Financial Statements of HSBC USA Inc. (Parent)

Condensed parent company financial statements follow.



Balance Sheet At December 31,	2012		2011
	(in millions)
Assets:
Interest bearing deposits with banks	$	—	$	—
Trading assets	985		868
Securities available-for-sale	612		273
Securities held-to-maturity (fair value $8 million and $19 million)	8		19
Loans	28		33
Receivables from subsidiaries	14,245		11,793
Receivables from other HSBC affiliates	5,107		1,629
Investment in subsidiaries at amount of their net assets:
Banking	18,892		19,591
Other	23		67
Goodwill	510		589
Other assets	542		502
Total assets	$	40,952	$	35,364
Liabilities:
Interest, taxes and other liabilities	$	100	$	316
Payables due to subsidiaries	2,672		1,813
Payables due to other HSBC affiliates	956		605
Short-term borrowings	5,022		4,836
Long-term debt⁽¹⁾	9,802		4,419
Long-term debt due to subsidiary and other HSBC affiliates⁽¹⁾	4,564		4,873
Total liabilities	23,116		16,862
Shareholders’ equity	17,836		18,502
Total liabilities and shareholders’ equity	$	40,952	$	35,364


⁽¹⁾	Contractual scheduled maturities for the debt over the next five years are as follows: 2013 – $3.2 billion; 2014 – $2.1 billion; 2015 – $3.5 billion; 2016 – $1.3 billion; 2017 – $0.3 billion; and thereafter – $4.0 billion.



Statement of Income (Loss) Year Ended December 31,	2012			2011			2010
	(in millions)
Income:
Dividends from banking subsidiaries	$	—		$	1		$	5
Dividends from other subsidiaries	57			2			2
Interest from subsidiaries	67			67			74
Interest from other HSBC affiliates	27			17			20
Other interest income	19			19			22
Other securities gains, net	21			—			1
Other income from subsidiaries	(290		)	(131		)	(89		)
Other income from other HSBC Affiliates	472			(18		)	217
Other income	(155		)	312			(30		)
Total income	218			269			222
Expenses:
Interest to subsidiaries	69			70			70
Interest to other HSBC Affiliates	65			48			19
Other Interest Expense	198			224			216
Provision for credit losses	—			(1		)	—
Other expenses with Other HSBC Affiliates	19			12			4
Other expenses	8			2			3
Total expenses	359			355			312
Loss before taxes and equity in undistributed income of subsidiaries	(141		)	(86		)	(90		)
Income tax benefit	47			62			47
Loss before equity in undistributed income of subsidiaries	(94		)	(24		)	(43		)
Equity in undistributed income (loss) of subsidiaries	(951		)	1,042			1,607
Net income (loss)	$	(1,045	)	$	1,018		$	1,564



Statement of Comprehensive Income (Loss) Year Ended December 31,	2012			2011			2010
	(in millions)
Net income (loss)	$	(1,045	)	$	1,018		$	1,564
Net changes in unrealized gains (losses). net of tax as applicable on:
Securities available-for-sale, not other-than-temporarily impaired	109			786			165
Other-than-temporary impaired debt securities available-for-sale	—			1			55
Other-than-temporary impaired securities held-to-maturity	—			11			93
Adjustment to reverse other-than-temporary impairment on securities held-to-maturity due to deconsolidation of a variable interest entity	—			142			—
Derivatives designated as cash flow hedges	28			(142		)	13
Unrecognized actuarial gains, transition obligation and prior service costs relating to pension and postretirement benefits, net of tax	6			(3		)	(5		)
Other comprehensive income, net of tax	143			795			321
Comprehensive income (loss)	$	(902	)	$	1,813		$	1,885



Statement of Cash Flows Year Ended December 31,	2012			2011			2010
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	(1,045	)	$	1,018		$	1,564
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and deferred taxes	159			149			141
Net change in other accrued accounts	(3,744		)	765			708
Net change in fair value of non-trading derivatives	499			(240		)	(176		)
Undistributed loss (gain) of subsidiaries	951			(1,042		)	(1,607		)
Other, net	(263		)	(73		)	(291		)
Net cash provided by (used in) operating activities	(3,443		)	577			339
Cash flows from investing activities:
Net change in interest bearing deposits with banks	—			(900		)	64
Purchases of securities	(342		)	—			—
Sales and maturities of securities	14			21			107
Net change in loans	5			(390		)	295
Net change in investments in and advances to subsidiaries	(850		)	(1,134		)	(1,833		)
Other, net	1			—			105
Net cash used in investing activities	(1,172		)	(2,403		)	(1,262		)
Cash flows from financing activities:
Net change in short-term borrowings	186			1,809			67
Issuance of long-term debt, net of issuance costs	7,051			5,511			2,357
Repayment of long-term debt	(2,858		)	(5,450		)	(1,417		)
Dividends paid	(73		)	(73		)	(74		)
Capital contributions from parent	312			—			—
Additions (reductions) of capital surplus	(3		)	29			(10		)
Net cash provided by financing activities	4,615			1,826			923
Net change in cash and due from banks	—			—			—
Cash and due from banks at beginning of year	—			—			—
Cash and due from banks at end of year	$	—		$	—		$	—
Cash paid for:
Interest	$	317		$	338		$	295

HSBC Bank USA is subject to legal restrictions on certain transactions with its nonbank affiliates in addition to the restrictions on the payment of dividends to us. See Note 26, “Retained Earnings and Regulatory Capital Requirements,” for further discussion.