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Derivatives
 3 Months Ended
Mar. 31, 2019
Derivative Instrument Detail [Abstract]  
Derivatives [Text Block] Derivatives
 
Derivative instruments may be used by the Company as part of its internal 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. Deterioration in the credit rating of customer or other counterparties reduced the fair value of asset contracts. Deterioration of our credit rating could decrease the fair value of our derivative liabilities.

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.
 
None of these derivative contracts have been designated as hedging instruments for accounting purposes.

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, interest rates and foreign exchange rates with 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.
 
Internal Risk Management Programs
 
BOK Financial may use derivative contracts in managing its interest rate sensitivity, as part of its economic hedge of the change in the fair value of mortgage servicing rights and to mitigate the market risk of holding trading securities. Changes in the fair value of derivative instruments used in managing interest rate sensitivity and as part of the economic hedge of changes in the fair value of mortgage servicing rights are included in Other operating revenue – Gain (loss) on derivatives, net in the Consolidated Statements of Earnings. Changes in the fair value of derivative instruments used to mitigate the market risk of holding trading securities are included in Other operating revenue – Brokerage and trading revenue.

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.
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at March 31, 2019 (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
 
$
11,338,256

 
$
91,727

 
$
(33,983
)
 
$
57,744

 
$
—

 
$
57,744

Interest rate swaps
 
2,047,117

 
36,602

 
(8,296
)
 
28,306

 
(593
)
 
27,713

Energy contracts
 
1,501,876

 
123,485

 
(84,482
)
 
39,003

 
(10,130
)
 
28,873

Agricultural contracts
 
23,660

 
2,696

 
(64
)
 
2,632

 
—

 
2,632

Foreign exchange contracts
 
224,741

 
223,329

 
—

 
223,329

 
—

 
223,329

Equity option contracts
 
86,944

 
3,140

 
—

 
3,140

 
(930
)
 
2,210

Total customer risk management programs
 
15,222,594

 
480,979

 
(126,825
)
 
354,154

 
(11,653
)
 
342,501

Internal risk management programs
 
25,928,716

 
132,974

 
(116,252
)
 
16,722

 
—

 
16,722

Total derivative contracts
 
$
41,151,310

 
$
613,953

 
$
(243,077
)
 
$
370,876

 
$
(11,653
)
 
$
359,223

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
11,140,756

 
$
89,929

 
$
(33,983
)
 
$
55,946

 
$
(55,879
)
 
$
67

Interest rate swaps
 
2,047,117

 
36,644

 
(8,296
)
 
28,348

 
(14,345
)
 
14,003

Energy contracts
 
1,433,137

 
119,097

 
(84,482
)
 
34,615

 
(4,608
)
 
30,007

Agricultural contracts
 
23,636

 
2,662

 
(64
)
 
2,598

 
—

 
2,598

Foreign exchange contracts
 
219,893

 
218,400

 
—

 
218,400

 
(414
)
 
217,986

Equity option contracts
 
86,944

 
3,140

 
—

 
3,140

 
—

 
3,140

Total customer risk management programs
 
14,951,483

 
469,872

 
(126,825
)
 
343,047

 
(75,246
)
 
267,801

Internal risk management programs
 
27,041,772

 
151,686

 
(116,252
)
 
35,434

 
(3,537
)
 
31,897

Total derivative contracts
 
$
41,993,255

 
$
621,558

 
$
(243,077
)
 
$
378,481

 
$
(78,783
)
 
$
299,698

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, 2018 (in thousands):

 
 
Assets
 
 
Notional 1
 
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
 
$
10,671,151

 
$
92,231

 
$
(26,787
)
 
$
65,444

 
$
—

 
$
65,444

Interest rate swaps
 
1,924,131

 
36,112

 
(6,688
)
 
29,424

 
(7,934
)
 
21,490

Energy contracts
 
1,472,209

 
206,418

 
(60,983
)
 
145,435

 
(106,752
)
 
38,683

Agricultural contracts
 
21,210

 
842

 
(201
)
 
641

 
—

 
641

Foreign exchange contracts
 
184,990

 
183,759

 
—

 
183,759

 
—

 
183,759

Equity option contracts
 
89,085

 
2,021

 
—

 
2,021

 
(648
)
 
1,373

Total customer risk management programs
 
14,362,776

 
521,383

 
(94,659
)
 
426,724

 
(115,334
)
 
311,390

Internal risk management programs
 
15,909,988

 
50,410

 
(40,871
)
 
9,539

 
—

 
9,539

Total derivative contracts
 
$
30,272,764

 
$
571,793

 
$
(135,530
)
 
$
436,263

 
$
(115,334
)
 
$
320,929

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
Notional 1
 
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
 
$
10,558,151

 
$
90,388

 
$
(26,787
)
 
$
63,601

 
$
(63,596
)
 
$
5

Interest rate swaps
 
1,924,131

 
36,288

 
(6,688
)
 
29,600

 
(4,110
)
 
25,490

Energy contracts
 
1,434,247

 
202,494

 
(60,983
)
 
141,511

 
(1,490
)
 
140,021

Agricultural contracts
 
21,214

 
812

 
(201
)
 
611

 
—

 
611

Foreign exchange contracts
 
177,423

 
175,922

 
—

 
175,922

 
—

 
175,922

Equity option contracts
 
89,085

 
2,021

 
—

 
2,021

 
—

 
2,021

Total customer risk management programs
 
14,204,251

 
507,925

 
(94,659
)
 
413,266

 
(69,196
)
 
344,070

Internal risk management programs
 
19,634,642

 
66,422

 
(40,871
)
 
25,551

 
(7,315
)
 
18,236

Total derivative contracts
 
$
33,838,893

 
$
574,347

 
$
(135,530
)
 
$
438,817

 
$
(76,511
)
 
$
362,306

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
 
 
March 31, 2019
 
March 31, 2018
 
 
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
 
$
5,700

 
$
—

 
$
6,819

 
$
—

Interest rate swaps
 
593

 
—

 
756

 
—

Energy contracts
 
226

 
—

 
3,140

 
—

Agricultural contracts
 
4

 
—

 
15

 
—

Foreign exchange contracts
 
154

 
—

 
176

 
—

Equity option contracts
 
—

 
—

 
—

 
—

Total customer risk management programs
 
6,677

 
—

 
10,906

 
—

Internal risk management programs
 
(7,295
)
 
4,667

 
(1,883
)
 
(5,685
)
Total derivative contracts
 
$
(618
)
 
$
4,667

 
$
9,023

 
$
(5,685
)