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Derivatives
 3 Months Ended
Mar. 31, 2015
Derivative Instrument Detail [Abstract]  
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 March 31, 2015, 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 $22 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 March 31, 2015, 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 5, 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 5 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 March 31, 2015 (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
 
$
18,144,202

 
$
115,693

 
$
(38,135
)
 
$
77,558

 
$
—

 
$
77,558

Interest rate swaps
 
1,174,975

 
39,880

 
—

 
39,880

 
—

 
39,880

Energy contracts
 
651,548

 
133,391

 
(47,576
)
 
85,815

 
(62,118
)
 
23,697

Agricultural contracts
 
37,545

 
837

 
(367
)
 
470

 
—

 
470

Foreign exchange contracts
 
379,243

 
311,739

 
—

 
311,739

 
—

 
311,739

Equity option contracts
 
185,043

 
8,939

 
—

 
8,939

 
(100
)
 
8,839

Total customer risk management programs
 
20,572,556

 
610,479

 
(86,078
)
 
524,401

 
(62,218
)
 
462,183

Interest rate risk management programs
 
22,000

 
203

 
—

 
203

 
—

 
203

Total derivative contracts
 
$
20,594,556

 
$
610,682

 
$
(86,078
)
 
$
524,604

 
$
(62,218
)
 
$
462,386

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
17,920,104

 
$
111,977

 
$
(38,135
)
 
$
73,842

 
$
(61,094
)
 
$
12,748

Interest rate swaps
 
1,174,975

 
40,134

 
—

 
40,134

 
(23,121
)
 
17,013

Energy contracts
 
634,459

 
130,396

 
(47,576
)
 
82,820

 
—

 
82,820

Agricultural contracts
 
37,536

 
830

 
(367
)
 
463

 
—

 
463

Foreign exchange contracts
 
378,406

 
310,940

 
—

 
310,940

 
(13,716
)
 
297,224

Equity option contracts
 
185,043

 
8,939

 
—

 
8,939

 
—

 
8,939

Total customer risk management programs
 
20,330,523

 
603,216

 
(86,078
)
 
517,138

 
(97,931
)
 
419,207

Interest rate risk management programs
 
25,000

 
144

 
—

 
144

 
—

 
144

Total derivative contracts
 
$
20,355,523

 
$
603,360

 
$
(86,078
)
 
$
517,282

 
$
(97,931
)
 
$
419,351

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, 2014 (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
 
$
13,313,615

 
$
94,719

 
$
(39,359
)
 
$
55,360

 
$
—

 
$
55,360

Interest rate swaps
 
1,165,568

 
35,405

 
—

 
35,405

 
—

 
35,405

Energy contracts
 
579,801

 
141,166

 
(48,624
)
 
92,542

 
(71,310
)
 
21,232

Agricultural contracts
 
47,657

 
1,904

 
(1,256
)
 
648

 
—

 
648

Foreign exchange contracts
 
290,965

 
238,395

 
—

 
238,395

 
—

 
238,395

Equity option contracts
 
194,960

 
10,834

 
—

 
10,834

 
—

 
10,834

Total customer risk management programs
 
15,592,566

 
522,423

 
(89,239
)
 
433,184

 
(71,310
)
 
361,874

Interest rate risk management programs
 
—

 
—

 
—

 
—

 
—

 
—

Total derivative contracts
 
$
15,592,566

 
$
522,423

 
$
(89,239
)
 
$
433,184

 
$
(71,310
)
 
$
361,874

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
13,471,880

 
$
91,949

 
$
(39,359
)
 
$
52,590

 
$
(52,290
)
 
$
300

Interest rate swaps
 
1,165,568

 
35,599

 
—

 
35,599

 
(18,717
)
 
16,882

Energy contracts
 
579,801

 
142,839

 
(48,624
)
 
94,215

 
—

 
94,215

Agricultural contracts
 
47,418

 
1,908

 
(1,256
)
 
652

 
(596
)
 
56

Foreign exchange contracts
 
290,856

 
238,118

 
—

 
238,118

 
(6,703
)
 
231,415

Equity option contracts
 
194,960

 
10,834

 
—

 
10,834

 
—

 
10,834

Total customer risk management programs
 
15,750,483

 
521,247

 
(89,239
)
 
432,008

 
(78,306
)
 
353,702

Interest rate risk management programs
 
47,000

 
852

 
—

 
852

 
—

 
852

Total derivative contracts
 
$
15,797,483

 
$
522,099

 
$
(89,239
)
 
$
432,860

 
$
(78,306
)
 
$
354,554

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 March 31, 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
 
$
10,859,613

 
$
30,897

 
$
(20,219
)
 
$
10,678

 
$
—

 
$
10,678

Interest rate swaps
 
1,266,880

 
41,331

 
—

 
41,331

 
—

 
41,331

Energy contracts
 
1,207,861

 
53,440

 
(27,112
)
 
26,328

 
—

 
26,328

Agricultural contracts
 
111,960

 
4,208

 
(1,875
)
 
2,333

 
—

 
2,333

Foreign exchange contracts
 
123,278

 
123,278

 
—

 
123,278

 
—

 
123,278

Equity option contracts
 
208,977

 
17,939

 
—

 
17,939

 
(3,380
)
 
14,559

Total customer risk management programs
 
13,778,569

 
271,093

 
(49,206
)
 
221,887

 
(3,380
)
 
218,507

Interest rate risk management programs
 
—

 
—

 
—

 
—

 
—

 
—

Total derivative contracts
 
$
13,778,569

 
$
271,093

 
$
(49,206
)
 
$
221,887

 
$
(3,380
)
 
$
218,507

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
11,398,442

 
$
27,966

 
$
(20,219
)
 
$
7,747

 
$
—

 
$
7,747

Interest rate swaps
 
1,266,880

 
41,596

 
—

 
41,596

 
(17,388
)
 
24,208

Energy contracts
 
1,134,208

 
51,308

 
(27,112
)
 
24,196

 
(14,202
)
 
9,994

Agricultural contracts
 
105,518

 
4,174

 
(1,875
)
 
2,299

 
(2,287
)
 
12

Foreign exchange contracts
 
122,939

 
122,939

 
—

 
122,939

 
—

 
122,939

Equity option contracts
 
208,977

 
17,939

 
—

 
17,939

 
—

 
17,939

Total customer risk management programs
 
14,236,964

 
265,922

 
(49,206
)
 
216,716

 
(33,877
)
 
182,839

Interest rate risk management programs
 
47,000

 
2,660

 
—

 
2,660

 
—

 
2,660

Total derivative contracts
 
$
14,283,964

 
$
268,582

 
$
(49,206
)
 
$
219,376

 
$
(33,877
)
 
$
185,499

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, 2015
 
March 31, 2014
 
 
Brokerage
and Trading Revenue
 
Gain on Derivatives, Net
 
Brokerage
and Trading
Revenue
 
Gain on Derivatives, Net
Customer risk management programs:
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
 
 
 
 
 
 
To-be-announced residential mortgage-backed securities
 
$
8,250

 
$
—

 
$
5,381

 
$
—

Interest rate swaps
 
473

 
—

 
507

 
—

Energy contracts
 
1,341

 
—

 
871

 
—

Agricultural contracts
 
12

 
—

 
63

 
—

Foreign exchange contracts
 
245

 
—

 
219

 
—

Equity option contracts
 
—

 
—

 
—

 
—

Total customer risk management programs
 
10,321

 
—

 
7,041

 
—

Interest rate risk management programs
 
—

 
911

 
—

 
968

Total derivative contracts
 
$
10,321

 
$
911

 
$
7,041

 
$
968



Net interest revenue was not significantly impacted by the settlement of amounts receivable or payable on interest rate swaps for the three and three months ended March 31, 2015 and 2014, respectively.