Aloha Airlines, Bank of Hawaii and First Hawaiian Bank have agreed to reimburse the federal government $10.5 million for losses suffered by the defunct airline's three pension plans.

The U.S. Department of Labor announced the settlement with the three companies yesterday.

Under that settlement, about $9.55 million will be paid to the pension plans' trustee, the Pension Benefit Guaranty Corp., a federal agency that protects pension programs of bankrupt companies.

Another $955,000 was assessed as civil fines and will be paid to the federal government.

The settlement relates to $10 million that the pension plans invested in the airline as publicly traded stock.

The Labor Department alleged that Aloha and Bank of Hawaii caused or permitted the pension plans to buy newly issued stock of the airline's holding company in September 2000 for more than its fair market value and without investigating the merits of the stock purchase.

The government also said Aloha and Bank of Hawaii failed to take steps to protect the pension plans as the stock lost all of its value.

The department said the transaction also was prohibited under federal law because there was no purchaser independent of the stock issuer.

Aloha, which filed bankruptcy and shut down in March 2008, last month obtained bankruptcy court approval to pay the settlement, which includes $5 million to the pension plans and $500,000 in civil penalties to the federal government.

Almost $4 million of the settlement will go to the pension fund for the International Association of Machinists, according to bankruptcy court documents.

Bank of Hawaii and First Hawaiian each agreed to pay $2.5 million. Of the $5 million total, $4.55 million is for restitution and $455,000 is for civil penalties.

Bank of Hawaii spokesman Stafford Kiguchi yesterday said the bank disagrees with the Labor Department's contentions, but is pleased to have the long-contested issue resolved.

The Labor Department alleged that First Hawaiian, which managed a portion of the plans' investments not involved in the stock transaction, facilitated the stock transaction and therefore knowingly participated in fiduciary breaches or violated its duty as a co-fiduciary.

A First Hawaiian representative could not be reached yesterday.

In an earlier settlement agreement reached in September, PriceWaterhouseCoopers agreed to pay $250,000 to the pension plans and a $50,000 civil penalty. The Labor Department said the firm was the auditor for the plans and knowingly participated in fiduciary breaches.

The settlements related to Aloha were pursued by the Labor Department's Employee Benefits Security Administration, which last fiscal year obtained $1.2 billion in claims related to pension, 401(k), health and other benefit plans for beneficiaries.