NOTE 10. INTEREST RATE SWAPS The Company has entered into interest rate swap agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to the below noted borrowings. The interest rate agreements were 100% effective during the three and six months ended June 30, 2022. Accordingly, the changes in fair value on the interest rate swaps have been classified in accumulated other comprehensive income (loss). The fair value of the interest rate swap agreements are included in other assets and accrue and other liabilities, respectively, on the consolidated balance sheets. Information related to the Company’s interest rate swap agreements are noted below (in thousands): | | | | | | | | | | | | | Hedged Item | | Effective Date | | Maturity Date | | Rate | | Amount | | Fair Value as of June 30, 2022 | 2026 Term Loan (1) | | 5/21/2021 | | 5/21/2026 | | 0.80% + 0.10% +
applicable spread | | $ | 60,000 | | $ | 4,640 | 2027 Term Loan (2) | | 9/30/2021 | | 11/26/2024 | | 0.51%+ 0.10% +
applicable spread | | $ | 80,000 | | $ | 4,691 | 2027 Term Loan (3) | | 11/26/2024 | | 1/31/2027 | | 1.60%+ 0.10% +
applicable spread | | $ | 80,000 | | $ | 1,668 |
| (1) | Effective May 21, 2021, as amended on April 14, 2022 in connection with the 2026 Term Loan Amendment, the Company utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 0.80% plus the applicable spread on $60.0 million of the $100.0 million 2026 Term Loan balance. Prior to April 14, 2022, the swap was to fix LIBOR at a weighted average fixed interest rate of 0.81%) |
| (2) | Effective September 30, 2021, as amended on April 14, 2022 in connection with the 2027 Term Loan Amendment, the Company utilized interest rate swaps, inclusive of its redesignation of the existing $50.0 million interest rate swap entered into as of April 30, 2020, to fix SOFR and achieve a weighted average fixed interest rate of 0.51% plus the applicable spread on $80.0 million of the $100.0 million 2027 Term Loan balance. Prior to April 14, 2022, the swap was to fix LIBOR at a weighted average fixed interest rate of 0.53%. |
| (3) | The interest rate swap agreement hedges $80.0 million of the $100.0 million 2027 Term Loan balance under different terms and commences concurrent to the interest rate agreements maturing on November 26, 2024. |
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