Company: BOH
Filing Date: 2025-03-04
Form Type: 10-K
Source: 0000950170-25-031193
Chunk: 272

Company: BANK OF HAWAII CORP
Filing Date: 2025-03-04
Form: 10-K
Item: Item 8
Chunk 272
---
,240

        $
        52,246

        $
        53,025

97

Note 17.  Derivative Financial Instruments The Company uses derivative instruments to manage its exposure to market risks, including interest rate risk, and to assist customers with their risk management objectives. The Company designates certain derivatives as hedging instruments in a qualifying hedge accounting relationship, while other derivatives serve as economic hedges that do not qualify for hedge accounting. The Company is party to master netting arrangements with its financial institution counterparties. See Note 19 Balance Sheet Offsetting for more information. The Company enters into certain interest rate swap contracts that are matched to closed portfolios of fixed-rate residential mortgage loans and available-for-sale investments securities. These contracts have been designated as hedging instruments to hedge the risk of changes in the fair value of the underlying loans or investment securities due to changes in interest rates. The related contracts are structured so that the notional amounts reduce over time to generally match the expected amortization of the underlying loan or investment security.  During the year ended December 31, 2024, the Company terminated several interest rate swap agreements with a total notional value of $1.7 billion. These interest rate swap agreements were designated as fair value hedging instruments. The termination of the interest rate swaps resulted in a loss of $20.2 million, which was allocated to the assets of the respective closed portfolios and will be amortized to interest income over the contractual terms of those assets using the effective interest method. In 2024, the Company amortized $0.4 million of these losses to interest income. The notional amounts and fair values of the Company’s derivative financial instruments as of December 31, 2024 and 2023 were as follows: 

        December 31, 2024

        December 31, 2023

        (dollars in thousands)
         
        Notional Amount

        Fair Value

        Notional Amount

        Fair Value

        Derivatives designated as hedging instruments

          Interest Rate Swap Agreements 1
         
        $
        2,000,000

        $
        2,738

        $
        3,000,000

        $
        (48,672
        )

        Derivatives not designated as hedging instruments

        Interest Rate Lock Commitments

        1,534

        34

        5,899

        148

        Forward Commit