Preparing for a Seamless Transition from LIBOR for Existing Loans and Lines of Credit

Updated: July 2022

Banks and financial institutions across the U.S., including Sandy Spring Bank, are working to replace the interest rate index called LIBOR (London Inter-Bank Offered Rate) and transition to new indices. LIBOR has been used for certain types of loans, lines of credit and adjustable-rate mortgages (ARMs). 

Sandy Spring Bank has been preparing for the elimination of the LIBOR interest rate index, and work is well underway to make the transition to new interest rate indices easy for clients who currently have a loan, line of credit or ARM tied to the LIBOR index. 

LIBOR interest rates will not be published after June 30, 2023. Existing LIBOR-based loans, lines of credit and ARMs that are being serviced by Sandy Spring Bank will continue to use LIBOR as the benchmark index until LIBOR is no longer available in June 2023.

  • If you have a loan tied to the LIBOR interest rate index, you will receive an informational letter regarding the upcoming changes to LIBOR in mid-July 2022.
  • You do not need to take any action.  There is no change to your interest rate index at this time. You will also receive additional information by mail in 2023 outlining the change to your benchmark interest rate index well in advance of such change. Our goal is to ensure that the new benchmark interest rate index is consistent with your current index and in compliance with regulatory guidance when the change occurs in June 2023. 
  • You can refer to your account statement for your current interest rate and to your loan documentation for how that rate was determined. 

If you have a LIBOR-based loan at Sandy Spring Bank that comes up for renewal or requires an amendment before June 30, 2023, the Bank will work with you to amend the loan to replace the LIBOR index.

New Variable Rate Loans and Lines of Credit

Sandy Spring Bank now offers a couple of benchmark indices for new variable interest rate loans, lines of credit and ARMs. 

  • The benchmark index for new variable rate commercial transactions is SOFR (Secured Overnight Financing Rate). The Bank may also consider using Prime or other industry-accepted benchmarks, such as AMERIBOR® (American Interbank Offered Rate), when appropriate. 
  • AMERIBOR is the benchmark index for new wealth-secured lines of credit.
  • SOFR is the benchmark index for all new ARMs.

Thank you for trusting Sandy Spring Bank with your financial needs. See the Frequently Asked Questions below for additional information.

Should you have questions about the transition from LIBOR, please contact your relationship manager, branch manager, mortgage representative or the Client Service Center at 800.399.5919, option 2. 

Frequently Asked Questions (FAQs)

  • Question

    Why is LIBOR being discontinued?

    Answer

    The US dollar-based LIBOR was used nationally by financial institutions as the index rate for many types of commercial and consumer loans, as well as adjustable rate mortgages (ARMs). However, concerns about LIBOR’s transparency following the financial crisis in 2008 caused regulators to consider alternative reference rate options.

    As a result, LIBOR, as a benchmark interest rate, will be phased out and will no longer be published after June 2023. Additionally, regulators have indicated that no new or modified loans can use LIBOR after December 2021. These changes to LIBOR affect all financial institutions.

  • Question

    What indices does Sandy Spring Bank offer for new adjustable rate mortgages (ARMs) and variable rate loans and lines of credit?

    Answer

    The Bank has several benchmark indices to replace LIBOR for new commercial loans, lines of credit and ARMs: 

    • The benchmark index for new variable rate commercial transactions is SOFR (Secured Overnight Financing Rate). The Bank may also consider using Prime or other industry-accepted benchmarks, such as AMERIBOR® (American Interbank Offered Rate), when appropriate. 
    • AMERIBOR is the benchmark index for new wealth-secured lines of credit. 
    • SOFR is the benchmark index for all new ARMs.
  • Question

    What should I do about my existing loan that has a LIBOR-based interest rate?

    Answer

    Existing LIBOR-based loans, lines of credit and ARMs will continue to use LIBOR as the benchmark index until LIBOR is no longer published, which is currently scheduled for June 30, 2023. We will send you some initial information regarding this change in July 2022. You do not need to take any action at this time.

    In 2023, we will send you additional information outlining any changes to your benchmark index well in advance of the effective date of such changes. Our goal is to ensure your new benchmark index is consistent with your current index and in compliance with regulatory guidance when the change occurs in June 2023. 

  • Question

    Can you provide additional information about SOFR and AMERIBOR®?

    Answer

    SOFR is transaction-based and a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. This rate is robust, and it meets U.S. and international standards. The New York Fed publishes daily SOFR interest rates and additional information.

    AMERIBOR is a stable, market driven benchmark interest rate that reflects the actual borrowing costs of thousands of small, medium and regional banks across America and is based on overnight unsecured lending. Learn more about AMERIBOR and the current interest rates.

Information on AMERIBOR and SOFR contained in this article came from their respective websites and is for informational purposes only. Sandy Spring Bank is not endorsing any third party sources cited herein, and makes no representation about the information published by such third party sources. Please consult your own professional advisors regarding your specific situation