| Derivatives [Text Block] |
(3) Derivatives Derivative instruments may be used by the Company as part of its interest rate risk management programs or may be offered to customers. All derivative instruments are carried at fair value and changes in fair value are reported in earnings as they occur. Credit risk is also considered in determining fair value.
When bilateral netting agreements or similar arrangements exist between the Company and its counterparties that create a single legal claim or obligation to pay or receive the net amount in settlement of the individual derivative contracts, the Company reports derivative assets and liabilities on a net by derivative contract type by counterparty basis.
Derivative contracts may require the Company to provide or receive cash margin as collateral for derivative assets and liabilities. Derivative assets and liabilities are reported net of cash margin when certain conditions are met. In addition, derivative contracts executed with customers under Customer Risk Management Programs may be secured by non-cash collateral in conjunction with a credit agreement with that customer. Access to collateral, in the event of default is reasonably assured. As of September 30, 2014, a decrease in BOK Financial's credit rating to below investment grade would increase our obligation to post cash margin on existing contracts by approximately $19 million. None of these derivative contracts have been designated as hedging instruments.
Customer Risk Management Programs BOK Financial offers programs to permit its customers to manage various risks, including fluctuations in energy, cattle and other agricultural products, and foreign exchange rates, or to take positions in derivative contracts. Customers may also manage interest rate risk through interest rate swaps used by borrowers to modify interest rate terms of their loans or to-be-announced securities used by mortgage banking customers to hedge their loan production. Derivative contracts are executed between the customers and BOK Financial. Offsetting contracts are executed between BOK Financial and other selected counterparties to minimize the risk of changes in commodity prices, interest rates or foreign exchange rates. The counterparty contracts are identical to customer contracts, except for a fixed pricing spread or fee paid to BOK Financial as profit and compensation for administrative costs and credit risk which is recognized over the life of the contracts and included in other operating revenue – brokerage and trading revenue in the Consolidated Statements of Earnings. Interest Rate Risk Management Programs BOK Financial may use derivative contracts in managing its interest rate sensitivity and as part of its economic hedge of the change in the fair value of mortgage servicing rights. Interest rate swaps are generally used to reduce overall asset sensitivity by converting specific fixed-rate liabilities to floating-rate based on LIBOR. As of September 30, 2014, BOK Financial had interest rate swaps with a notional value of $47 million used as part of the economic hedge of the change in the fair value of the mortgage servicing rights.
As discussed in Note 6, certain derivative contracts not designated as hedging instruments related to mortgage loan commitments and forward sales contracts are included in Residential mortgage loans held for sale on the Consolidated Balance Sheets. See Note 6 for additional discussion of notional, fair value and impact on earnings of these contracts. Forward sales contracts are not considered swaps under the Commodity and Futures Trading Commission final rules.
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at September 30, 2014 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets | | | Notional1 | | Gross Fair Value | | Netting Adjustments | | Net Fair Value Before Cash Collateral | | Cash Collateral | | Fair Value Net of Cash Collateral | Customer risk management programs: | | | | | | | | | | | | | Interest rate contracts | | | | | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | 13,125,309 |
| | $ | 48,913 |
| | $ | (25,263 | ) | | $ | 23,650 |
| | $ | — |
| | $ | 23,650 |
| Interest rate swaps | | 1,171,163 |
| | 34,148 |
| | — |
| | 34,148 |
| | (199 | ) | | 33,949 |
| Energy contracts | | 847,446 |
| | 32,005 |
| | (15,660 | ) | | 16,345 |
| | (3,499 | ) | | 12,846 |
| Agricultural contracts | | 49,943 |
| | 2,372 |
| | (470 | ) | | 1,902 |
| | — |
| | 1,902 |
| Foreign exchange contracts | | 336,755 |
| | 275,116 |
| | — |
| | 275,116 |
| | — |
| | 275,116 |
| Equity option contracts | | 202,883 |
| | 13,900 |
| | — |
| | 13,900 |
| | (554 | ) | | 13,346 |
| Total customer risk management programs | | 15,733,499 |
| | 406,454 |
| | (41,393 | ) | | 365,061 |
| | (4,252 | ) | | 360,809 |
| Interest rate risk management programs | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Total derivative contracts | | $ | 15,733,499 |
| | $ | 406,454 |
| | $ | (41,393 | ) | | $ | 365,061 |
| | $ | (4,252 | ) | | $ | 360,809 |
| | | | | | | | | | | | | | | | Liabilities | | | Notional¹ | | Gross Fair Value | | Netting Adjustments | | Net Fair Value Before Cash Collateral | | Cash Collateral | | Fair Value Net of Cash Collateral | Customer risk management programs: | | | | | | | | | | | | | Interest rate contracts | | | | | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | 13,702,440 |
| | $ | 45,889 |
| | $ | (25,263 | ) | | $ | 20,626 |
| | $ | — |
| | $ | 20,626 |
| Interest rate swaps | | 1,171,163 |
| | 34,316 |
| | — |
| | 34,316 |
| | (15,145 | ) | | 19,171 |
| Energy contracts | | 844,976 |
| | 35,583 |
| | (15,660 | ) | | 19,923 |
| | — |
| | 19,923 |
| Agricultural contracts | | 49,911 |
| | 2,404 |
| | (470 | ) | | 1,934 |
| | (1,888 | ) | | 46 |
| Foreign exchange contracts | | 336,661 |
| | 274,829 |
| | — |
| | 274,829 |
| | (1,729 | ) | | 273,100 |
| Equity option contracts | | 202,883 |
| | 13,900 |
| | — |
| | 13,900 |
| | — |
| | 13,900 |
| Total customer risk management programs | | 16,308,034 |
| | 406,921 |
| | (41,393 | ) | | 365,528 |
| | (18,762 | ) | | 346,766 |
| Interest rate risk management programs | | 47,000 |
| | 1,921 |
| | — |
| | 1,921 |
| | — |
| | 1,921 |
| Total derivative contracts | | $ | 16,355,034 |
| | $ | 408,842 |
| | $ | (41,393 | ) | | $ | 367,449 |
| | $ | (18,762 | ) | | $ | 348,687 |
|
| | 1 | Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract. |
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at December 31, 2013 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets | | | Notional | | Gross Fair Value | | Netting Adjustments | | Net Fair Value Before Cash Collateral | | Cash Collateral | | Fair Value Net of Cash Collateral | Customer risk management programs: | | | | | | | | | | | | | Interest rate contracts | | | | | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | 10,817,159 |
| | $ | 102,921 |
| | $ | (46,623 | ) | | $ | 56,298 |
| | $ | — |
| | $ | 56,298 |
| Interest rate swaps | | 1,283,379 |
| | 44,124 |
| | — |
| | 44,124 |
| | (731 | ) | | 43,393 |
| Energy contracts | | 1,263,266 |
| | 48,078 |
| | (29,957 | ) | | 18,121 |
| | (2,575 | ) | | 15,546 |
| Agricultural contracts | | 100,886 |
| | 2,060 |
| | (1,166 | ) | | 894 |
| | — |
| | 894 |
| Foreign exchange contracts | | 136,543 |
| | 136,543 |
| | — |
| | 136,543 |
| | (2,147 | ) | | 134,396 |
| Equity option contracts | | 210,816 |
| | 17,957 |
| | — |
| | 17,957 |
| | (3,472 | ) | | 14,485 |
| Total customer risk management programs | | 13,812,049 |
| | 351,683 |
| | (77,746 | ) | | 273,937 |
| | (8,925 | ) | | 265,012 |
| Interest rate risk management programs | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Total derivative contracts | | $ | 13,812,049 |
| | $ | 351,683 |
| | $ | (77,746 | ) | | $ | 273,937 |
| | $ | (8,925 | ) | | $ | 265,012 |
| | | | | | | | | | | | | | | | Liabilities | | | Notional | | Gross Fair Value | | Netting Adjustments | | Net Fair Value Before Cash Collateral | | Cash Collateral | | Fair Value Net of Cash Collateral | Customer risk management programs: | | | | | | | | | | | | | Interest rate contracts | | | | | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | 10,982,049 |
| | $ | 99,830 |
| | $ | (46,623 | ) | | $ | 53,207 |
| | $ | — |
| | $ | 53,207 |
| Interest rate swaps | | 1,283,379 |
| | 44,377 |
| | — |
| | 44,377 |
| | (17,853 | ) | | 26,524 |
| Energy contracts | | 1,216,426 |
| | 46,095 |
| | (29,957 | ) | | 16,138 |
| | (6,055 | ) | | 10,083 |
| Agricultural contracts | | 99,191 |
| | 2,009 |
| | (1,166 | ) | | 843 |
| | — |
| | 843 |
| Foreign exchange contracts | | 135,237 |
| | 135,237 |
| | — |
| | 135,237 |
| | (294 | ) | | 134,943 |
| Equity option contracts | | 210,816 |
| | 17,957 |
| | — |
| | 17,957 |
| | — |
| | 17,957 |
| Total customer risk management programs | | 13,927,098 |
| | 345,505 |
| | (77,746 | ) | | 267,759 |
| | (24,202 | ) | | 243,557 |
| Interest rate risk management programs | | 47,000 |
| | 3,628 |
| | — |
| | 3,628 |
| | — |
| | 3,628 |
| Total derivative contracts | | $ | 13,974,098 |
| | $ | 349,133 |
| | $ | (77,746 | ) | | $ | 271,387 |
| | $ | (24,202 | ) | | $ | 247,185 |
|
| | 1 | Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract. |
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at September 30, 2013 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets | | | Notional1 | | Gross Fair Value | | Netting Adjustments | | Net Fair Value Before Cash Collateral | | Cash Collateral | | Fair Value Net of Cash Collateral | Customer risk management programs: | | | | | | | | | | | | | Interest rate contracts | | | | | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | 12,455,689 |
| | $ | 224,392 |
| | $ | (99,970 | ) | | $ | 124,422 |
| | $ | (5,191 | ) | | $ | 119,231 |
| Interest rate swaps | | 1,361,499 |
| | 49,183 |
| | — |
| | 49,183 |
| | — |
| | 49,183 |
| Energy contracts | | 1,412,238 |
| | 73,293 |
| | (42,078 | ) | | 31,215 |
| | (606 | ) | | 30,609 |
| Agricultural contracts | | 262,770 |
| | 5,783 |
| | (3,430 | ) | | 2,353 |
| | — |
| | 2,353 |
| Foreign exchange contracts | | 164,970 |
| | 164,970 |
| | — |
| | 164,970 |
| | — |
| | 164,970 |
| Equity option contracts | | 212,452 |
| | 14,339 |
| | — |
| | 14,339 |
| | (3,360 | ) | | 10,979 |
| Total customer risk management programs | | 15,869,618 |
| | 531,960 |
| | (145,478 | ) | | 386,482 |
| | (9,157 | ) | | 377,325 |
| Interest rate risk management programs | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Total derivative contracts | | $ | 15,869,618 |
| | $ | 531,960 |
| | $ | (145,478 | ) | | $ | 386,482 |
| | $ | (9,157 | ) | | $ | 377,325 |
| | | | | | | | | | | | | | | | Liabilities | | | Notional1 | | Gross Fair Value | | Netting Adjustments | | Net Fair Value Before Cash Collateral | | Cash Collateral | | Fair Value Net of Cash Collateral | Customer risk management programs: | | | | | | | | | | | | | Interest rate contracts | | | | | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | 12,529,704 |
| | $ | 221,720 |
| | $ | (99,970 | ) | | $ | 121,750 |
| | $ | (118,166 | ) | | $ | 3,584 |
| Interest rate swaps | | 1,361,499 |
| | 49,518 |
| | — |
| | 49,518 |
| | (21,240 | ) | | 28,278 |
| Energy contracts | | 1,400,542 |
| | 71,971 |
| | (42,078 | ) | | 29,893 |
| | (10,762 | ) | | 19,131 |
| Agricultural contracts | | 261,782 |
| | 5,731 |
| | (3,430 | ) | | 2,301 |
| | (2,242 | ) | | 59 |
| Foreign exchange contracts | | 164,455 |
| | 164,455 |
| | — |
| | 164,455 |
| | — |
| | 164,455 |
| Equity option contracts | | 212,452 |
| | 14,339 |
| | — |
| | 14,339 |
| | — |
| | 14,339 |
| Total customer risk management programs | | 15,930,434 |
| | 527,734 |
| | (145,478 | ) | | 382,256 |
| | (152,410 | ) | | 229,846 |
| Interest rate risk management programs | | 47,000 |
| | 2,698 |
| | — |
| | 2,698 |
| | — |
| | 2,698 |
| Total derivative contracts | | $ | 15,977,434 |
| | $ | 530,432 |
| | $ | (145,478 | ) | | $ | 384,954 |
| | $ | (152,410 | ) | | $ | 232,544 |
|
| | 1 | Notional amounts for commodity contracts are converted into dollar-equivalent amounts based on dollar prices at the inception of the contract. |
The following summarizes the pre-tax net gains (losses) on derivative instruments and where they are recorded in the income statement (in thousands): | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | September 30, 2014 | | September 30, 2013 | | | Brokerage and Trading Revenue | | Gain (Loss) on Derivatives, Net | | Brokerage and Trading Revenue | | Gain (Loss) on Derivatives, Net | Customer Risk Management Programs: | | | | | | | | | Interest rate contracts | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | (131 | ) | | $ | — |
| | $ | (2,078 | ) | | $ | — |
| Interest rate swaps | | 967 |
| | — |
| | 679 |
| | — |
| Energy contracts | | 1,523 |
| | — |
| | 1,682 |
| | — |
| Agricultural contracts | | 26 |
| | — |
| | 69 |
| | — |
| Foreign exchange contracts | | 806 |
| | — |
| | 192 |
| | — |
| Equity option contracts | | — |
| | — |
| | — |
| | — |
| Total customer risk management programs | | 3,191 |
| | — |
| | 544 |
| | — |
| Interest Rate Risk Management Programs | | — |
| | (93 | ) | | — |
| | 31 |
| Total Derivative Contracts | | $ | 3,191 |
| | $ | (93 | ) | | $ | 544 |
| | $ | 31 |
|
| | | | | | | | | | | | | | | | | | | | Nine Months Ended | | | September 30, 2014 | | September 30, 2013 | | | Brokerage and Trading Revenue | | Gain (Loss) on Derivatives, Net | | Brokerage and Trading Revenue | | Gain (Loss) on Derivatives, Net | Customer Risk Management Programs: | | | | | | | | | Interest rate contracts | | | | | | | | | To-be-announced residential mortgage-backed securities | | $ | (67 | ) | | $ | — |
| | $ | (377 | ) | | $ | — |
| Interest rate swaps | | 1,998 |
| | — |
| | 2,214 |
| | — |
| Energy contracts | | 5,007 |
| | — |
| | 5,901 |
| | — |
| Agricultural contracts | | 127 |
| | — |
| | 254 |
| | — |
| Foreign exchange contracts | | 1,358 |
| | — |
| | 552 |
| | — |
| Equity option contracts | | — |
| | — |
| | — |
| | — |
| Total customer risk management programs | | 8,423 |
| | — |
| | 8,544 |
| | — |
| Interest Rate Risk Management Programs | | — |
| | 1,706 |
| | — |
| | (3,437 | ) | Total Derivative Contracts | | $ | 8,423 |
| | $ | 1,706 |
| | $ | 8,544 |
| | $ | (3,437 | ) |
Net interest revenue was not significantly impacted by the settlement of amounts receivable or payable on interest rate swaps for the three and nine months ended September 30, 2014 and 2013, respectively. |