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Derivatives
 9 Months Ended
Sep. 30, 2018
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 September 30, 2018 (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
 
$
12,423,155

 
$
45,983

 
$
(18,338
)
 
$
27,645

 
$
—

 
$
27,645

Interest rate swaps
 
1,702,731

 
46,160

 
(1,300
)
 
44,860

 
(13,307
)
 
31,553

Energy contracts
 
1,509,976

 
202,086

 
(67,611
)
 
134,475

 
(3,020
)
 
131,455

Agricultural contracts
 
26,318

 
1,024

 
(196
)
 
828

 
—

 
828

Foreign exchange contracts
 
148,824

 
146,719

 
—

 
146,719

 
—

 
146,719

Equity option contracts
 
89,606

 
4,144

 
—

 
4,144

 
(660
)
 
3,484

Total customer risk management programs
 
15,900,610

 
446,116

 
(87,445
)
 
358,671

 
(16,987
)
 
341,684

Internal risk management programs
 
1,064,113

 
23,887

 
(16,090
)
 
7,797

 
—

 
7,797

Total derivative contracts
 
$
16,964,723

 
$
470,003

 
$
(103,535
)
 
$
366,468

 
$
(16,987
)
 
$
349,481

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
12,160,590

 
$
43,074

 
$
(18,338
)
 
$
24,736

 
$
—

 
$
24,736

Interest rate swaps
 
1,702,731

 
46,162

 
(1,300
)
 
44,862

 
(3,844
)
 
41,018

Energy contracts
 
1,485,036

 
200,290

 
(67,611
)
 
132,679

 
(115,191
)
 
17,488

Agricultural contracts
 
26,316

 
998

 
(196
)
 
802

 
—

 
802

Foreign exchange contracts
 
145,943

 
143,817

 
—

 
143,817

 
(48
)
 
143,769

Equity option contracts
 
89,606

 
4,144

 
—

 
4,144

 
—

 
4,144

Total customer risk management programs
 
15,610,222

 
438,485

 
(87,445
)
 
351,040

 
(119,083
)
 
231,957

Internal risk management programs
 
4,079,094

 
36,520

 
(16,090
)
 
20,430

 
—

 
20,430

Total derivative contracts
 
$
19,689,316

 
$
475,005

 
$
(103,535
)
 
$
371,470

 
$
(119,083
)
 
$
252,387

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, 2017 (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
 
$
12,347,542

 
$
23,606

 
$
(18,096
)
 
$
5,510

 
$
—

 
$
5,510

Interest rate swaps
 
1,478,944

 
28,278

 
—

 
28,278

 
(4,964
)
 
23,314

Energy contracts
 
1,190,067

 
103,044

 
(47,873
)
 
55,171

 
(196
)
 
54,975

Agricultural contracts
 
53,238

 
1,576

 
(960
)
 
616

 
—

 
616

Foreign exchange contracts
 
132,397

 
129,551

 
—

 
129,551

 
(448
)
 
129,103

Equity option contracts
 
99,633

 
5,503

 
—

 
5,503

 
(920
)
 
4,583

Total customer risk management programs
 
15,301,821

 
291,558

 
(66,929
)
 
224,629

 
(6,528
)
 
218,101

Internal risk management programs
 
4,736,701

 
9,494

 
(7,093
)
 
2,401

 
—

 
2,401

Total derivative contracts
 
$
20,038,522

 
$
301,052

 
$
(74,022
)
 
$
227,030

 
$
(6,528
)
 
$
220,502

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
11,537,742

 
$
20,367

 
$
(18,096
)
 
$
2,271

 
$
(704
)
 
$
1,567

Interest rate swaps
 
1,478,944

 
28,298

 
—

 
28,298

 
(12,896
)
 
15,402

Energy contracts
 
1,166,924

 
101,603

 
(47,873
)
 
53,730

 
(42,767
)
 
10,963

Agricultural contracts
 
48,552

 
1,551

 
(960
)
 
591

 
—

 
591

Foreign exchange contracts
 
126,251

 
123,321

 
—

 
123,321

 
(53
)
 
123,268

Equity option contracts
 
99,633

 
5,503

 
—

 
5,503

 
—

 
5,503

Total customer risk management programs
 
14,458,046

 
280,643

 
(66,929
)
 
213,714

 
(56,420
)
 
157,294

Internal risk management programs
 
5,728,421

 
21,762

 
(7,093
)
 
14,669

 
—

 
14,669

Total derivative contracts
 
$
20,186,467

 
$
302,405

 
$
(74,022
)
 
$
228,383

 
$
(56,420
)
 
$
171,963

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, 2017 (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
 
$
14,244,442

 
$
38,875

 
$
(9,547
)
 
$
29,328

 
$
—

 
$
29,328

Interest rate swaps
 
1,368,210

 
27,016

 
—

 
27,016

 
(2,820
)
 
24,196

Energy contracts
 
983,794

 
45,368

 
(35,166
)
 
10,202

 
(238
)
 
9,964

Agricultural contracts
 
60,745

 
1,870

 
(1,172
)
 
698

 
—

 
698

Foreign exchange contracts
 
252,525

 
249,788

 
—

 
249,788

 
—

 
249,788

Equity option contracts
 
101,841

 
4,871

 
—

 
4,871

 
(920
)
 
3,951

Total customer risk management programs
 
17,011,557

 
367,788

 
(45,885
)
 
321,903

 
(3,978
)
 
317,925

Internal risk management programs
 
11,941,260

 
34,634

 
—

 
34,634

 
—

 
34,634

Total derivative contracts
 
$
28,952,817

 
$
402,422

 
$
(45,885
)
 
$
356,537

 
$
(3,978
)
 
$
352,559

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
14,244,442

 
$
34,948

 
$
(9,547
)
 
$
25,401

 
$
(374
)
 
$
25,027

Interest rate swaps
 
1,368,230

 
27,056

 
—

 
27,056

 
(16,599
)
 
10,457

Energy contracts
 
939,350

 
42,744

 
(35,166
)
 
7,578

 
—

 
7,578

Agricultural contracts
 
60,746

 
1,846

 
(1,172
)
 
674

 
—

 
674

Foreign exchange contracts
 
249,269

 
245,925

 
—

 
245,925

 
(1,395
)
 
244,530

Equity option contracts
 
101,841

 
4,871

 
—

 
4,871

 
—

 
4,871

Total customer risk management programs
 
16,963,878

 
357,390

 
(45,885
)
 
311,505

 
(18,368
)
 
293,137

Internal risk management programs
 
9,180,531

 
43,190

 
—

 
43,190

 
—

 
43,190

Total derivative contracts
 
$
26,144,409

 
$
400,580

 
$
(45,885
)
 
$
354,695

 
$
(18,368
)
 
$
336,327

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, 2018
 
September 30, 2017
 
 
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
 
$
7,272

 
$
—

 
$
9,181

 
$
—

Interest rate swaps
 
618

 
—

 
767

 
—

Energy contracts
 
541

 
—

 
378

 
—

Agricultural contracts
 
6

 
—

 
38

 
—

Foreign exchange contracts
 
78

 
—

 
164

 
—

Equity option contracts
 
—

 
—

 
—

 
—

Total customer risk management programs
 
8,515

 
—

 
10,528

 
—

Internal risk management programs
 
6,124

 
(2,847
)
 
(711
)
 
1,033

Total derivative contracts
 
$
14,639

 
$
(2,847
)
 
$
9,817

 
$
1,033


 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
September 30, 2018
 
September 30, 2017
 
 
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
 
$
21,677

 
$
—

 
$
26,413

 
$
—

Interest rate swaps
 
2,057

 
—

 
1,891

 
—

Energy contracts
 
5,097

 
—

 
4,917

 
—

Agricultural contracts
 
36

 
—

 
58

 
—

Foreign exchange contracts
 
350

 
—

 
524

 
—

Equity option contracts
 
—

 
—

 
—

 
—

Total customer risk management programs
 
29,217

 
—

 
33,803

 
—

Internal risk management programs
 
3,260

 
(11,589
)
 
5,307

 
3,824

Total derivative contracts
 
$
32,477

 
$
(11,589
)
 
$
39,110

 
$
3,824