LIBOR transition

Stay in-the-know as First Financial Bank moves to a new rate benchmark.

What is LIBOR?

The London Inter-Bank Offered Rate or LIBOR is an industry interest rate benchmark which has been used by many international and US banks for decades, including First Financial. LIBOR is used as the basis for interest rates for a variety of business lending solutions and mortgages.

What to know about the upcoming LIBOR changes

The UK and US regulators, as well as The Alternative Reference Rates Committee (ARRC) are calling for the industry to phase out LIBOR. Please note, this announcement and transition only affects loans tied to LIBOR. If you have a loan priced using Prime, Treasury, etc. there will be no impact to that loan.

Although LIBOR won’t be phased out until mid-2023, our team started working on our transition plan in 2019. In the coming months (if not already), your First Financial Bank Relationship Manager will contact you to amend your current lending agreements if necessary. We want to ensure a seamless transition to a new index in mid-2023.

While the industry has not made a definitive decision on the replacement for LIBOR, there are several indices which are gaining market interest. These include SOFR (Secured Overnight Financing Rate), AFX Ameribor, Bloomberg BSBY, ICE Bank Yield Index and IHS Markit Credit Spread Rate. Below is a graph charting these rates. As you will see, these rates all follow a very similar path, but are slightly different. We continue to watch the markets closely to see what the best successor rate will be that results in a similar (if not exact) cost to our clients.


What's the timeline?

July 2017

FCA announces the industry will transition away from LIBOR.

December 2019

First Financial started including LIBOR fallback language in all new loans and any renewing loans.

October 2020

First Financial began ISDA Swap Protocol and started including LIBOR fallback language in all new swap transactions.

March 5, 2021

ICE Benchmark Administration and FCA announced cessation of certain LIBOR indexes.

May – September 2021

First Financial will complete amendment process for addition of fallback language to existing portfolio loans.

Fourth quarter 2021

Begin pricing new production using new index.

June 30, 2023

USD LIBOR Overnight, 1, 3, 6 and 12-month LIBOR will cease.

June 30, 2023

Migration of all LIBOR-based loans and other investments away from LIBOR to a new index must be complete.

Frequently asked questions

LIBOR is an interest-rate which has historically been a benchmark for unsecured money market funding, derivatives, loans, bonds, etc. and is used by many large international and US banks, including First Financial Bank.

Regulators including the Alternative Reference Rates Committee are calling for the finance industry to move away from LIBOR. There are a few factors for this move including limitations in LIBOR as a benchmark rate along with concerns about the stability of LIBOR in a stressed market.

New loans will no longer be tied to LIBOR by the end of 2021 and current loans will convert by mid-2023.

A team has been working since 2019 to determine a plan to guide the bank through this change. We are now executing this plan and will be contacting clients over the coming months to amend any current lending products utilizing LIBOR.

Our team identified loans that are impacted by this change. Your Relationship Manager will be reaching out to you to walk through any impacts and how FFB will help manage through this change.

We will begin using a new index for new production sometime in the fourth quarter of 2021, unless the industry moves to a new index sooner.

We anticipate converting current loans in the first half of 2023.