Audit & Corporate Governance Committee Charter

Charter Of The Audit And Corporate Governance Committee

Purpose Of The Committee

The purpose of the Audit and Corporate Governance Committee (the "Committee") is to assist the Board of Directors (the "Board") of Hawaii National Bancshares, Inc. (the "Company") and Hawaii National Bank (the "Bank") in overseeing the audit function and in developing and reviewing the Guidelines on Corporate Governance.

Composition Of The Committee

The Committee shall be comprised of not less than three members of the Board. Each member of the Committee shall be an outside director who is not a large customer of the Company or the Bank and who is free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her objectivity as a member of the Committee. All members of the Committee shall have relevant banking or related financial expertise.

Responsibilities

Audit

The Committee's responsibilities in overseeing the audit function include:

• Selecting, evaluating and, where appropriate, replacing the external auditors subject to ratification by the shareholders.
• Approving the external auditors' fee arrangements and other terms of service and pre-approving any audit or non-audit services.
• Hiring, compensating, and reviewing the performance of the Internal Auditor.
• Providing continuing education and professional development opportunities for internal audit staff.
• Ensuring that internal and external auditors are independent and objective and fully qualified to audit the activities in which the Company and the Bank are engaged.
• Meeting regularly with internal and external auditors to ensure that the Company and the Bank have comprehensive audit coverage to meet the risks and demands posed by its current and planned activities.
• Reviewing and approving internal audit strategies, policies, programs, risk assessments, and organizational structure.
• Reviewing and approving annual audit plans and schedules and any subsequent changes.
• Reviewing the annual audited financial statements, the audit procedures and tests used in performing the annual audit, the annual internal control report, and other reports that may be provided by the external auditor.
• Resolving any disagreements between management and the external auditors regarding financial reporting.
• Meeting with bank examiners at least once during each supervisory cycle to discuss their findings and conclusions regarding audit.
• Monitoring and tracking to ensure timely and effective response by management to address the findings, conclusions, and recommendations of internal and external auditors and bank examiners.
• Reviewing and approving the regulatory compliance program.
• Adopting procedures for the receipt, retention, and treatment of complaints received by the Company or the Bank regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
• Maintaining minutes and other relevant records of the Committee's meetings and decisions.
• Reviewing the adequacy of this Charter at least annually.

Corporate Governance

The Committee's responsibilities in the area of corporate governance include:

• Reviewing the Insider Activities Policy at least annually, which addresses, among other things, honest and ethical behavior and the handling of confidential information and conflicts of interest for insiders (who include executive officers, directors, principal shareholders, and their related interests).
• Advising the Board on issues of corporate governance, including matters of conduct and conflicts of interest.
• Considering any other corporate governance issue that may arise from time to time.
• Developing the Guidelines on Corporate Governance and reviewing the adequacy of these Guidelines and this Charter at least annually.