Financial Statements of HSBC USA Inc. (Parent)

Condensed parent company financial statements follow:



Balance Sheet At December 31,	2018		2017
	(in millions)
Assets:
Interest bearing deposits with banks	$	2	$	1
Securities held-to-maturity (fair value of $2 million and $3 million at December 31, 2018 and 2017, respectively)	2		2
Receivables and balances due from subsidiaries	15,593		14,536
Receivables from other HSBC affiliates	2,510		6,722
Investment in subsidiaries:
Banking	23,765		23,316
Other	1		1
Other assets	179		148
Total assets	$	42,052	$	44,726
Liabilities:
Interest, taxes and other liabilities	$	127	$	137
Payables due to subsidiaries	12		3
Payables due to other HSBC affiliates	12		22
Short-term borrowings	2,532		1,154
Long-term debt⁽¹⁾	16,017		22,474
Long-term debt due to other HSBC affiliates⁽¹⁾	2,846		842
Total liabilities	21,546		24,632
Total equity	20,506		20,094
Total liabilities and equity	$	42,052	$	44,726


⁽¹⁾	Contractual scheduled maturities for the debt over the next five years are as follows: 2019 –$4.1 billion; 2020 – $5.8 billion; 2021 – $2.0 billion; 2022 – $1.3 billion; 2023 – $1.0 billion; and thereafter – $4.7 billion.



Statement of Income (Loss) Year Ended December 31,	2018			2017			2016
	(in millions)
Income:
Dividends from banking subsidiaries	$	137		$	136		$	136
Dividends from other subsidiaries	—			—			17
Interest from subsidiaries	367			309			268
Interest from other HSBC affiliates	55			37			115
Other interest income	—			5			2
Other securities gains, net	—			—			7
Other income (loss) from subsidiaries	(2		)	(1		)	1
Other income (loss) from other HSBC Affiliates	(829		)	1,093			418
Other income (loss)	792			(772		)	(321		)
Total income	520			807			643
Expenses:
Interest to other HSBC Affiliates	62			40			43
Other interest expense	574			541			475
Other expenses with subsidiaries	8			15			27
Other expenses	2			3			3
Total expenses	646			599			548
Income (loss) before taxes and equity in undistributed income (loss) of subsidiaries	(126		)	208			95
Income tax expense (benefit)	(66		)	18			(27		)
Income (loss) before equity in undistributed income (loss) of subsidiaries	(60		)	190			122
Equity in undistributed income (loss) of subsidiaries	380			(369		)	7
Net income (loss)	$	320		$	(179	)	$	129



Statement of Comprehensive Income (Loss) Year Ended December 31,	2018			2017			2016
	(in millions)
Net income (loss)	$	320		$	(179	)	$	129
Net change in unrealized gains (losses), net of tax:
Investment securities	(220		)	211			(227		)
Fair value option liabilities attributable to our own credit spread	324			(193		)	—
Derivatives designated as cash flow hedges	40			(7		)	13
Pension and post-retirement benefit plans	8			2			3
Total other comprehensive income (loss)	152			13			(211		)
Comprehensive income (loss)	$	472		$	(166	)	$	(82	)



Statement of Cash Flows Year Ended December 31,	2018			2017			2016
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	320		$	(179	)	$	129
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	8			12			14
Net change in other assets and liabilities	(1,277		)	481			271
Undistributed (income) loss of subsidiaries	(380		)	369			(7		)
Other, net	16			5			(4		)
Cash provided by (used in) operating activities	(1,313		)	688			403
Cash flows from investing activities:
Sales and maturities of securities	—			1			254
Net change in investments in and receivables due from subsidiaries	(1,045		)	2,843			(496		)
Net change in receivables from other HSBC affiliates	4,211			(2,882		)	887
Other, net	10			403			(24		)
Cash provided by investing activities	3,176			365			621
Cash flows from financing activities:
Net change in payables to other HSBC affiliates	(19		)	(2		)	19
Net change in short-term borrowings	1,378			(97		)	(727		)
Issuance of long-term debt	5,571			4,826			3,587
Repayment of long-term debt	(8,722		)	(5,684		)	(3,815		)
Preferred stock issuance	—			—			1,265
Preferred stock redemption	—			—			(1,265		)
Other increases (decreases) in capital surplus	6			(18		)	(21		)
Dividends paid	(76		)	(77		)	(67		)
Cash used in financing activities	(1,862		)	(1,052		)	(1,024		)
Net change in cash and due from banks and interest bearing deposits with banks⁽¹⁾	1			1			—
Cash and due from banks and interest bearing deposits with banks at beginning of year⁽¹⁾	1			—			—
Cash and due from banks and interest bearing deposits with banks at end of year⁽¹⁾	$	2		$	1		$	—
Cash paid for:
Interest	$	649		$	584		$	517


⁽¹⁾	As a result of adopting new accounting guidance in 2018, we changed our presentation of cash and cash equivalents to include cash and due from banks as well as interest bearing deposits with banks. See Note 2, "Summary of Significant Accounting Policies and New Accounting Pronouncements," for further discussion.

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.