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Derivatives and Hedging
 9 Months Ended
Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Derivatives and Hedging
During the second quarter of 2023, Shentel entered into 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 beginning 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 expected outstanding debt (including expected future borrowings under the Term Loans). The Company uses the Swaps to manage its exposure to interest rate risk for its long-term variable-rate Term Loans.

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)September 30,
2023
Balance sheet line item of derivative financial instruments:
Prepaid expenses and other$1,321 
Deferred charges and other assets3,048 
Total derivatives designated as hedging instruments$4,369 
The hedge was determined to be highly effective and therefore all change in the fair value of the swaps was recognized through other comprehensive income. The Company recognized $1.1 million and $3.2 million of unrealized gains, net of deferred taxes totaling $0.4 million and $1.1 million, for the three and nine months ended September 30, 2023, respectively. Since the Company did not have outstanding interest rate swaps in the prior year period, there were no gains or losses recorded for the three or nine months ended September 30, 2022. Shentel expects to begin reclassifying amounts related to the Swaps from accumulated other comprehensive income to interest expense in May 2024 when the payment periods of the Swaps begin.