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Derivatives
 3 Months Ended
Mar. 31, 2020
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. 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.
 
Trading

BOK Financial may offer derivative instruments such as to-be-announced securities to mortgage banking customers to enable them to manage their market risk or to mitigate the Company's market risk of holding trading securities. Changes in the fair value of derivative instruments for trading purposes or used to mitigate the market risk of holding trading securities are included in Other operating revenue – Brokerage and trading revenue.

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. 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.

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.
The following table summarizes the fair values of derivative contracts recorded as “derivative contracts” assets and liabilities in the balance sheet at March 31, 2020 (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
 
2,632,062

 
132,346

 
(34
)
 
132,312

 
—

 
132,312

Energy contracts
 
2,097,638

 
583,117

 
(100,748
)
 
482,369

 
(413,946
)
 
68,423

Agricultural contracts
 
16,653

 
807

 
(715
)
 
92

 
—

 
92

Foreign exchange contracts
 
317,068

 
312,685

 
—

 
312,685

 
(25
)
 
312,660

Equity option contracts
 
77,973

 
1,162

 
—

 
1,162

 
(289
)
 
873

Total customer risk management programs
 
5,141,394

 
1,030,117

 
(101,497
)
 
928,620

 
(414,260
)
 
514,360

Trading
 
51,637,953

 
774,631

 
(371,512
)
 
403,119

 
(17,333
)
 
385,786

Internal risk management programs
 
765,572

 
22,837

 
(267
)
 
22,570

 
—

 
22,570

Total derivative contracts
 
$
57,544,919

 
$
1,827,585

 
$
(473,276
)
 
$
1,354,309

 
$
(431,593
)
 
$
922,716

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
2,632,062

 
132,622

 
(34
)
 
132,588

 
(122,237
)
 
10,351

Energy contracts
 
2,068,380

 
571,306

 
(100,748
)
 
470,558

 
—

 
470,558

Agricultural contracts
 
16,657

 
791

 
(715
)
 
76

 
—

 
76

Foreign exchange contracts
 
292,940

 
288,446

 
—

 
288,446

 
(621
)
 
287,825

Equity option contracts
 
77,973

 
1,162

 
—

 
1,162

 
—

 
1,162

Total customer risk management programs
 
5,088,012

 
994,327

 
(101,497
)
 
892,830

 
(122,858
)
 
769,972

Trading
 
54,719,502

 
804,059

 
(371,512
)
 
432,547

 
(5,037
)
 
427,510

Internal risk management programs
 
987,833

 
16,230

 
(267
)
 
15,963

 
—

 
15,963

Total derivative contracts
 
$
60,795,347

 
$
1,814,616

 
$
(473,276
)
 
$
1,341,340

 
$
(127,895
)
 
$
1,213,445

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, 2019 (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
 
2,464,478

 
49,100

 
(1,839
)
 
47,261

 
—

 
47,261

Energy contracts
 
2,151,096

 
144,906

 
(107,591
)
 
37,315

 
(38
)
 
37,277

Agricultural contracts
 
16,118

 
1,522

 
(22
)
 
1,500

 
—

 
1,500

Foreign exchange contracts
 
214,119

 
213,007

 
—

 
213,007

 
—

 
213,007

Equity option contracts
 
81,455

 
3,233

 
—

 
3,233

 
(660
)
 
2,573

Total customer risk management programs
 
4,927,266

 
411,768

 
(109,452
)
 
302,316

 
(698
)
 
301,618

Trading
 
69,721,932

 
131,561

 
(115,949
)
 
15,612

 
—

 
15,612

Internal risk management programs
 
1,268,180

 
6,226

 
(81
)
 
6,145

 
—

 
6,145

Total derivative contracts
 
$
75,917,378

 
$
549,555

 
$
(225,482
)
 
$
324,073

 
$
(698
)
 
$
323,375

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
2,464,478

 
49,194

 
(1,839
)
 
47,355

 
(43,932
)
 
3,423

Energy contracts
 
2,105,391

 
139,311

 
(107,591
)
 
31,720

 
(6,031
)
 
25,689

Agricultural contracts
 
16,139

 
1,507

 
(22
)
 
1,485

 
(1,485
)
 
—

Foreign exchange contracts
 
207,919

 
207,020

 
—

 
207,020

 
—

 
207,020

Equity option contracts
 
81,455

 
3,233

 
—

 
3,233

 
—

 
3,233

Total customer risk management programs
 
4,875,382

 
400,265

 
(109,452
)
 
290,813

 
(51,448
)
 
239,365

Trading
 
65,144,388

 
125,535

 
(115,949
)
 
9,586

 
—

 
9,586

Internal risk management programs
 
380,401

 
3,121

 
(81
)
 
3,040

 
(863
)
 
2,177

Total derivative contracts
 
$
70,400,171

 
$
528,921

 
$
(225,482
)
 
$
303,439

 
$
(52,311
)
 
$
251,128

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, 2020
 
March 31, 2019
 
 
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

 
$
—

Interest rate swaps
 
942

 
—

 
593

 
—

Energy contracts
 
2,007

 
—

 
226

 
—

Agricultural contracts
 
15

 
—

 
4

 
—

Foreign exchange contracts
 
258

 
—

 
154

 
—

Equity option contracts
 
—

 
—

 
—

 
—

Total customer risk management programs
 
3,222

 
—

 
6,677

 
—

Trading1
 
(40,655
)
 
—

 
(7,295
)
 
—

Internal risk management programs
 
—

 
18,420

 
—

 
4,667

Total derivative contracts
 
$
(37,433
)
 
$
18,420

 
$
(618
)
 
$
4,667


1 
Represents changes in fair value of to-be-announced securities and other derivative instruments held to mitigate market risk of trading securities portfolio, which is offset by changes in fair value of trading securities also include in Brokerage and Trading Revenue in the Consolidated Statements of Earnings.