our initial investment; we terminated our business arrangement with Swell and Elevate; we closed all of our customer accounts which had been opened using the Swell digital platform, and our director Paul K. Yonamine (who had been serving on Swell’s Board of Directors) resigned from Swell’s Board. In connection with our exit from Swell and Elevate, we also secured the right to use Swell’s technology for no payment/fee, and we secured an agreement that should Swell use its digital platform in the future for new products, Swell will pay our Company a fee subject to certain limits and conditions, the most significant being that Swell has no obligation to use its digital platform in which case no fee would be due to our Company. In 2023, prior to our termination of our business arrangement with Swell and Elevate, our Company paid Elevate $125 for use of Elevate’s technology and Elevate paid our Company $14,960 for contractual obligations respecting the Swell credit product, pursuant to contracts under the then/former business arrangement. The aforementioned business arrangement and related contracts did not have any material financial impact on our Company or Elevate, and was not for professional, consulting or advisory services.
Company Director Robert K.W.H. Nobriga is President and Chief Executive Officer of Tradewind Group, Inc. (“Tradewind”). Atlas Insurance Agency, Inc. (“Atlas”), Island Insurance Company, Limited (“Island Insurance”), Tradewind Insurance Company, Limited (“Tradewind Insurance”), and Hoike Networks, Inc. (“Hoike”) are all subsidiaries of Tradewind. Mr. Nobriga is Chairman of the Board of Directors of Atlas and Hoike, Vice Chairman of the Board of Directors of Island Insurance, and a director on the Board of Directors of Tradewind Insurance. In 2023, Atlas provided insurance agency services to the Company and received $138,956 in commissions (based on premiums for the Company’s corporate insurance policies with third-party insurance carriers totaling $1,575,960, of which the Company paid $2,970 and $178,354 to Island Insurance and Tradewind Insurance, respectively.) Hoike provided certain information technology technical support services, and third-party software, services and equipment, to the Company and received $406,690 (based on a total payment to Hoike of $1,966,617, which total includes $1,559,927 of passthrough costs to unrelated third parties for software licensing, cloud storage, and website hosting.) Mr. Nobriga is an employee of Tradewind and does not have any ownership in any of the aforementioned companies. The Company has been a customer of Atlas since 2000 and Atlas which was founded in 1929 is the largest insurance agency in Hawaii. The Company has engaged the aforementioned companies for many years due to their superior quality and value and given limited alternatives in Hawaii’s very small and geographically isolated island market. Mr. Nobriga had no involvement respecting the Company’s procurement of any of the aforementioned products and services, the cost of such products and services does not have any material financial impact on the Company or the other aforementioned companies, such products and services are not for professional, consulting or advisory services, such products and services were contracted for on market terms and not made on favorable or preferential terms, and the amounts do not exceed $1,000,000 and do not exceed 1% of the consolidated gross revenues of Tradewind.
Certain Relationships and Related Transactions
Ms. Thuy Nguyen-Martines, the wife of Company President and Chief Executive Officer, director and director nominee, Mr. Arnold Martines, was employed by the Bank from 2003 until March 31, 2023 and held the position of Senior Vice President and Senior Private Banking Manager, a non-executive officer position. During the period in 2023 (January 1, 2023 to March 31, 2023) when Ms. Nguyen-Martines was employed by the Bank, Ms. Nguyen-Martines’ total compensation, including salary, bonus, equity awards and other benefits, totaled approximately $51,000. During her employment with the Bank, Ms. Nguyen-Martines participated in the Company’s general benefit plans available to all similarly situated employees. Her compensation was commensurate with that of her peers and Mr. Martines did not have input into Ms. Nguyen-Martines’ compensation.
See also “Director Independence and Relationships” for additional information regarding certain relationships and related transactions.
Loans to Related Persons
The Bank, which is a wholly owned subsidiary of the Company, has made loans to directors and executive officers, their immediate family members, and companies in which they or their immediate family members have an interest, in the ordinary course of its business as a bank. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Bank and do not involve more than the normal risk of collectability or present other unfavorable features. As of the date of this Proxy Statement, all of these loans are pass-rated loans.
Policy Regarding Transactions with Related Persons
The Company has a Board approved written policy (“Policy Regarding Transactions with Related Persons”) which sets forth the process and procedures for the review, approval, ratification and disclosure of any transactions with a related person (“transaction” and “related person” being as defined by Item 404 of SEC Regulation S-K). Loans subject to the lending restrictions set forth in Federal Reserve Board Regulation O are reviewed by the Bank’s Board Directors’ Loan Committee and approved by the Bank’s Board. All other loans to related persons are reviewed by the Bank’s Board Directors’ Loan Committee and reported to the Audit Committee when up for credit approval or renewal. All other transactions with related persons are reviewed by the Company’s Audit Committee. Each director and executive officer is required to report to the Company transactions with the Company in which they have an interest.
