The state’s two largest banks are joining a trend by companies on the mainland in giving employees bonuses of at least $1,000 and increasing the minimum wage to $15 an hour.
Bank of Hawaii, the state’s second-largest bank, said Friday afternoon it will give out $1,000 cash bonuses to 2,074 employees, or 95 percent of its workforce. The bank also will increase its minimum wage to $15 an hour.
First Hawaiian Bank, which had planned to make a similar announcement on Christmas, said later in the day it would give out $1,500 cash bonuses to 2,264 employees, or all but 11 members of its senior management team. The state’s largest bank also will increase its minimum wage to $15 an hour.
The changes came following the passage of the
$1.5 trillion Republican tax overhaul, which will save companies money by lowering income taxes. The federal corporate tax rate will be reduced to 21 percent from 35 percent beginning Jan. 1.
Bankoh, which has 2,173 employees, said it will reward all employees below the senior vice president level with the cash bonus, which will be payable next week.
The bank also said it will increase its minimum wage to $15 an hour, effective Jan. 1, from the current $12 an hour. That move will affect 565 employees and will put them well in excess of the new state minimum wage of $10.10 an hour, scheduled to go into effect Jan. 1. The current state minimum wage is $9.25 an hour.
Bankoh said the increase in the minimum wage brings it in line with the state’s “living wage,” which is often cited as approximately $30,000 annually for single individuals.
“Our employees are,
by far, our greatest asset,” Peter Ho, chairman, president and CEO of Bank of Hawaii, said in a statement. “It’s our pleasure to reward our team with this holiday opportunity. We’ve recently been thinking about increasing our minimum wage level throughout the organization to the living wage level. The adjustments to the corporate tax rate provided further momentum to execute on the plan.”
Both the bonuses and new minimum wage levels will apply to Bankoh’s Hawaii-based employees as well as employees in American Samoa, Guam, Saipan and Palau. The bank has 69 branches, including 64 in Hawaii.
The $1,000 bonuses will cost Bankoh $2.07 million. The increase in minimum wage to $15 an hour is expected to cost more than
$2 million, but the bank did not disclose an exact amount.
Altogether, that works out to a payout of more than
$4 million for the bank, which in 2016 had a net profit of $181.5 million.
Bankoh was taxed at the federal corporate rate of 30.1 percent last year and paid approximately $78 million in taxes.
The bank said its decision to give out the cash bonuses and increase the minimum wage was not a coordinated effort with mainland banks and that it couldn’t speak to why some mainland banks also increased the minimum wage to $15 an hour even though the “living wage” in their service areas would be different from Hawaii’s.
First Hawaiian said it will be increasing its minimum wage for the second time in three months. In October the bank said it adjusted the minimum teller wage to $12.75 an hour from $12 an hour, and now that wage will go up to $15 an hour starting Jan. 1. The move will affect 613 employees.
The $1,500 bonuses will cost First Hawaiian $3.4 million and be paid in early January. The increase in minimum wage to $15 an hour is expected to cost between $2 million and $3 million, the bank said.
Altogether, that works
out to a payout of roughly $6 million for the bank, which in 2016 had a net profit of $230.2 million.
First Hawaiian was taxed at the federal corporate rate of 35 percent in 2016 and paid about $91 million in taxes.
“One-time bonuses and minimum wage rates are great rewards we can share with our team members across the organization,” First Hawaiian Chairman and CEO Bob Harrison said in a statement. “This is also an opportunity for us to invest in future initiatives to ensure we are always providing the best possible service for our customers.”
The announcements by Bankoh and First Hawaiian follow in the footsteps of several mainland companies that have given their employees $1,000 bonuses, increased worker pay or both, after the passage of the tax bill.
Among mainland-based companies giving out bonuses, increasing wages or both are Bank of America Merrill Lynch, Wells Fargo, AT&T, Boeing, Fifth Third Bank, Comcast NBC Universal, Sinclair Broadcast Group and Texas Capital Bank.
Florida-based Raymond James Financial Services Inc. estimates that the corporate tax cut will boost earnings for the average U.S. bank by 18 percent.
