| Derivatives and Hedging |
Derivatives and Hedging Shentel has pay fixed (2.90%) receive variable (one-month term SOFR) interest rate swaps totaling $150.0 million of notional principal (the “Swaps”). The Swaps contain monthly payment terms that became effective in May 2024, which extend through their maturity dates in June 2026. The Swaps are designated as cash flow hedges, representing 50% of the Company’s outstanding debt under Term Loan A-1 and Term Loan A-2. The Company uses the Swaps to manage its exposure to interest rate risk for its long-term variable-rate Term Loans.
The Swaps were determined to be highly effective hedges and therefore all change in the fair value of the Swaps was recognized in accumulated other comprehensive income.
The table below presents the fair value of the Swaps as well as their classification in the unaudited condensed consolidated balance sheets. The fair value of these instruments was estimated using an income approach and observable market inputs (Level 2): | | | | | | | | | | | | | (in thousands) | June 30,
2025 | | December 31,
2024 | | Balance sheet line item of derivative financial instruments: | | | | | Prepaid expenses and other | $ | 1,354 | | | $ | 1,766 | | | Deferred charges and other assets | — | | | 721 | | | Total derivatives designated as hedging instruments | $ | 1,354 | | | $ | 2,487 | |
The table below summarizes changes in accumulated other comprehensive income by component: | | | | | | | | | | | | | | | | | | | | | | (in thousands) | | Gain on Swaps | | Income tax expense | | Accumulated Other Comprehensive Income, net of taxes | | Balance, March 31, 2025 | | $ | 1,657 | | | $ | (434) | | | $ | 1,223 | | Net change in unrealized gain | | 239 | | | (57) | | | 182 | | Amounts reclassified to interest expense | | (542) | | | 137 | | | (405) | | Net current period other comprehensive (loss) income | | (303) | | | 80 | | | (223) | | | Balance, June 30, 2025 | | $ | 1,354 | | | $ | (354) | | | $ | 1,000 | |
| | | | | | | | | | | | | | | | | | | | | | (in thousands) | | Gain on Swaps | | Income tax expense | | Accumulated Other Comprehensive Income, net of taxes | | Balance, December 31, 2024 | | $ | 2,487 | | | $ | (634) | | | $ | 1,853 | | Net change in unrealized loss | | (53) | | | 13 | | | (40) | | Amounts reclassified to interest expense | | (1,080) | | | 267 | | | (813) | | Net current period other comprehensive (loss) income | | (1,133) | | | 280 | | | (853) | | | Balance, June 30, 2025 | | $ | 1,354 | | | $ | (354) | | | $ | 1,000 | |
| | | | | | | | | | | | | | | | | | | | | | (in thousands) | | Gain on Swaps | | Income tax expense | | Accumulated Other Comprehensive Income, net of taxes | | Balance, March 31, 2024 | | $ | 4,361 | | | $ | (1,099) | | | $ | 3,262 | | Net change in unrealized gain | | 725 | | | (154) | | | 571 | | | Amounts reclassified to interest expense | | (536) | | | 108 | | | (428) | | Net current period other comprehensive (loss) income | | 189 | | | (46) | | | 143 | | | Balance, June 30, 2024 | | $ | 4,550 | | | $ | (1,145) | | | $ | 3,405 | |
| | | | | | | | | | | | | | | | | | | | | | (in thousands) | | Gain on Swaps | | Income tax expense | | Accumulated Other Comprehensive Income, net of taxes | | Balance, December 31, 2023 | | $ | 2,241 | | | $ | (573) | | | $ | 1,668 | | Net change in unrealized gain | | 2,845 | | | (680) | | | 2,165 | | | Amounts reclassified to interest expense | | (536) | | | 108 | | | (428) | | Net current period other comprehensive (loss) income | | 2,309 | | | (572) | | | 1,737 | | | Balance, June 30, 2024 | | $ | 4,550 | | | $ | (1,145) | | | $ | 3,405 | |
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