BUSINESS OVERVIEW

2018

3BUSINESS OVERVIEW 2018 AFL

CONT

ENTS

04_ EDITORIAL

05_ A WORD FROM THE CHAIRMEN

06_ AGENCE FRANCE LOCALE GROUP: A DUAL COMPANY GOVERNANCE

08_ KEY FIGURES FOR 2018

10_ 2018 HIGHLIGHTS

12_ NEW MEMBERS IN 2018

14_ LOCAL AUTHORITIES: AFL-ST’S ONLY SHAREHOLDERS

15_ LOCAL AUTHORITIES: AFL’S ONLY BORROWERS

16_ INCREASINGLY DIVERSIFIED ACCESS TO FUNDING

17_ ACCESS TO AFL FUNDING: A FEW KEY FIGURES

18_ AGENCE FRANCE LOCALE GROUP FINANCIALS

20_ AFL GROUP SHAREHOLDERS: 302 AUTHORITIES AS OF APRIL

30, 2019

We used the loan to finance a developmental project on the left bank of the Allier. This €24 million project is a response to issues involving the environment, risk prevention (flooding), urban planning, quality of life for local residents and attractiveness to tourists.

Mathieu BOCQ, Deputy Managing Director, Resource Services and Local Services, Suburban Community of Vichy

We joined Agence France Locale for the attractive financing solutions and to increase competition in our municipal project financing consultations. Membership has been good for us – not only have we gotten very competitive interest rates thanks to AFL, it has forced our traditional banks to offer us loans with better interest rates, better withdrawal terms and greater flexibility of use.

Our community is experiencing considerable demographic growth, around three to four percent per year. This means that there are many projects underway locally. We used AFL exclusively for one of our projects: the completion of a school complex (pre-school, elementary, community park) for delivery in the fall of 2019. The total budget is €16 million, half of which is financed by borrowing. AFL loans enabled us to finance €2 million of it.»

Antoine VIELLIARD, Mayor of Saint-Julien-en-Genevois

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Allier left bank project, Suburban Community of Vichy

School complex construction, Saint-Julien-en-Genevois

5

EDITORIAL

A wordFROM THE CHAIRMEN

Agence France Locale reached new heights of growth in 2018.

For its fourth year of operation, it extended over €2.5 billion in credit to local authorities and granted over €800 million in loans in 2018 alone.

No fewer than 69 new authorities joined Agence France Locale in 2018, making the number of shareholder authorities 292 as of the end of the year.

Our members represent just over 15% of French local public debt and, according to the latest Finance Active study, Agence France Locale financed 5.1%

of long-term loans in 2018, just four years after its founding; this market share rises to 25% for AFL members only.

At the same time, it successfully continued its fundraising with a €625 million bond issue, which allowed it to expand and consolidate its investor base.

We are proud of the growth of the only bank fully owned and managed by local authorities.

This success is based on a model that pools French local authorities’ access to financial markets and redistributes them in the form of loans to its shareholders so they can finance investment in any type of equipment under the best possible conditions.

Thanks to this model and in accordance with the mandate entrusted to it by the member authorities, Agence France Locale supports local investment throughout the country, metropolises and suburbs, countries and overseas towns, small municipalities and large regions.

We look forward to continuing this momentum in 2019 – and we’re already part of the way there thanks to new members such as the Occitanie Region.

Yves Millardet, Chairman of the Executive Board of

Agence France Locale

Jacques Pélissard, Mayor of Lons-le-Saunier, Chairman of the Board of

Directors of Agence France Locale - Société Territoriale

Olivier Landel, Chief Executive Officer

of Agence France Locale – Société Territoriale

The year 2018 was a historic turning point for our country and our communities.

Faced with economic and regional inequalities, a lack of social well-being and disturbing climatic disruptions, more than ever, the citizens we serve want strong and visible actions to these major challenges, for us and for future generations.

As local elected officials, it is our responsibility to be part of a virtuous path to make our communities fair and sustainable places to live

that facilitate access to public services for all, job-creating economic development, intergenerational solidarity and social inclusion for everyone.

Far from theoretical or political discourse, as local elected officials of the regions, departments, metropolitan areas and municipalities of France, we expect concrete

decisions in this area. Many of us are calling for a new decentralization act so that communities can have the

resources and tools needed to meet these major challenges.

In 2013, after over ten years of action, we managed to create the first of our tools, a bank inspired by the Nordic model, fully owned by local authorities and fully dedicated to local public investment.

Our goal is to enable local authorities to always have access to financial resources under conditions that are transparent and fair for everyone, giving them leeway to invest, regardless of the policies and strategies of private banks, the market fluctuations that have become more obvious since the financial crisis and the recentralizing of access to credit by the French government.

Eleven local authorities signed the documents that created our institutions on October 22, 2013. Today, we have over 300 shareholder local and regional authorities, which act as ambassadors for the financial autonomy of communities.

Agence France Locale is much more than just a banking partner. It is a product of local governments. It is an expression of the values we hold dear: fairness, transparency, proximity, flexibility and solidarity.

It is the symbol of responsible and efficient management of public finances.

Through membership, each shareholder local authority contributes to making this historic creation a success and building a powerful tool for action and decentralization.

Richard Brumm, Vice-Chairman of the

Lyon Metropolitan Area in charge of finance,

Chairman of the Supervisory Board of

Agence France Locale

BUSINESS OVERVIEW 2018 AFL

7

Agence France Locale Group : A DUAL COMPANY GOVERNANCE

La Société Territoriale: A financial company

Agence France Locale:A specialized credit institution

Its shareholders: Owned exclusively by member local and regional authorities, which are its only shareholders: municipalities, departments, regions, groupings of municipalities and local government agencies

Its Shareholders: 99.99% owned by La Société Territoriale

Its mission: Promotion of AFL Group (among local authorities especially) and representation of the interests of member local and regional authorities;

Management of AFL Group membership;

Definition of the AFL Group’s strategic trajectories;

Management of the twofold guarantee system in place within the AFL Group.

Its mission: AFL Group operational management

Market financing

Granting of credit to shareholder member local and regional authorities

BOARD OF DIRECTORS AT DECEMBER 31, 2018

JACQUES PÉLISSARD I Chairman RICHARD BRUMM I Vice-Chairman

SUPERVISORY BOARD AT DECEMBER 31, 2018

RICHARD BRUMM I Chairman JACQUES PELISSARD I Vice-Chairman

LARS ANDERSSON I Founder of Kommuninvest

VICTOIRE AUBRY-BERRURIER I Member of the Executive Committee of Icade in charge of Finance, Legal, and Information Systems

FRANÇOIS DROUIN I Chairman of ETIFINANCE

NICOLAS FOURT I Deputy Managing Director of ACOFI Gestion

MÉLANIE LAMANT I Managing Director, Services of Établissement Public Territorial (EPT) - Plaine Commune

OLIVIER LANDEL I General Delegate of France Urbaine

and Chief Executive Officer of Agence France Locale - Société Territoriale

DANIEL LEBÈGUE I Chairman of the Observatory on Corporate Social Responsibility (ORSE, Observatoire sur la Responsabilité Sociétale des Entreprises)

ROLLON MOUCHEL-BLAISOT I Prefect, National Program Director of Action Coeur de Ville

CAROL SIROU I Chairman of Safineia Advisors LLC

MUNICIPALITIES:

MUNICIPALITY OF CONCHES-EN-OUCHE: Jérôme Pasco I First Deputy Mayor

MUNICIPALITY OF GRENOBLE: Hakim Sabri I Deputy Mayor in charge of Finance

GREATER NANCY METROPOLITAN AREA: Pierre Boileau I Vice-Chairman in charge of Finance

LILLE EUROPEAN METROPOLITAN AREA: Michel Colin I Vice-Chairman for Public Policy Assessment, Financial and Management Controls and Insurance

LYON METROPOLITAN AREA: Karine Dognin-Sauze I Vice-Chairman for Innovation, Smart Cities and Digital Development

STRASBOURG EUROPEAN METROPOLITAN AREA: Caroline Barrière I Vice-Chairman for Budgetary and Financial Oversight

MUNICIPALITY OF ROQUEFORT-SUR-SOULZON: Bernard Sirgue I Mayor

TOULOUSE MÉTROPOLE: Sacha Briand I Vice-Chairman in charge of Finance

THE EXECUTIVE BOARD

YVES MILLARDET I Chairman

ARIANE CHAZEL I Head of Risk, Compliance and Control

THIÉBAUT JULIN I Chief Financial Officer

Its governance: Its governance:

REGIONS:

PAYS DE LA LOIRE REGION: Laurent Dejoie I Vice-Chairman in charge of Finance

OCCITANIE REGION [AS OF 1/10/19]: Claire Fita I Chairman of Finance

DEPARTMENTS :

ESSONNE DEPARTMENT: Dominique Echaroux I Vice-Chairman in charge of Finance

SAVOIE DEPARTMENT: Luc Berthoud I Chairman of the Finance Committee

SEINE-SAINT-DENIS DEPARTMENT: Stéphane Troussel I Chairman

GENERAL MANAGEMENT: OLIVIER LANDEL I Chief Executive Officer YVES MILLARDET I Deputy Chief Executive Officer

BUSINESS OVERVIEW 2018 AFL

Municipality Community of La Vallée du Lot et du Vignoble:

Touzac, Suspension bridge

KEYFIGURES 2018

Our smallest member as of Dec. 31, 2018:

Juvrécourt (54): 61 inhabitants

Our largest member as of Déc. 31, 2018 :

Pays de la Loire Region: 3.71 million inhabitants

Our smallest loan in 2018: €12,800

Our largest loan in 2018: €40 million

69 local authorities BECAME SHAREHOLDERS IN 2018

Key figuresfor 2018

1 Région

7 Départments

214 Municipalities

2 Overseas communities

12 Métropolitan areas

4 Urban communities

19 Suburban communities

29 Municipality communities

4 Territorial public entities

292 shareholder LOCAL AND REGIONAL AUTHORITIES AS OF DECEMBER 31, 2018 :

5,1% estimated market share in 2018

25 % market share among AFL members in 2018

15% percentage of local public debt from AFL members as of December 31, 2018

27 employees

39% OF THE FRENCH POPULATION LIVES IN AN AFL MEMBER LOCAL AUTHORITY

€ 831,4 million in loans granted by AFL in 2018

202 loan contracts signed in 2018

138 local authorities borrowed from AFL in 2018

€ 2,5 billion in credit granted since 2015

9BUSINESS OVERVIEW 2018 AFL

During our banking consultation, AFL offered a range of diversified and secure financial products. Being a shareholder in our own bank through the ownership of capital helped us to make our choice, as did a broad knowledge of the local issues of a bank created by local and regional authorities themselves. In 2016, the Suburban Community of the Pays de Saint-Omer bought the Saint-Omer train station, which was closed by the SNCF since 2011 because of risk of falling rocks. Thanks to a huge construction project (€11 million), the community transformed this venerable 3,000 square meter building into La Station: a space dedicated to new forms of work like co-working spaces and Fablab… and reopened the station by renting space to the SNCF.

François DECOSTER, President of the Suburban Community of the Pays de Saint-Omer

Rehabilitation of the old train station into a co-working space - Pays de St Omer

11

HightlightsOF 2018

Since it was founded, AFL has lent more than €1.6 billion

AFL gives a presentation at the Association nationale des pôles d’équilibre territoriaux et ruraux et des Pays in Castelnaudary on July 5.

AFL welcomes 13 new authorities during its 18th capital increase, the fourth in 2018, for a total of 69 new members at the end of 2018.

Agence France Locale participates in the 101st AMF Congress of Mayors.

The AFL passes the €2 billion mark for loans to local authorities.

20 new authorities join the AFL during its 17th capital increase, including the Suburban Community of Vichy and the City of Tours.

AFL renews its partnership with the Association des Administrateurs Territoriaux de France at their Congress in Toulouse.

The Occitanie Region votes to become an AFL member.

AFL participates in the inauguration of the new headquarters of the Etablissement public territorial Grand Orly Seine Bièvre, a member since 2014, which it helped to finance.

AFL participates in the Africities Summit in Marrakech to contribute its expertise to the creation of a local financing agency for the whole African continent.

AFL gives presentations alongside Tarn elected officials over two mornings organized with the department’s Association of Mayors.

The Metropolis of Grenoble is the 12th metropolitan area to join AFL.

AFL welcomes its first member authority in Mayenne: the municipality of Cossé-le-Vivien

AFL completes its 15th capital increase and welcomes 26 new member authorities

The department of Seine Saint-Denis joins the Group and becomes the seventh shareholder department

AFL publishes its 2017 financials, which showed continued growth with 223 authorities as shareholders and loan commitments up 63%.

BUSINESS OVERVIEW 2018 AFL

JANUARY

JULY- AUGUST

DECEMBER

OCTOBER

SEPTEMBER

FEBRUARY

APRIL

MARCH

The third annual Agency Day is held on May 17 at the General Meeting of Shareholders.

MAY

JUNE

Lendosphère, the participatory financing platform that has been partnering with AFL since 2016, launches its first transaction for the City of Malaunay in Seine-Maritime.

The AFL Group welcomes 10 new authorities, including the Municipality of Bora Bora in French Polynesia, on the occasion of its 16th capital increase.

AFL successfully completes its fourth benchmark issue (€500 million), which will mature in 2028.

On June 28, the AFL Group’s governing bodies meet in Strasbourg at the headquarters of Eurométropole, a member since 2015.

We asked AFL to finance our recently completed Village House. Municipal financing was 100% paid for by Agence France Locale. First, we took out a long-term loan on which we have been repaying principal and interest from the beginning. We though the amortization schedule was well suited to our needs and the interest rates were reasonable. Then we took out a bridge loan to support the VAT advance, and the terms were reasonable and the rates very competitive.

Alain VERGE, Mayor of Saint-Marcel-en-Marcillat

“NOVEMBER

AFL is taking part in the Journée des maires du Bas-Rhin in Strasbourg on September 14 and will introduce attendees to its activities.

Creation of a Village House in Saint-Marcel-en-Marcillat

BUSINESS OVERVIEW 2018 AFL

New membersIN 2018

The Suburban Community of Vichy decided to join AFL to diversify its sources of financing because it embarked on an ambitious investment program. The Suburban Community of Vichy is a perfect fit for a banking institution by and for local authorities regardless of their size and financing needs. AFL’s structure is light and very responsive, and no commissions are ever paid. The AFL is also very well positioned in the market during banking consultations.

Mathieu BOCQ, Deputy Managing Director, Resource Services and Local Services, Suburban Community of Vichy

Agence France Locale’s approach is adapted to the specific features of local authorities, and the people we deal with are attentive and competent. We have formed a long-term, trusting relationship with AFL. I believe that in a democracy, it is unthinkable for us to be under the yoke of traditional lenders. Also, traditional lenders don’t have specialists in local public finance.

Olivier MARTIN, President of the Municipality Community of Cèze Cévennes

We were reassured by a banking model dedicated solely to local authorities that they manage as shareholders. We were interested in this because we still remember the toxic loans offered by some banks. As Vice-President of the Municipality Community of the Pont du Gard, I worked on its membership with Agence France Locale, then the City Council decided that it could be advantageous for Estézargues as well, despite the initial investment, because our low debt ratio limited the cost of entry.

Thanks to the loans taken out with AFL, we are building a new purification plant for the town and will also finance accessibility for municipal buildings.

Martine LAGUERIE, Mayor of Estézargues

The local authority used to finance its investments through traditional banks. Agence France Locale (AFL) offers new opportunities and establishes healthy competition with those banks. Beyond the optimization of financing costs (through reasonable rates), we wanted to protect ourselves and secure our financing needs. If there’s another crisis in the banking sector like in 2008, local authorities can continue to borrow from a financial institution such as AFL, whereas banks may be more timid. The greatest advantage is financial: La Roche-sur-Yon Suburban Community is achieving economies of scale thanks to reasonable interest rates. The second advantage is the terms of loans offered by AFL, which are often longer than in the traditional banking sector.

Luc BOUARD, President of La Roche-sur-Yon Suburban Community

AFL membership started us on an upward spiral and helped to begin a new chapter for the City of Grigny. Last year, we had no access to bank loans and there was nowhere we could turn. The «small» loan from AFL of €1 million was the first step toward recovery. Having AFL as a partner created a significant leverage effect that culminated in the signing of a budgetary and financial commitment agreement with the French government, followed by the Grigny 2030 Financial Pact. AFL was an essential partner that stopped us from drowning in debt. A year ago, we had a deficit of 20%, or €15 million. Now it’s 1% and we’re steadily paying down our debt. Our loans with AFL are helping us to maintain our amenities, our 27 schools and 5 gyms, and to get caught up! We also opened a health center in the Grande Borne neighborhood.

As I see it, AFL’s usefulness has been inversely proportional to its size!

Philippe RIO, Mayor of Grigny

13“

“Construction of an aquatic center - La Roche-sur-Yon Suburban Community

Construction of a purification plant in the Municipality of Estézargues

Construction of a health center in La Grande Borne – City of Grigny

BUSINESS OVERVIEW 2018 AFL

Local authorities, AFL-ST’S ONLY SHAREHOLDERS

Local authorities, AFL’S ONLY BORROWERS

15

69 local authorities BECAME AFL GROUP SHAREHOLDERS IN 2018, BRINGING THE TOTAL NUMBER OF MEMBERS TO 292 as of 31/12/18

In 2018, AFL-ST continued to make ICC calculation methods and payment terms from prior years more flexible (namely by eliminating the ICC minimum threshold and offering the option to make ICC payments in five or more stages depending on how much was borrowed) by allowing local authorities to become members based on one or more subsidiary budgets, excluding the main budget. The Greater Grenoble Metropolitan Area joined the Group in 2018 under these terms.

The Group’s local and regional authority shareholders are the sole beneficiaries of the loans offered

by Agence France Locale. AFL’s financing offers meet all of the financing needs of its shareholders.

In 2018, the Board of Directors approved the establishment of a mechanism to further promote the AFL Group model through stronger dialogue between representatives of member local

authorities and local elected representatives in the form of meetings in local communities, local partnerships, outreach on social networks, co-signing letters etc.

Each new shareholder of Société Territoriale becomes an ambassador of the model among its peers.

TRANSPARENCY LOCAL SOLIDARITY PROXIMITY FLEXIBILITY FAIRNESS

Becoming a shareholder

Being a Group shareholder

The values of the Group are therefore upheld by our shareholders

The local authority applies for membership with AFL by telephone, e-mail or via the dedicated portal

portail.agence-france-locale.fr

The AFL gives the local authority a financial rating of between 1 and 7. With a rating of 1 to 5.99, the local authority can join. For ratings of 6 and above, the local authority cannot become a member during the current fiscal year

The local auhority becomes a member upon payment of the ICC or the first tranche of the ICC for payments in several installments. It may then apply to AFL for financing.

The local authority then signs the instrument of assent to the Shareholders’ Agreement and becomes a shareholder of Société Territoriale when the capital is increased. It then begins to participate in the Group’s governance.

AFL informs the local authority of the amount of its Initial Capital Contribution (ICC). It corresponds to 0.8% of its outstanding debt or 0.25% of its actual operating revenue, whichever figure is greater. The local authority deliberates to approve membership.

THE LOCAL AUTHORITY IS ASSIGNED A

FINANCIAL RATING

DELIBERATIVE VOTE BY

THE LOCAL AUTHORITY

PAYMENT OF THE INITIAL CAPITAL CONTRIBUTION

SIGNATURE OF THE INSTRUMENT OF ASSENT TO THE SHAREHOLDERS’

AGREEMENT

APPLYING FOR MEMBERSHIP

LONG TERM LOANS

BRIDGE LOANS

SHORT-TERM FACILITIES

LONG-TERM LOANS WITH PROGRESSIVE

CASH OUTFLOWS

Choosing to be a shareholder in your own bank means participating in the collective construction of a shared means of guaranteeing sustainable, permanent and secure access to financial resources under the best conditions.

Jacques PÉLISSARD Chairman of the Board of Directors of Agence France Locale - Société Territoriale

202 loan contracts signed in 2018

138 local authorities borrowed from AFL in 2018

€ 831,4 million million in loans granted by AFL in 2018

“In 2018, the Metropolis mobilized a €3 million loan from Agence France Locale to help finance the construction of the Biomax cogeneration plant, which will replace heavy fuel oil-powered equipment and supply between 15,000 and 20,000 homes with heat and 10,000 homes with electricity using local wood. By optimizing energy yields, this equipment will help control consumer sale prices. With a cost of €57.6 million (excluding taxes), the equipment should be delivered in March 2020. This is the largest investment in the urban heating network since 1992, which is already the second-largest nationwide, present in seven municipalities and scheduled to expand into even more.

Raphaël GUERRERO Vice-Chairman in charge of Finance, Greater Grenoble Metropolitan Area

Construction of a cogeneration plant, Greater Grenoble Metropolitan Area

17BUSINESS OVERVIEW 2018 AFL

Increasingly diversifiedACCESS TO FUNDING

In 2018, for the first time in its history, AFL financed itself on the long portion of the curve, taking advantage of attractive market conditions. Three issues were launched:

A ten-year and a fifteen-year private placement issues of €25 million and €100 million respectively, at a margin of 25 basis points above the French government bond (OAT) curve;

On June 12, 2018, a third public issue of €500 million with a maturity of 10 years took place at a margin of 30 basis points above the OAT curve.

These three issues were well received by investors, once again demonstrating their confidence in the AFL Group model, its development trajectory since April 2015 and, more broadly, the credit quality of the French local sector.

We are pleased to have supported the creation of Agence France Locale and to have contributed, over the last four years, all of our experience to the successful launch on the bond market of a local authority financing agency in France modeled after ones that have existed for many years in the countries of Northern Europe

Marc VINCENT, Global Head of Corporate & Investment Banking, member of the Senior Management Committee of Natixis

The Territoire de la Côte Ouest (TCO) wanted to encourage partnership with a bank controlled by local authorities for greater transparency in the financing chain. In 2018, the TCO benefited from more reasonable interest rates than those offered by other «traditional» financial providers in the local market. AFL’s offers to the TCO depend on the local authority’s rating, not its geographical area. We also appreciate the flexibility and responsiveness with which loans are granted. The TCO asked AFL to cover 2018 investments such as the creation of the Ecole Artistique Intercommunale de l’Ouest with the mobilization of a €4 million loan.

Joseph SINIMALE, Président of the TCO

AFL funding accessA FEW KEY FIGURES

GEOGRAPHICAL DISTRIBUTION OFOUR INVESTORS [2015- 2018]

TYPE OF INVESTORS[2015- 2018]

28%

12%

17%

8%

12%

4%

19%

France

Germany, Austria & Switzerland

Benelux

UK & Nordics

Southern Europe

Asia

Other

Central banks & official institutions

Fund managersInsurers & Pension funds

Banks & privates banks

Corporates

€ 625 million raised on the bond market through long-term issues in 2018

Over € 3 billion raised since the founding of AFL in 2015

29%

27%9%

28%

7%

Aa3/P-1Rating (most recent credit opinion: March 20, 2019)

Outlook stable

Project for creating the Ecole Artistique Intercommunale de l’Ouest – TCO

AA-/A-1+Rating (May 2019)

Outlook stable

19BUSINESS OVERVIEW 2018 AFL

Agence France LocaleGROUP FINANCIALS

(Consolidated figures under IFRS)

Financials as of December 31, 2018 demonstrate to the local authority bank’s continued development, which was driven by further growth in credit activity and a sustained pace of local authority memberships. Gross operating income amounted to -€1,304 thousand, for net banking income of €9,745 thousand.

The year 2018 saw another significant increase in AFL Group’s financials, which are part of its growth trajectory, in line with its 2017-2021 strategic plan. This improvement in financials reflects the good revenue generation momentum generated by the AFL Group’s lending activity since financial year 2015, when operations began, which is measured in particular by the increase in the outstanding portfolio of credit granted to local authority members.

In 2018, for the AFL Group, the increase in outstanding loans combined with the control of expenses resulted in gross operating loss of €1,304 thousand under IFRS and a net loss of €1,705 thousand after the cost of risk under IFRS 9 and deferred tax assets were taken into account. These results break down as follows:

Net banking income for the 2018 financial year was €9,745 thousand (compared to €10,722 thousand in 2017, a year that was characterized by non-recurring capital gains on the sale of securities of €4,494 thousand). NBI for 2018 corresponded mainly to:

a net interest margin of €7,853 thousand, an increase of 20% compared to €6,552 thousand in the previous financial year,

net capital gains on the sale of investment securities of €1,636 thousand,

commission income of €162 thousand, and

a net loss in hedge accounting of -€4 thousand.

Operating expenses were under control at €11,049 thousand (versus €10,566 thousand in 2017, a year that had been characterized by a reversal of €488 thousand in provisions for risks and charges). These charges break down as follows:

€4,799 thousand in personnel costs (versus €4,835 thousand in 2017);

Administrative expenses, which were €4,255 thousand, versus €3,831 thousand as of December 31, 2017, which, as indicated above, included a €488 thousand reversal of a provision for risks and charges. Excluding this exceptional item, administrative expenses are stable from one year to the next;

€1,995 thousand for net depreciation and amortization (compared with €1,914 thousand in 2017).

As of December 31, 2018, the AFL Group completed its fourth year of activity, exceeding the objectives it had set and continuing the implementation of its 2017-2021 strategic plan at three levels:

Continued reinforcement of equity capital with memberships of new local uthorities as expressed by their new stake in the capital of Société Territoriale;

The sustained and diversified increase in production of credit to member local authorities;

Continued diversification of the AFL investor base in the capital markets.

Cash in hand, central banks and overnight deposits

Securities

Loans and receivables

Debt securities

Equity

Net banking income

Net interest margin - MNI

General operating expenses (details below)

Gross operating income

Net profit

General operating expenses

Employee expenses

Administrative expenses of which:

- Information systems

- Advisory

- Legal fees and rating

- Custodian services

- Promotion

- Taxes

Net depreciation and amortization

180,026

681,988

2,229,911

2,996,909

124,485

9,745

7,853

11,049

-1,304

-1,705

11,049

4,799

4,255

1,532194196202244

506

1,995

633,784

363,554

1,430,829

2,335,802

120,968

10,722

6,552

10,566

156

- 423

10,566

4,835

3,831

1,621

68

255

200

232

110

1,914

2018

2018

2017

2017

MAIN ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

BREAKDOWN OF OPERATING EXPENSES (IFRS)

In thousand €

In thousand €

21BUSINESS OVERVIEW 2018 AFL

Auvergne-Rhône-Alpes

Ain (01)Municipality of Pont d’Ain, Municipality Community of Rives de l’Ain - Pays du Cerdon, Municipality of Sainte-Euphémie, Municipality of Thil

Allier (03)Municipality of Cusset, Municipality of Domérat, Municipality of Saint-Marcel-en-Marcillat, Suburban Community of Vichy, Municipality of Vichy

Ardèche (07)Municipality of Aubenas, Municipality of Bourg-Saint-Andéol, Municipality of Chirols, Municipality Community of Rhône aux Gorges de l’Ardèche, Municipality of Saint-Just-d’Ardèche

Drôme (26)Municipality Community of Val de Drôme

Isère (38)Municipality of Bourgoin-Jallieu, Municipality Community of Cœur de Chartreuse, Municipality of Grenoble, Grenoble-Alpes Métropole, Municipality of Saint-Pierre-d’Entremont

Loire (42)Municipality of Boën-sur-Lignon, Municipality of Bourg-Argental, Municipality of Saint-Sauveur-en-Rue, Municipality of Saint-Jean-Bonnefonds, Municipality of Usson-en-Forez

Haute-Loire (43)Municipality of Chadron

Puy-de-Dôme (63)Municipality of Billom, Clermont Auvergne Metropolitan Area, Municipality of Clermont-Ferrand, Municipality of La Monnerie-le-Montel, Municipality of Loubeyrat, Municipality of Pontaumur, Municipality of Puy-Saint-Gulmier, Municipality of Teilhède, Municipality of Youx, Municipality of Riom

Rhône (69)Municipality of La Mulatière, Lyon Metropolitan Area, Municipality of Millery, Municipality Community of Pays Mornantais, Municipality Community of La Vallée du Garon, Municipality of Villeurbanne

Savoie (73)Municipality of Challes-les-Eaux, Municipality of Corbel, Suburban Community of Greater Chambéry, Municipality of La Motte-Servolex, Municipality of Montmélian, Municipality of Motz, Municipality of Le Pont-de-Beauvoisin, Municipality of Saint-Béron, Municipality of Saint-Pierre-d’Entremont, Department of Savoie

Haute-Savoie (74)Annemasse - Les Voirons Suburbs, Municipality of Combloux, Municipality of Étrembières, Municipality of Saint-Julien-en-Genevois

Bourgogne-Franche-ComtéCôte-d’Or (21)Municipality of Collonges et Premières, Municipality of Grosbois-en-Montagne, Municipality of Izier, Municipality of Longvic, Municipality Community of La Plaine Dijonnaise, Municipality of Tart

Doubs (25)Suburban Community of Grand Besançon, Municipality of Huanne-Montmartin, Municipality of Rigney

Jura (39)Commune of Lons-le-Saunier

Saône-et-Loire (71)Municipality of Autun, Municipality of Chalon-sur-Saône, Municipality of Cressy-sur-Somme, Creusot Montceau Urban Community, Municipality of Mâcon, Department of Saône-et-Loire

BretagneCôtes-d’Armor (22)Municipality of Lannion

Finistère (29)Brest Metropolitan Area, Municipality of Brest, Municipality of Lesneven, Suburban Community of Morlaix, Municipality of Plouvorn, Municipality of Plouzané

Ile-et-Vilaine (35)

Municipality of Ferré, Municipality of Le Verger, Municipality of Saint-Marc-le-Blanc

Morbihan (56)Municipality of Saint-Armel, Municipality of Saint-Avé

Centre-Val de LoireIndre-et-Loire (37)Municipality of Tours

Loir-et-Cher (41)Suburban Community of Blois – Agglopolys, Municipality of Vendôme

Loiret (45)Municipality of Gidy, Municipality Community of Plaine du Nord Loiret

Corse Municipality of Monacia-d’Aullène

Grand EstArdennes (08)Municipality Community of Ardenne Rives de Meuse, Municipality of Aubrives

Aube (10)Municipality Community of Portes de Romilly-sur-Seine

Meurthe-et-Moselle (54)Municipality of Anthelupt, Municipality of Bathelémont, Municipality Community of Bassin de Pompey, Municipality of Bauzemont, Municipality of Bernécourt, Municipality of Bezange-la-Grande, Municipality of Bonviller, Municipality of Bures, Municipality of Crion, Municipality of Croismare, Municipality of Flainval, Greater Nancy Metropolitan Area, Municipality of Hénaménil, Municipality of Juvrecourt, Municipality of Maixe, Municipality of Montigny-sur-Chiers, Municipality of Mouacourt, Municipality Community of Moselle et Madon, Municipality of Parroy, Municipality of Richardménil, Municipality of Sionviller, Municipality of Virecourt, Municipality of Waville, Municipality of Xures

Meuse (55)Department of Meuse, Municipality of Pretz-en-Argonne

Moselle (57)Suburban Community of Val de Fensch, Municipality of Metz, Municipality of Morhange, Municipality of Scy-Chazelles, Municipality Community of Warndt

Bas-Rhin (67)Municipality of Schiltigheim, Strasbourg European Metropolitan Area

Haut-Rhin (68)Municipality of Huningue, Municipality Community of the Pays de Rouffach, Vignobles et Châteaux, Municipality Community of the Guebwiller Region, Municipality Community of Sundgau, Municipality of Wittenheim

Vosges (88)Suburban Community of Epinal, Municipality of Les Voivres

Hauts-de-FranceAisne (02)Department of Aisne

Nord (59)Municipality of Anzin, Municipality of Attiches, Municipality of Aulnoy-lez-Valenciennes, Municipality Community of Cœur de l’Avesnois, Municipality of Croix, Municipality of Cysoing, Urban Community of Dunkerque, Municipality of Genech, Municipality of Landas

Municipality of Mons-en-Pévèle, Municipality of Montrécourt, Municipality Community of Pévèle Carembault, Municipality of Raimbeaucourt, Municipality of Sailly-lez-Lannoy, Municipality of Saint-Saulve, Municipality of Saulzoir, Municipality of Thun l’Evêque, Suburban Community of Valenciennes Metropolitan Area, Municipality of Waziers, Municipality of Wavrin, Lille European Metropolitan Area

Oise (60)Municipality of Grandvilliers, Municipality of Noyon, Municipality Community of Pays Noyonnais, Municipality of

Plailly.

Pas-de-Calais (62)Urban Community of Arras, Municipality of Carvin, Municipality of Merlimont, Suburban Community of the Pays de Saint-Omer, Municipality of Rang-du-Fliers

Somme (80)Municipality of Amiens, Suburban Community of Amiens Metropolitan Area, Municipality of Rumigny

Île-de-FranceSeine-et-Marne (77)Municipality of Bernay-Vilbert, Municipality of Chelles

Yvelines (78)Municipality of Vaux-sur-Seine

Essonne (91)Municipality of Brunoy, Department of Essonne, Municipality of Grigny, City of Viry-Châtillon

Hauts-de-Seine (92)Municipality of Gennevilliers

Seine-Saint-Denis (93)Municipality of Le Blanc-Mesnil, Municipality of Clichy-sous-Bois, Municipality of Epinay-sur-Seine, Etablissement public territorial Est Ensemble, Municipality of Livry-Gargan, Municipality of Montfermeil, Municipality of Montreuil, Municipality of Noisy-le-Grand, Municipality of Rosny-sous-Bois, Etablissement public territorial Plaine Commune, Department of Seine-Saint-Denis, Municipality of Saint-Denis

Val-de-Marne (94)Municipality of Bry-sur-Marne, Municipality of Créteil

Municipality of Kremlin-Bicêtre, Municipality of Nogent-sur-Marne, Municipality of Vincennes, Territorial Public Establishment of Grand-Orly Seine Bièvre, Territorial Public Establishment of Paris-Est-Marne et Bois

Val-d’Oise (95)Municipality of Bessancourt, Municipality of Gonesse, Municipality of Saint-Brice-sous-Forêt, Suburban Community of Val Parisis

Normandie

Calvados (14)Municipality of Giberville

Eure (27)Municipality of Conches-en-Ouche, Municipality of Evreux, Municipality Community of the Pays de Conches, Municipality Community of Roumois Seine, Municipality of Saint-Pierre-des-Fleurs, Municipality of Saint-Pierre-du-Bosguérard, Municipality of Thuit-de-l’Oison, Municipality of Vernon

Manche (50)Municipality of Cherbourg-en-Cotentin

Orne (61)Municipality of Alençon, Urban Community of Alençon

Seine-Maritime (76)Municipality of La Feuillie, Rouen Normandy Metropolitan Area

302 local authorities as AFL Group shareholders AT APRIL 30, 2019

Nouvelle-Aquitaine

Charente-Maritime (17)Municipality Community of Gémozac, Suburban Community of La Rochelle, Municipality of Matha

Dordogne (24)Municipality of Bergerac, Municipality of Beynac-et-Cazenac, Suburban Community of Grand Périgueux, Municipality of Peyrignac, Municipality of Saint-Martial-d’Albarède, Municipality of Vitrac

Gironde (33)Municipality of Bordeaux, Bordeaux Metropolitan Area, Municipality of Le Bouscat, Municipality of Peujard, Municipality of Val-de-Livenne

Landes (40)Municipality of Biscarosse, Municipality of Mimizan, Municipality of Saint-Martin-de-Seignanx

Lot-et-Garonne (47)Municipality of Saint-Maurin

Pyrénées-Atlantiques (64)Municipality of Guéthary, Municipality of Oloron-Sainte-Marie, Municipality of Pau, Suburban Community of Pau Béarn Pyrénées, Municipality of Saint-Etienne-de-Baigorry

Vienne (86)

Urban Community of Grand Poitiers

OccitanieOccitanie Region

Ariège (09)Department of Ariège

Aveyron (12)Municipality of Roquefort-sur-Soulzon

Gard (30)Municipality Community of Cèze Cévennes, Municipality of Comps, Municipality of Estézargues, Municipality of Fournès, Municipality Community of Pont du Gard, Municipality of Roquemaure, Municipality of Saint-André d’Olérargues, Municipality of Saint-Victor-de-Malcap, Municipality of Valliguières, Municipality of Vénéjan

Haute-Garonne (31)Municipality of Aussonne, Municipality of Aussonne Bagnères-de-Luchon, Municipality Community of Les Coteaux du Girou, Municipality of Flourens, Municipality of Larroque, Municipality of Roquesérière, Municipality of Toulouse, Toulouse Metropolitan Area

Gers (32)Municipality of Condom

Hérault (34)Municipality of Balaruc-les-Bains, Municipality of Pomérols, Sète agglopôle méditerranée

Lot (46)Municipality Community of La Vallée du Lot et du Vignoble

Hautes-Pyrénées (65)Municipality Community of Adour Madiran, Municipality of

Capvern, Municipality of Pujo

Pyrénées-Orientales (66)Municipality of Pollestres, Municipality of Soler

Tarn-et-Garonne (82)Municipality Community of Quercy Caussadais

Pays de la LoirePays de la Loire Region

Loire-Atlantique (44)

Municipality of Ancenis-Saint-Géréon, Municipality of Le Pallet, Municipality of Loireauxence, Municipality of Nantes, Nantes Metropolitan Area, Municipality of Rezé, Municipality of Saint-Nazaire, Municipality of Sorinières, Municipality of Vertou

Maine-et-Loire (49)Municipality of Beaucouzé, Municipality of Épieds, Municipality of Saint-Augustin-des-Bois, Municipality of Saumur, Suburban Community of Saumur Val de Loire

Mayenne (53)Municipality of Cossé-le-Vivien

Sarthe (72)Municipality Community of Huisne Sarthoise

Vendée (85)Suburban Community of La Roche sur Yon, Municipality of Saint-Hilaire-de-Riez

Provence-Alpes-Côte d’AzurAlpes de Haute-Provence (04)Municipality of Mison

Alpes-Maritimes (06)Suburban Community of Cannes Pays de Lérins

Bouches du Rhône (13)Aix-Marseille Provence Metropolitan Area, Municipality of Marseille, Municipality of Peypin, Municipality of Puy-Sainte-Réparade

Var (83)Municipality of Gonfaron, Municipality Community of Pays de Fayence, Municipality of Roquebrune-sur-Argens, Municipality of Seillans

Vaucluse (84)Municipality of Merindol, Municipality of Pertuis

Overseas communitiesRéunion (974)Suburban Community of Territoire de la Côte Ouest, Municipality of La Possession

Saint-Pierre-et-Miquelon (975)Overseas Community of Saint-Pierre-et-Miquelon

Polynésie Française (987)Overseas Community of French Polynesia, Municipality of Bora Bora

23

Our structure was headed toward a tense financial position by 2020. This tension was the result of fragile self-financing for an ambitious investment program. We improved the operating aspect of our financial position to advance our self-financing. We turned to the partner that offered us the best rates. It was almost natural that our choice in 2018 was Agence France Locale. We were the first grouping of municipalities in this beautiful rural department of Lot to join AFL. This desire was the result of our reflective process, and the idea of having a bank created by and for local authorities with a flexible and cooperative operating model suited us perfectly. It spoke to our ‘country common sense.

Serge BLADINIERES, President of the Municipality Community of La Vallée du Lot et du Vignoble

“

The Territoire de la côte Ouest (TCO) is recognized at the highest national level for its actions to promote sustainable development. At the beginning of 2019, we signed the Ecological Transition Contract with the French government, which was our latest distinction, after the «Territoire d’Industrie» designation (in November 2018) and the awarding of the silver label for «Territoires Innovants et Interconnectés» (in December 2018). The TCO asked AFL to cover the funding gap for the grants expected from the financial provider of the embankment construction (the EU) under the new aquatic environments and flood prevention management (GEMAPI) authorization (Rivière des Galets and Ravine de l’Hermitage), with a bridge loan of €2.5 million.

Joseph SINIMALE, Président of the TCO

CCentre Bourg, Duravel, Municipality Community of La Vallée du Lot et du Vignoble

Embankment project – Rivière des Galets and Ravine de l’Hermitage TCO

BUSINESS OVERVIEW 2018 AFL

www.agence-france-locale.fr

You are a local authority :

You are an investor:

Philippe ROGIER

Chief credit officer

04 81 11 29 32

philippe.rogier@agence-france-locale.fr

Thiebaut JULIN

Chief financial officer

04 81 11 29 33

thiebaut.julin@agence-france-locale.fr

Laurence LEYDIER

Director of local authority relations

04 81 11 29 37

laurence.leydier@agence-france-locale.fr

Romain NETTER

Director of Medium and long-term funding

04 81 11 29 40

romain.netter@agence-france-locale.fr

Astrée BOYET

Local authority relations officer

04 69 84 81 02

astree.boyet@agence-france-locale.fr

Maëlien BOREL

Medium and long term funding officer

04 69 84 81 01

maelien.borel@agence-france-locale.fr

@AgenceFRLocale Agence-France-Locale contact@agence-france-locale.fr