Financial Statements of HSBC USA Inc. (Parent)

Condensed parent company financial statements follow:



Balance Sheet At December 31,	2017		2016
	(in millions)
Assets:
Interest bearing deposits with banks	$	1	$	—
Securities held-to-maturity (fair value of $3 million at both December 31, 2017 and 2016)	2		3
Receivables and balances due from subsidiaries	14,536		17,356
Receivables from other HSBC affiliates	6,722		3,863
Investment in subsidiaries:
Banking	23,316		23,626
Other	1		3
Other assets	148		267
Total assets	$	44,726	$	45,118
Liabilities:
Interest, taxes and other liabilities	$	137	$	106
Payables due to subsidiaries	3		1
Payables due to other HSBC affiliates	22		27
Short-term borrowings	1,154		1,251
Long-term debt⁽¹⁾	22,474		22,542
Long-term debt due to other HSBC affiliates⁽¹⁾	842		836
Total liabilities	24,632		24,763
Total equity	20,094		20,355
Total liabilities and equity	$	44,726	$	45,118


⁽¹⁾	Contractual scheduled maturities for the debt over the next five years are as follows: 2018 –$7.1 billion; 2019 – $4.0 billion; 2020 – $5.8 billion; 2021 – $1.6 billion; 2022 – $1.7 billion; and thereafter – $3.1 billion.



Statement of Income (Loss) Year Ended December 31,	2017			2016			2015
	(in millions)
Income:
Dividends from banking subsidiaries	$	136		$	136		$	104
Dividends from other subsidiaries	—			17			1
Interest from subsidiaries	309			268			97
Interest from other HSBC affiliates	37			115			121
Other interest income	5			2			14
Other securities gains, net	—			7			1
Other income (loss) from subsidiaries	(1		)	1			(2		)
Other income (loss) from other HSBC Affiliates	1,093			418			(79		)
Other income (loss)	(772		)	(321		)	121
Total income	807			643			378
Expenses:
Interest to subsidiaries	—			—			23
Interest to other HSBC Affiliates	40			43			28
Other interest expense	541			475			375
Other expenses with subsidiaries	15			27			—
Other expenses	3			3			6
Total expenses	599			548			432
Income (loss) before taxes and equity in undistributed income (loss) of subsidiaries	208			95			(54		)
Income tax expense (benefit)	18			(27		)	(76		)
Income (loss) before equity in undistributed income (loss) of subsidiaries	190			122			22
Equity in undistributed income (loss) of subsidiaries	(369		)	7			308
Net income (loss)	$	(179	)	$	129		$	330



Statement of Comprehensive Loss Year Ended December 31,	2017			2016			2015
	(in millions)
Net income (loss)	$	(179	)	$	129		$	330
Net change in unrealized gains (losses), net of tax:
Investment securities	211			(227		)	(392		)
Fair value option liabilities attributable to our own credit spread	(193		)	—			—
Derivatives designated as cash flow hedges	(7		)	13			(14		)
Pension and post-retirement benefit plans	2			3			—
Total other comprehensive income (loss)	13			(211		)	(406		)
Comprehensive loss	$	(166	)	$	(82	)	$	(76	)



Statement of Cash Flows Year Ended December 31,	2017			2016			2015
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	(179	)	$	129		$	330
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12			14			25
Net change in other assets and liabilities	485			274			517
Undistributed (income) loss of subsidiaries	369			(7		)	(308		)
Other, net	5			(4		)	(31		)
Cash provided by operating activities	692			406			533
Cash flows from investing activities:
Purchases of securities	—			—			(56		)
Sales and maturities of securities	1			254			298
Net change in investments in and receivables due from subsidiaries	2,843			(496		)	(4,489		)
Net change in receivables from other HSBC affiliates	(2,882		)	887			835
Other, net	403			(27		)	(38		)
Cash provided by (used in) investing activities	365			618			(3,450		)
Cash flows from financing activities:
Net change in payables to other HSBC affiliates	(2		)	19			—
Net change in short-term borrowings	(97		)	(727		)	(2,794		)
Issuance of long-term debt	4,826			3,587			11,946
Repayment of long-term debt	(5,689		)	(3,815		)	(9,870		)
Preferred stock issuance	—			1,265			—
Preferred stock redemption	—			(1,265		)	(300		)
Capital contribution from parent	—			—			4,000
Other increases (decreases) in capital surplus	(18		)	(21		)	(1		)
Dividends paid	(77		)	(67		)	(65		)
Cash provided by (used in) financing activities	(1,057		)	(1,024		)	2,916
Net change in cash and due from banks	—			—			(1		)
Cash and due from banks at beginning of year	—			—			1
Cash and due from banks at end of year	$	—		$	—		$	—
Cash paid for:
Interest	$	579		$	517		$	406

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 23, "Retained Earnings and Regulatory Capital Requirements," for further discussion.