

 

 

—

 

Actuarial Losses (Gains)

 

 

(839

)

 

 

1,070

 

 

 

270

 

 

 

1,496

 

Employer Benefits Paid 1

 

 

(6,964

)

 

 

(7,309

)

 

 

(1,606

)

 

 

(1,673

)

Benefit Obligation at End of Year

 

$

74,843

 

 

$

78,568

 

 

$

23,658

 

 

$

23,314

 

Fair Value of Plan Assets at Beginning of Year

 

$

78,214

 

 

$

79,324

 

 

$

—

 

 

$

—

 

Actual Return on Plan Assets

 

 

3,029

 

 

 

9,846

 

 

 

—

 

 

 

—

 

Employer Contributions

 

 

462

 

 

 

468

 

 

 

1,606

 

 

 

1,673

 

Purchase

 

 

—

 

 

 

(4,115

)

 

 

—

 

 

 

—

 

Employer Benefits Paid 1

 

 

(6,964

)

 

 

(7,309

)

 

 

(1,606

)

 

 

(1,673

)

Fair Value of Plan Assets at End of Year

 

$

74,741

 

 

$

78,214

 

 

$

—

 

 

$

—

 

Funded Status at End of Year 2

 

$

(102

)

 

$

(354

)

 

$

(23,658

)

 

$

(23,314

)
1.
Participants' contributions relative to the postretirement benefit plan were offset against employer benefits paid in the table above. Participants' contributions for postretirement benefits were $0.8 million for the years ended December 31, 2024 and 2023.
2.
Amounts are recognized in Retirement Benefits Payable in the consolidated statements of condition.

The changes in actuarial losses (gains) related to the Company’s Pension Plans and postretirement benefit plans are mainly due to changes in discount rates for the years ended December 31, 2024 and 2023. For the year ended December 31, 2024, the change in discount rate resulted in a $1.3 million decrease to the Company’s Pension Plans liability and a $0.5 million decrease to the Company’s postretirement benefit plan liability. For the year ended December 31, 2023, the change in discount rate resulted in a $0.4 million increase to the Company’s Pension Plans liability and a $0.2 million increase to the Company’s postretirement benefit plan liability.

The following presents the amounts recognized in the Company’s accumulated other comprehensive income for the Pension Plans and postretirement benefit plan as of December 31, 2024 and 2023.

 

 

 

Pension Benefits

 

 

Postretirement Benefits

 

(dollars in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Amounts Recognized in Accumulated Other
   Comprehensive Income (Loss), Net of Tax

 

 

 

 

 

 

 

 

 

 

 

 

Net Actuarial Gains (Losses)

 

$

(28,033

)

 

$

(28,512

)

 

$

3,896

 

 

$

4,330

 

Net Prior Service Credit

 

 

—

 

 

 

—

 

 

 

741

 

 

 

922

 

Total Amounts Recognized in Accumulated Other
   Comprehensive Income (Loss), Net of Tax

 

$

(28,033

)

 

$

(28,512

)

 

$

4,637

 

 

$

5,252

 

 

Components of net periodic benefit cost for the Company’s Pension Plans and the postretirement benefit plan are presented in the following table for the years ended December 31, 2024, 2023 and 2022.

 

 

 

Pension Benefits

 

 

Postretirement Benefits

 

(dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

Service Cost

 

$

—

 

 

$

—

 

 

$

—

 

 

$

438

 

 

$

376

 

 

$

584

 

Interest Cost

 

 

4,078

 

 

 

4,468

 

 

 

3,097

 

 

 

1,242

 

 

 

1,186

 

 

 

861

 

Expected Return on Plan Assets

 

 

(4,705

)

 

 

(5,238

)

 

 

(4,840

)

 

 

—

 

 

 

—

 

 

 

—

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Service Credit 1

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(246

)

 

 

(246

)

 

 

(246

)

Net Actuarial Losses (Gains) 1

 

 

1,484

 

 

 

1,258

 

 

 

2,175

 

 

 

(321

)

 

 

(507

)

 

 

—

 

Net Periodic Benefit Cost

 

$

857

 

 

$

488

 

 

$

432

 

 

$

1,113

 

 

$

809

 

 

$

1,199

 
1.
Represents reclassification adjustments from accumulated other comprehensive income during the period.

Assumptions used to determine the benefit obligations as of December 31, 2024 and 2023 for the Company’s Pension Plans and postretirement benefit plan were as follows:

 

 

 

Pension Benefits

 

 

Postretirement Benefits

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Weighted Average Assumptions as of December 31:

 

 

 

 

 

 

 

 

 

 

 

 

Discount Rate

 

 

5.67

%

 

 

5.44

%

 

 

5.74

%

 

 

5.51

%

Health Care Cost Trend Rate Assumed For Next Year

 

 

—

 

 

 

—

 

 

 

7.10

%

 

 

6.90

%

Ultimate Trend Rate

 

 

—

 

 

 

—

 

 

 

4.00

%

 

 

4.00

%

Year That the Rate Reaches the Ultimate Trend Rate

 

 

—

 

 

 

—

 

 

2046

 

 

2047

 

Assumptions used to determine the net periodic benefit cost for the Company’s Pension Plans and postretirement benefit plan for the years ended December 31, 2024, 2023 and 2022 were as follows:

 

 

 

Pension Benefits

 

 

Postretirement Benefits

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

Weighted Average Assumptions as of December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount Rate

 

 

5.44

%

 

 

5.51

%

 

 

2.89

%

 

 

5.51

%

 

 

5.58

%

 

 

3.00

%

Expected Long-Term Rate of Return on Plan Assets

 

 

6.00

%

 

 

6.00

%

 

 

5.25

%

 

 

—

 

 

 

—

 

 

 

—

 

Health Care Cost Trend Rate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6.90

%

 

 

6.20

%

 

 

5.70

%

A combination of factors is used by management in determining the expected long-term rate of return on plan assets. Historical return experience for major asset categories are evaluated and current market factors, such as inflation and interest rates, are considered in determining the expected long-term rate of return assumption.

The Company expects to contribute $0.4 million to the Pension Plans and $1.7 million to the postretirement benefit plan in 2025.

As of December 31, 2024, expected benefits to be paid in each of the next five years and in the aggregate for the five years thereafter were as follows:

 

(dollars in thousands)

 

Pension
Benefits

 

 

Postretirement
Benefits

 

2025

 

$

7,207

 

 

$

1,701

 

2026

 

 

7,108

 

 

 

1,695

 

2027

 

 

7,001

 

 

 

1,759

 

2028

 

 

6,855

 

 

 

1,777

 

2029

 

 

6,708

 

 

 

1,829

 

Years 2030-2034

 

 

30,695

 

 

 

9,515

 

 

Retirement Plan Assets

The Company’s overall investment strategy is to maintain an adequate level of funding to secure current and future retiree benefits. This objective is based on a long-term investment horizon to maintain cash reserves sufficient to pay pension benefits and expenses, achieve the highest long-term rate of return practicable without taking excessive risk and de-risk in an orderly fashion. The long-term investment objective is to achieve an overall annualized total return, gross of fees, in line with the blended benchmark index comprised of 80% MSCI ACWI IMI Index and 20% Custom Growth Fixed Income Benchmark.

Subject to liquidity requirements, the asset allocation targets are 80% public global equity securities and 20% growth fixed income securities with a 10% to 15% range permitted from the strategic targets.

The fair values of the Retirement Plan assets as of December 31, 2024 and 2023 by asset category were as follows:

 

 

 

Fair Value Measurements as of December 31,

 

(dollars in thousands)

 

2024

 

 

2023

 

Cash

 

$

857

 

 

$

6,214

 

Collective Investment Funds

 

 

73,884

 

 

 

72,000

 

Total Investments at Fair Value

 

$

74,741

 

 

$

78,214

 

 

The fair value of the collective investment fund is based on net asset value of units as a practical expedient, and therefore the asset is not classified in the fair value hierarchy.