Financial Statements of HSBC USA Inc. (Parent)

Condensed parent company financial statements follow.



Balance Sheet At December 31,	2013		2012
	(in millions)
Assets:
Cash and due from banks…………………………….……….………………………..	$	8	$	—
Trading assets	573		985
Securities available-for-sale	504		612
Securities held-to-maturity (fair value of $4 million and $8 million at December 31, 2013 and 2012, respectively)	4		8
Loans	23		28
Receivables from subsidiaries	11,230		14,245
Receivables from other HSBC affiliates	5,304		5,107
Investment in subsidiaries:
Banking	18,279		18,892
Other	23		23
Goodwill	—		510
Other assets	320		542
Total assets	$	36,268	$	40,952
Liabilities:
Interest, taxes and other liabilities	$	201	$	100
Payables due to subsidiaries	4		2,672
Payables due to other HSBC affiliates	171		956
Short-term borrowings	3,379		5,022
Long-term debt⁽¹⁾	11,488		9,802
Long-term debt due to subsidiary and other HSBC affiliates⁽¹⁾	4,561		4,564
Total liabilities	19,804		23,116
Shareholders’ equity	16,464		17,836
Total liabilities and shareholders’ equity	$	36,268	$	40,952


⁽¹⁾	Contractual scheduled maturities for the debt over the next five years are as follows: 2014 – $2.9 billion; 2015 – $4.3 billion; 2016 – $1.5 billion; 2017 – $1.3 billion; 2018 – $3.0 billion; and thereafter – $3.0 billion.



Statement of Income (Loss) Year Ended December 31,	2013			2012			2011
	(in millions)
Income:
Dividends from banking subsidiaries	$	—		$	—		$	1
Dividends from other subsidiaries	1			57			2
Interest from subsidiaries	67			67			67
Interest from other HSBC affiliates	95			27			17
Other interest income	22			19			19
Other securities gains, net	—			21			—
Other income from subsidiaries	276			(290		)	(131		)
Other income from other HSBC Affiliates	543			472			(18		)
Other income	(799		)	(155		)	312
Total income	205			218			269
Expenses:
Interest to subsidiaries	45			69			70
Interest to other HSBC Affiliates	59			65			48
Other interest expense	231			198			224
Provision for credit losses	—			—			(1		)
Goodwill impairment	510			—			—
Other expenses with other HSBC Affiliates	—			19			12
Other expenses	124			8			2
Total expenses	969			359			355
Loss before taxes and equity in undistributed income of subsidiaries	(764		)	(141		)	(86		)
Income tax benefit	101			47			62
Loss before equity in undistributed income of subsidiaries	(663		)	(94		)	(24		)
Equity in undistributed income (loss) of subsidiaries	325			(951		)	1,042
Net income (loss)	$	(338	)	$	(1,045	)	$	1,018



Statement of Comprehensive Income (Loss) Year Ended December 31,	2013			2012			2011
	(in millions)
Net income (loss)	$	(338	)	$	(1,045	)	$	1,018
Net changes in unrealized gains (losses). net of tax as applicable on:
Securities available-for-sale, not other-than-temporarily impaired	(1,010		)	109			786
Other-than-temporary impaired debt securities available-for-sale	—			—			1
Other-than-temporary impaired securities held-to-maturity	7			—			11
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	118			28			(142		)
Unrecognized actuarial gains, transition obligation and prior service costs relating to pension and postretirement benefits, net of tax	8			6			(3		)
Other comprehensive income (loss), net of tax	(877		)	143			795
Comprehensive income (loss)	$	(1,215	)	$	(902	)	$	1,813



Statement of Cash Flows Year Ended December 31,	2013			2012			2011
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	(338	)	$	(1,045	)	$	1,018
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	37			1			14
Net change in other assets and liabilities	2,087			(3,177		)	(997		)
Undistributed loss (gain) of subsidiaries	(325		)	951			(1,042		)
Net change in trading assets and liabilities	362			(321		)	(72		)
Other, net	(16		)	58			(27		)
Net cash provided by (used in) operating activities	1,807			(3,533		)	(1,106		)
Cash flows from investing activities:
Purchases of securities	(139		)	(342		)	—
Sales and maturities of securities	208			14			21
Net change in loans	5			5			10
Net change in investments in and advances to subsidiaries	(1,666		)	(918		)	(886		)
Other, net	—			1			—
Net cash used in investing activities	(1,592		)	(1,240		)	(855		)
Cash flows from financing activities:
Net change in short-term borrowings	(1,643		)	186			1,809
Issuance of long-term debt, net of issuance costs	4,401			7,209			5,646
Repayment of long-term debt	(2,875		)	(2,858		)	(5,450		)
Dividends paid	(73		)	(73		)	(73		)
Capital contributions from parent	—			312			—
Additions (reductions) of capital surplus	(17		)	(3		)	29
Net cash provided by financing activities	(207		)	4,773			1,961
Net change in cash and due from banks	8			—			—
Cash and due from banks at beginning of year	—			—			—
Cash and due from banks at end of year	$	8		$	—		$	—
Cash paid for:
Interest	$	321		$	317		$	338

HSBC Bank USA is subject to legal restrictions on certain transactions with its non-bank affiliates in addition to the restrictions on the payment of dividends to us. See Note 24, "Retained Earnings and Regulatory Capital Requirements," for further discussion.