In March 2019, we terminated our previous credit agreement with Manufacturers and Traders Trust Company (“M&T”) and entered into a new credit agreement with M&T. The new credit agreement relates to a $

30.0

million unsecured revolving line of credit. The line of credit expires in

July 2020

. At September 30, 2019, we had no outstanding borrowings from M&T and had the ability to borrow up to $

30.0

million at

interest rates equal to M&T’s current prime rate or the then-current LIBOR rate plus 2.25%

. We pay a fee of 0.15% per annum on the loan commitment amount regardless of usage.

The credit a

greement requires our compliance with certain covenants. These covenants include minimum levels of our net worth, leverage ratio, statutory surplus and the A.M. Best ratings of our insurance subsidiaries. In addition, Atlantic States has guaranteed our payment obligations under the new credit agreement. We complied with all requirements of the credit agreement during the nine months ended September 30, 2019.

Atlantic States is a member of the FHLB of Pittsburgh. Through its membership, Atlantic States has the ability to issue debt to the FHLB of Pittsburgh in exchange for cash advances. In August 2019, Atlantic States repaid a variable-rate cash advance of

$35.0

million that was due in March 2020 and issued debt to the FHLB of Pittsburgh in exchange for a fixed-rate cash advance of $35.0 million that was outstanding at September 30, 2019. Atlantic States incurred a

pre-payment

penalty of $176,000 related to the early repayment of its previous cash advance. The new cash advance carries a fixed interest rate of

1.74%

and is due in August 2024.

The table below presents the amount of FHLB of Pittsburgh stock Atlantic States purchased, collateral pledged and assets related to Atlantic States’ membership in the FHLB of Pittsburgh at September 30, 2019.

Donegal Mutual holds a $5.0 million surplus note that MICO issued to increase MICO’s statutory surplus. The surplus note carries an interest rate of 5.00%, and any repayment of principal or payment of interest on the surplus note requires prior approval of the Michigan Department of Insurance and Financial Services.