Financial Statements of HSBC USA Inc. (Parent)

Condensed parent company financial statements follow:



Balance Sheet At December 31,	2014		2013
	(in millions)
Assets:
Cash and due from banks	$	1	$	8
Trading assets	—		573
Securities available-for-sale	498		504
Securities held-to-maturity (fair value of $4 million and $4 million at December 31, 2014 and 2013, respectively)	4		4
Loans	—		23
Receivables and balances due from subsidiaries	17,252		11,230
Receivables from other HSBC affiliates	6,084		5,304
Investment in subsidiaries:
Banking	19,029		18,262
Other	38		40
Other assets	597		320
Total assets	$	43,503	$	36,268
Liabilities:
Interest, taxes and other liabilities	$	90	$	201
Payables due to subsidiaries	28		4
Payables due to other HSBC affiliates	117		171
Short-term borrowings	4,772		3,379
Long-term debt⁽¹⁾	16,976		11,488
Long-term debt due to subsidiaries and other HSBC affiliates⁽¹⁾	4,553		4,561
Total liabilities	26,536		19,804
Shareholders’ equity	16,967		16,464
Total liabilities and shareholders’ equity	$	43,503	$	36,268


⁽¹⁾	Contractual scheduled maturities for the debt over the next five years are as follows: 2015 – $8.3 billion; 2016 – $0.8 billion; 2017 – $2.4 billion; 2018 – $3.1 billion; 2019 – $2.8 billion; and thereafter – $4.1 billion.



Statement of Income (Loss) Year Ended December 31,	2014			2013			2012
	(in millions)
Income:
Dividends from other subsidiaries	$	1		$	1		$	57
Interest from subsidiaries	66			67			67
Interest from other HSBC affiliates	117			95			27
Other interest income	22			22			19
Other securities gains, net	—			—			21
Other income from subsidiaries	(1		)	276			(301		)
Other income from other HSBC Affiliates	395			543			472
Other income	(347		)	(799		)	(144		)
Total income	253			205			218
Expenses:
Interest to subsidiaries	45			45			69
Interest to other HSBC Affiliates	49			59			65
Other interest expense	266			231			198
Provision for credit losses	(3		)	—			—
Goodwill impairment	—			510			—
Other expenses with subsidiaries	23			—			—
Other expenses with other HSBC Affiliates	—			—			19
Other expenses	182			124			8
Total expenses	562			969			359
Loss before taxes and equity in undistributed income of subsidiaries	(309		)	(764		)	(141		)
Income tax benefit	107			101			47
Loss before equity in undistributed income of subsidiaries	(202		)	(663		)	(94		)
Equity in undistributed income (loss) of subsidiaries	556			325			(951		)
Net income (loss)	$	354		$	(338	)	$	(1,045	)



Statement of Comprehensive Income (Loss) Year Ended December 31,	2014			2013			2012
	(in millions)
Net income (loss)	$	354		$	(338	)	$	(1,045	)
Net change in unrealized gains (losses), net of tax:
Investment securities	176			(1,010		)	109
Other-than-temporarily impaired debt securities held-to-maturity	60			7			—
Derivatives designated as cash flow hedges	(73		)	118			28
Pension and post-retirement benefit plans	(5		)	8			6
Total other comprehensive income (loss)	158			(877		)	143
Comprehensive income (loss)	$	512		$	(1,215	)	$	(902	)



Statement of Cash Flows Year Ended December 31,	2014			2013			2012
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	354		$	(338	)	$	(1,045	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	4			(2		)	3
Net change in other assets and liabilities	(1,224		)	95			(2,438		)
Undistributed loss (gain) of subsidiaries	(556		)	(325		)	951
Net change in trading assets and liabilities	624			362			(321		)
Other, net	(36		)	(16		)	58
Cash provided by (used in) operating activities	(834		)	(224		)	(2,792		)
Cash flows from investing activities:
Purchases of securities	—			(139		)	(342		)
Sales and maturities of securities	21			208			14
Net change in loans	26			5			5
Net change in investments in and receivables due from subsidiaries	(6,003		)	365			(1,659		)
Other, net	—			—			1
Cash used in investing activities	(5,956		)	439			(1,981		)
Cash flows from financing activities:
Net change in short-term borrowings	1,393			(1,643		)	186
Issuance of long-term debt, net of issuance costs	8,013			4,401			7,209
Repayment of long-term debt	(2,554		)	(2,875		)	(2,858		)
Dividends paid	(73		)	(73		)	(73		)
Capital contributions from parent	—			—			312
Additions (reductions) of capital surplus	4			(17		)	(3		)
Cash provided by (used in) financing activities	6,783			(207		)	4,773
Net change in cash and due from banks	(7		)	8			—
Cash and due from banks at beginning of year	8			—			—
Cash and due from banks at end of year	$	1		$	8		$	—
Cash paid for:
Interest	$	363		$	321		$	317

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.