Good morning. My name is Edison and I will be your conference operator today. At this time, I would like to welcome everyone to the PNC Financial Services Group Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to the Director of Investor Relations, Mr. Bill Callihan. Sir, please go ahead.

Thank you and good morning. Welcome to today's conference call for the PNC Financial Services Group. Participating on this call are PNC's Chairman, President and Chief Executive Officer, Bill Demchak, and Rob Reilly, Executive Vice President and Chief Financial Officer. Today's presentation contains forward-looking information. Our forward-looking statements regarding PNC performance assume a continuation of the current economic trends and do not take into account the impact of potential legal and regulatory contingencies. Actual results and future events could differ possibly materially from those anticipated in our statements and from our historical performance due to a variety of risks and other factors. Information about such factors, as well as GAAP reconciliation and other information on non-GAAP financial measures we discuss, is included in today's conference call, earnings release and related presentation materials, and in our 10-K, 10-Q, and various other SEC filings and investor materials. These are all available on our corporate Web-site, pnc.com, under Investor Relations. These statements speak only as of October 14, 2015 and PNC undertakes no obligation to update them. And now I'd like to turn the call over to Bill Demchak.

Thanks, Bill, and good morning everybody. I just have a few brief comments this morning before I turn it over to Rob. You will have seen today that we reported net income of $1.1 billion or $1.90 per diluted common share for the third quarter, which compares to $1 billion or $1.88 per diluted common share for the second quarter of 2015 and a $1 billion or $1.79 per diluted common share for the third quarter of 2014. Importantly, the $1.90 this quarter included $65 million of a net tax reserve release which added about $0.12 to our reported results. Beyond this line item, it was kind of just an okay quarter for us. I was pleased to see both core and reported NII up this quarter but was disappointed at the Fed's decision to leave rates unchanged at the end of September. This delay and the subsequent dubious statements from various Fed governors will at best delay our ability to grow NII materially in the future. Importantly, we were able to keep core NIM fairly stable this quarter as loan and security yields held constant. You will have seen that we gave up a couple of basis points on continued liquidity build, but this is largely behind us at this point. Loan growth was flat, which is reflective of the competitive market, but also the fact that we exited over $1 billion of non-LCR friendly assets during the quarter, and this runoff was largely offset by continued growth in our specialty segments. You will also notice that our investment securities increased by $6.7 billion this quarter, largely funded by the deposit growth of $5.3 billion. It's worth pointing out that despite this increase, our duration of equity actually became even more negative given the lower rate environment. You will…

Thanks, Bill, and good morning everyone. Overall, our third quarter results played out largely consistent with our expectations. Third quarter net income was $1.1 billion or $1.90 per diluted common share, with $0.13 of that related to tax reserve activity. These results also were driven by core growth in net interest income, continued increases in deposits and well-controlled expenses. Importantly, during the quarter, we maintained strong capital levels while delivering significant shareholder capital return. Our balance sheet is on Slide 4 and is presented on an average basis. As you can see, total assets increased by $5.9 billion or 2% compared to the second quarter. Total loans were down slightly linked quarter for reasons I will highlight. However, compared to the same quarter a year ago, total loans increased approximately $5 billion or 3%, primarily due to growth in commercial loans and in particular large corporate and commercial real estate lending. During the third quarter, commercial lending was up approximately $100 million as new production, again primarily in commercial real estate, was partially offset by the impact of ongoing capital and liquidity management activities. Consumer lending decreased approximately $650 million and about two-thirds of that was due to the runoff in the non-strategic consumer loan portfolio. Offsetting this decline somewhat in the quarter was growth in credit card and indirect auto loans. Investment securities were up $2.6 billion or 4% linked quarter. On a spot basis, investment securities increased $6.7 billion or 11% compared to June 30 as we purchased securities near quarter end. These were primarily agency, residential, mortgage-backed and U.S. Treasury securities, substantially funded by the deposit growth we experienced in the quarter. Our interest-earning deposits primarily with the Federal Reserve were $37.3 billion, an increase of $15.2 billion or 69% compared to the same time a year…

So, operator, if you could give our participants the instructions please?

[Operator Instructions] Your first question comes from the line of Betsy Graseck with Morgan Stanley. Please proceed.

I just wanted to follow-up on your comments around expecting the Fed is going to raise rates potentially in December and then maybe you could talk about what you've got baked in for next year's outlook and give us some indication as to what the plans are in the event that they don't come through as you are currently budgeting for?

This is Rob, and I should say this straight up for the call, we're going to refrain from 2016 guidance, but I can give you a general sense. As I mentioned in the prepared comments, we do have built into our plans the rate rise in December. Admittedly that's a close call. The revenue impact of what happens in 2015 or doesn't happen in 2015 is pretty insubstantial. In 2016 it does become substantial as you know, and if in fact rates don't rise, it will just make growing revenues that much tougher in 2016 than it would be if rates did in fact rise.

I guess I was just wondering, because I know you do have some investment spend going on and in particular in some of the IT that's coming to fruition in the middle of next year, I'm just wondering how you think about dropping any of that to the bottom line versus what you've done this year. I know you've spent most of your cost saves reinvesting in the business. Is that how you're thinking about next year as well or is there any room for dropping some of the expense saves that you've been generating along the way to the bottom line when they happen?

I'll let you know just in terms of the expense discussion, it's been – expense management has been a focus point for us and we've been doing pretty well. Our philosophy has been these last couple of years to in effect take the expense savings that we're generating to fund the investments that we are making in technology and the retail bank transformation. We expect those investments to continue into 2016. We will have a continuous improvement program in 2016. We are not there yet in terms of numbers because we haven't done our budgeting, but the philosophy will be the same.

I think the notion of would we drop – if what you're asking is, would we forego tech spend and slow down our investments because of the near-term environment, the answer is no. At the margin, we stretch things out a little bit in certain places but to make a change in strategic direction in technology as a function of near-term rate outlook doesn't make a whole lot of sense to me.

I get that. I just thought that some of the tech spend will come to fruition over the next 12 to 18 months, is that right, that you've got…

In the sense that it will be behind us or…?

In the sense that some of the big projects that you've got will be completed.

Yes, but what happens on the expense line, so we will – as we are completing the work, the capital expenditure is turning into ongoing expense through depreciation. So even though we might be done with the actual work, you're not going to see a drop in our tech spend line because it's going to roll through time in the depreciation line.

Okay, I got it.

But what you will see is a continuation of kind of occupancy down, tech up and people down, the compensation costs as we kind of go through that transformation.

All right, that's great, thanks.

The next question comes from the line of Scott Siefers with Sandler O'Neill & Partners. Please proceed.

If you could spend a second talking or kind of expanding upon your comments on the rate situation, if indeed we are going to be lower for potentially a lot longer, does that change the way you've been thinking about managing the balance sheet? For example, capital hit could be less of an issue if rates are going to stay low, so does that change your thoughts on the securities portfolio, could you sort of extend that with swaps, stuff like that?

So there is no immediate thought to change anything. Obviously if rates were to stay at these levels forever, then we could invest the excess balances both in Level 1 and some capacity we have in Level 2 securities. We don't think that's going to be the case. We do think it's going to be delayed. With respect to the issue in a rising rate environment, the capital hit we have taken in AOCI, we stress for that anyway inside of the CCAR exam and have plenty of capital to absorb that. So that doesn't really drive our decision as to how much we invest or not, it's more a function of kind of long term value I guess where we expect rates will be through time.

Okay, all right, that's helpful. And then maybe just a quick question on the fee side, just as you look at things, fee momentum has been such an important offset to the tougher NII environment. If you look at sort of the weaker than expected trends this quarter, to what extent you can say they are kind of transitory versus to what extent do you think that they are sort of controllable such that you can regain the kind of momentum you've had in the past several quarters?

A bunch of it was transitory in the sense against the second quarter comparison we had that big trust fee in wealth management which made the comparison tough. We also just at the end of the quarter with some volatility in rates dropped some of the valuation benefit we would have had in mortgage. So that will go away. I mean the one issue that we don't control is the beta that shows up through not only our wealth management segment but also the BlackRock income that we record and obviously that hurt our results this quarter, just the drop in equity values. Beyond that, the core fee momentum that we're seeing in consumer and corporate services, which are the biggest drivers, remains really strong and we think that will continue.

Okay, all right, that sounds great. Thank you very much.

The next question comes from the line of Matt O'Connor with Deutsche Bank. Please proceed. Matt O’Connor: If I were to follow up on the balance sheet question, honing in both on the liquidity but also just broadening it out, you've got a lot of liquidity, a lot of deposits, a lot of capital, not as many loans relative to your balance sheet as peers, and I get that you don't want to add $34 billion of securities all at once or even kind of over the next several quarters, but what are you thinking about on the loan book what you can do there maybe strategically a little different to deploy some of that liquidity and boost the revenues over time?

It's a fair question. As I mentioned, inside of what looked like a flat quarter on loan growth, we have been trimming certain exposures that are LCR and capital unfriendly. That slows through time and growth will take back over. I would tell you that we have looked strategically at some of the loan heavy businesses that have recently been sold. Unfortunately we haven't been able to execute on any of those, but the right business with the right risk profile that would be synergistic to what we already do, we would take a look at, we just haven't been able to do that at a price that makes sense to us. Beyond that, again carrying the extra capital and the extra liquidity to the extent that it's not burning a hole in our pocket and causing us to do something stupid with it, doesn't have a lot of – doesn't cause a lot of long-term value deterioration, it is there as an option as things change going forward. Matt O’Connor: Yes, I think it was that optionality that I was really kind of trying to get at. And if you had to rank in terms of like why loan growth isn't more, is it weak demand, bad pricing, concern on the terms, I'm sure it's a combination of all three, but like what would the pecking order be?

Interestingly, spreads have kind of stabilized inside the core middle-market commercial space. We continue to see growth in the specialty segments. We see growth that's M&A related. Part of what we're seeing I think in loan demand was the general slowdown in sentiment in the third quarter on corporate kind of coming on the back of both the volatility coming out of China and in the markets and then Jerry Allen statements on kind of the economy. So I think some of the last quarter's performance was just reflective of the environment in the third quarter versus the second and that can change through time. Matt O’Connor: Okay, all right, thank you very much.

The next question comes from the line of Paul Miller with FBR & Co. Please proceed.

We're just wondering, I know you guys have less than 2% energy exposure, but in some of these markets that you're seeing, is there any distress in the overall economics of some of these towns that you are in because of the lower commodity prices?

Nothing that's hit. So I get where you're going. We've seen lower energy prices hit energy companies directly following through to energy suppliers. We're not heavy – I imagine that's the case probably down in parts of Texas. I don't know that we're seeing that in any of the markets that are a core part of our footprint.

And I would just add that our [economists points out] [ph] that the lower gas prices are a net benefit to PNC in most of the markets on the consumer side.

On the consumer side. I'm just worried about some of the derivatives. I know parts of Pennsylvania have been really good with resellers, and I'm just wondering if this is reverse of some of those areas' economics.

Interestingly it hasn't really. I think partly because a lot of the cuts we saw in capital hit traditional oil as opposed to necessarily what's going on in the natural gas markets, so that while it hasn't increased, they haven't really pulled back so much locally. As you said Pittsburgh for example continues to increase its employment role and capital spend in our region despite what's going on in energy.

And then can you talk a little bit about the RBC acquisition? I know that's been for a couple of years now, I know it still probably doesn't move the needle, but is it still in the double-digit growth phase and what type of experience you have seen down there?

This is Rob. Continued strong performance, very consistent with say the trajectory that we've been on, we're pleased we're up and running in each of those markets with our full model, our brand awareness in those markets is approaching our brand awareness in our legacy markets, and just about in every category and in every business the growth rates are accretive to our legacy businesses, in some cases just by the nature that it's a relatively small base but also consistent with what we intended to do there.

The next question comes from the line of Gerard Cassidy with RBC. Please proceed.

A bigger picture question for you, Bill. Obviously your return on asset number is pretty good in this environment around 119 basis points, the return on equity number is less than 10%. Can you give us a view of what you're thinking with the return of excess capital? None of the banks have been willing to ask for more than earnings in the CCAR process. Maybe the excess capital could be used for acquisitions once you feel comfortable that when you read what MNC went through and what the Fed said about the application process, what you guys need to – you as an industry not just PNC, but what everybody needs to be at in terms of getting a big deal done internally in system CRA, CCAR, et cetera, so could you give us the picture if this environment doesn't change much where you guys are real good on credit, you're not going to overextend yourself on the growth, you don't get much benefit from interest rates, how do you take it to the next level with the capital picture, acquisitions and return of capital?

So in simple form your question is, what do you do with the capital trap that exists in a business or an industry that in effect can generate capital at a pace that at least in my view we can intelligently deploy it in the core franchise?

Correct.

So our bias look has been and will continue to be and we'll continue to push on the limit to which you can return capital through the CCAR process. You've heard me say before that in some ways we are restricted because our base case submission typically has lower total income than we earn because it doesn't count some of the line items that show up in our reported earnings. But we're going to push on that and I would tell you that there is no explicit, you can't go beyond a 100, they've been very clear with us on that, and for various reasons people have chosen not to push it. Outside of that, you heard me in one of the prior questions, if we could find asset generating business within our risk profile that are synergistic to the rest of our business, we'd pursue those. I don't know that those are necessarily in the traditional retail bank acquisition space but some of the things you've seen come to the market out of one big seller in the headlines recently were appealing to us. So we think about that a lot, and you're absolutely right, we're generating capital and have capital beyond a place that we need today to run the Company.

Thank you. And the follow-up, Rob, maybe you can share with us, you touched on your oil portfolio and we recognize that's only 2% of the commercial loan book, have you guys done any stress testing? Yesterday J.P. Morgan suggested they stress-tested their portfolio down to $30 a barrel and the results were not that bad relative to the size of their book. Have you guys done anything like that?

We've done a little bit, Gerard, not to the same extent that J.P. has. I saw and heard those same comments. Again, less than 2% of our total commercial loan book, less than 1.5% of our total loan book, so relatively small dollar amount. So we have done some stress testing at various price levels and nothing major in terms of outside relative to the enterprise.

The next question comes from the line of John Pancari with Evercore ISI. Please proceed.

Just back to the loan growth question again, I know in the past you've alluded to the focus on some of the loan only relationships you've had and accordingly you were a little bit more cautious in growing your pure midmarket type of relationships if you couldn't secure the fees. So can you just update us, is that conservative posture or that approach at all still impacting your loan growth at all in the commercial bucket?

Sure it is. By the way I don't know that that's conservative, I think that's rational. I mean what we're effectively saying is extend credit on a relationship basis that covers your cost of capital. So in an environment today where inside the C&I space our net charge-offs are effectively zero and have been for the last couple of years, you could make any loan and it looks good, it drops to the bottom line, but we don't expect today's charge-off levels and reserve ratios to hold through time, and once you normalize back to whatever that's supposed to be, 40 or 50 basis points, these marginal loans don't look so good if you're not getting the related fee income that come with them. By the way, that's nothing different. We've done that since the first day I got here 13 years ago. That's the model we pursue.

Okay, all right. And then separately, on the expense side, just want to get a little bit of an update on your expectation around the efficiency ratio. I mean we're at 62% here. How should we think about where that can trend through 2016 given the expense areas that you're still focusing on?

As you know we don't have an explicit target in terms of the efficiency ratio. We do have a disciplined expense management effort in place which is in terms of our guidance going to work our year-over-year expenses down a bit. So I think generally efficiency ratio, we are in the neighborhood that we are now and are likely to be there, a substantial step-down in that we are going to need some help from rates.

Okay, and then how would you – [indiscernible] but how would you quantify substantial step-down?

I mean give us a rate environment. The efficiency ratio runs well into the 50s in the normalized rate curve, so unfortunately we just don't see that happening in the near-term.

Right, so if we get a one and done or just a modest hike and then it slows, could you see [indiscernible]?

[Indiscernible], I mean those all help. If you think about it, we're running at 62 this quarter, we managed to hold core NIM flat, we're going to [heat on] [ph] purchase accounting in 2016, I don't know if we've put a number on it.

[Indiscernible] but less than 200.

It's 200 this year, it will be less next year, so that's a drop in revenue, we'll fight that with fees, try to hold expenses flat. I mean it's not – until rates move, our ability to materially grow the Company and therefore improve our efficiency ratio is a struggle. We do it through expense management, we do it through fee growth and the things that we can control and focus on, and that's what we're doing.

Got it, okay. Thank you.

The next question comes from the line of Erika Najarian with Bank of America. Please proceed.

My questions have been asked and answered.

The next question comes from the line of Ken Usdin with Jefferies. Please proceed.

Just a couple of quick cleanups if you don't mind. So again staying away from the next year full-year but just coming back to Bill your comments about with that rates kind of tough to grow NII, assuming you're talking about kind of an on basis, Rob, do you just have kind of even to help us out understand the expected PAA decline next year after the 180 to 200 that you are expecting for this year?

Ken, just what we just said there on the last question, we don't have a 2016 number for you but by definition it will be less than the decline we experienced this year which is the 180 to 200.

So if we just start, I guess if we just started ending at 70 and I ran it across 280 versus from that 300…?

That's a good approach. The delta is around the recoveries as you know which can be plus or minus 15 million or so.

Okay, that's what I wanted to clarify. Okay, mortgage gain on sale was – you have that bigger number just the way you calculated it, it's back down to 2.8% now. Has it found a new level here or any trends to discern in terms of do we have stability around that upper 2s gain on sale margin?

I don't think so, Ken. I think we guide to 300 which I think is the number that is the best number going forward. We see a lot of volatility in terms of those basis points because they are relatively small numbers, but the prior quarter at 3.20-ish down to 2.80-ish was all a result of the combination of that delta between the fair value marks and the RMSR hedge gains that Bill referenced. Loan production and servicing were actually pretty flat.

Right, okay. And then the last one just you mentioned that corporate services was helped by some pretty big M&A fees in the third quarter and I think you kind of alluded to that being down in the fourth, but isn't Harris Williams typically strong at the end of the year and I'm just wondering can you give us kind of a little bit of an update on what's happening within the pieces of those major businesses within corporate services and has something changed that you wouldn't see that typical year-end strengthen in Harris Williams?

It's a good question. We did see the rise in the third quarter level of Harris Williams which was a great increase. Some of the fee back there was some of the deals got pulled in that typically would have otherwise been in the fourth quarter got pulled into the third quarter for timing reasons on the client side. So it just has a little bit in terms of our projections is more sort of in that stable overall because that if in fact that was what would otherwise have been fourth quarter, we don't make up for it.

Okay. And then last one, I know we'll get some of this in the Q, but inside Asset Management, obviously the second to third was affected by that 30 million trust recovery that you mentioned. Can you just kind of help us understand core PNC Asset Management versus the BlackRock?

Flat to down-ish a bit. So setting the trust settlement aside, down a couple of million dollars.

On the core PNC?

On the core, yes.

Okay, all right, understood. Thanks guys.

The next question comes from the line of Matt Burnell with Wells Fargo Securities. Please proceed.

First of all, Rob, maybe a question for you, a question on loan commitments appear to be growing a little bit faster than loans, I'm curious if there is any specific areas where those are growing faster. You mentioned commercial real estate being an area where you are making some good momentum in terms of loan growth, but just curious if I'm right suggesting that commercial real estate is an area where you are growing commitments. And I guess to Bill's earlier comment about generating fee revenue off that, how successful have you been with those new relationships in terms of driving fee income?

I think generally speaking in answer to your first question around just sort of where commitments are rising, it is generally still mentioned that our specialty businesses within corporate banking. In answering your second question in terms of how is it going in terms of building out those relationships, we think it's going well. A big part of that obviously is for the growth in the fee income that you see in the corporate services line, so not just Harris Williams but obviously treasury management and corporate finance fees were good in the quarter, and that's where you see most of those sort of ancillary services sold into those relationships.

Rob, and then my follow-up really is on the interest bearing costs, those are up a couple of basis points quarter over quarter. Is there anything you're doing on the deposit side in terms of targeting specific areas or certain products that is pushing that cost of interest bearing liabilities up?

A couple of things. First on the deposit gathering side, we have been in many of our markets at the high end of rate paid in order to get ahead of LCR and liquidity needs, particularly if and when rates start to go up, so some of that shows up there. The other thing that's happened is that the change in Moody's methodology as it relates to how they rate banks has caused us to have to increase our wholesale funding in bank notes at the bank level and the whole industry has done that and you've seen spreads gap out pretty aggressively for wholesale funding of banks. So I'm sure that that is playing into that number. So I think it's up 2 basis points quarter on quarter. I don't know that you'll see that – as I said before, we're pretty far along and done on what we need to do on the liquidity side, so hopefully that's behind us.

The next question comes from the line of Bill Carcache with Nomura. Please proceed.

Some of the banks that have reported so far are showing loan growth, paced deposit growth and more broadly we have recently also started seeing that dynamic in the [HA] [ph] data. However, you guys continue to generate very healthy deposit growth in excess of your loan growth. Do you have any thoughts on what may be driving that?

Our deposit growth is purposeful, it's largely retail-based, although even our C&I deposits are growing pretty aggressively, and we're doing it to get ahead of – as Rob mentioned, we are over the 100% threshold on holding company and bank for LCR, which is ahead of the compliance period. I don't know if our peers are in fact there yet. We thought it's important to get in front of that. So almost independent of what we do on loans, deposit growth was purposeful and accomplished. On the loan side, we have a bit of a mix shift. As I mentioned, on the C&I side, we are exiting some things that are LCR unfriendly and things that are lending on the relationships with tight spreads. We continue to grow the specialty segments and have been even this quarter offset pretty aggressive runoff on the non-LCR side. I think we dropped 1.2 billion in LCR unfriendly and we managed to have a net positive C&I growth. So if you did the math on that, you'd annualize that to about a 4% growth rate in C&I. Retail, it's a struggle because we're running off educational loans, the discontinued segment, kind of trading water and home equity with some growth coming through in credit card and auto.

And then down in education.

And down in education as the government loans run down. So I don't – purposefully changing our C&I or retail growth trajectory at this point beyond what you're seeing, absent the runoffs, I think would change our risk bucket and I don't think that's the right thing to do. By the way, one of the things you'd see through time, if you went and you target our loan growth through time against peers, you would see that during the crisis and just after the crisis, we grew loans much more aggressively than everybody else, kind of the best time to make loans is when nobody else is making them, at the highest spreads and what we've been focused on as spreads have contracted and competition has got more aggressive is retaining relationships and cross-selling relationships, that's just why you're seeing the acceleration in our fee income. So it doesn't mean we're not going to grow loans, it doesn't mean we're not going to pursue new relationships, but dollars to the bottom line in terms of degree of difficulty, it's easier today to grow fees than it is to pursue economically attractive loans.

Thanks Bill. If I could follow up along these lines, you mentioned last quarter that you wouldn't be surprised if you guys were picking up some of the non-operating deposits that some of the larger banks were deemphasizing. Can you give us an update on where you think some of those non-operating deposits are going and perhaps why you might see value in accepting them?

I mean I'm sure some of the growth we've seen in our C&I deposits reflect that. We have room inside of our leverage ratio to be able to accept those deposits and we accept them and pay a rate on them where we earn a margin even against the excess balances at the Fed. So maybe it drops our ROA at the margin and NIM at the margin but it's riskless dollars to the bottom line and it doesn't affect – like I said, we had room inside of our leverage ratio, so it's fine.

And it's often in the context of a relationship that we have.

Understood. And then finally if I can, a related longer-term question, Bill, on competition for deposits, some believe that the industry's core loan to deposit ratio is higher than what it would appear to be on a reported basis once you factor in deposit outflow risk under LCR, and with that [recent age] [ph] data dynamic that we talked about showing loan growth now, pacing deposit growth across the large banks, do you think there's a chance that we could actually start to see competition for deposit intensify a bit independent of the Fed raising rates?

I do. It's one of the reasons we got out ahead of it. So we are in the camp that when people start to figure out what LCR is and the compliance period, it comes into play that retail deposits are going to matter and there's going to be a tough fight for it.

Great, that's really helpful. Thank you.

The next question comes from the line of Mike Mayo with CLSA. Please proceed.

If interest rates stay lower for longer, you made it clear that you will not take extra risk, you will not cut tech spending and you will not cut strategic spending, so what are your levers to better control expenses if revenues wind up weaker than expected?

First just the tech spending and the strategic spending are self funded and in fact cause savings on the other side. So if you think about the spending we are doing like inside of the branch rebuild, we are effectively dropping people. So people cost, occupancy cost as we drop branches has been replaced by technology cost, right. I think it's better for customers long-term, it has a better long-term growth trend and it's expense neutral. So if I cut the technology cost, I'm left back with my people cost, if you follow me. The same thing, a lot of the tech spend that we are spending in automating systems and applications and core processes that are in many cases manual today on the back of new regulation, so again we are sort of investing into long-term efficiency without a lot of near term paying. We've been able to self-fund it as we go forward. Rob's comment on it is there much to do outright on the expense side, is that going to be a driver of longer-term bottom line change, and the answer is no. We'll stay really focused on it. We can stretch tech spend out, we can delay, we can do some stuff at the margin, but the real driver ultimately has to come from quality loan growth, cross-selling fee income and hopefully a move in rates. And by the way, just to go back to your original assumption, if basically we are going to be in this low rate environment for a long period of time and we come to that conclusion and that's what's being foreshadowed by the Fed, then we'll invest into it, right. I mean at this point we have half the Fed governors telling us they're going in December, or more than half, and half saying no, so if they all said no, you'd probably have a bit of a rally in the backend but we have $34 billion of cash sitting at the Fed at 25 basis point. So there's a lever there that I don't think we should use or need to use but it's available.

The next question comes from the line of Eric Wasserstrom with Guggenheim Securities. Please proceed.

Operator, I mean do we want to poll again for any other questions that are out there?

[Operator Instructions] Mr. Wasserstrom, your line is open. Please proceed with your question.

My questions have been addressed. Thank you.

One last question.

And we do have a question from Nancy Bush with NAB Research. Please proceed.

Bill, you've been the only CEO thus far who has said, we are disappointed with the Fed's failure to raise rates. I think you said the same thing as I recall in Boston about three years ago. You've been one of the more forthright I think in not necessarily criticizing but certainly calling it to everyone's attention. We know what it's doing to the banking industry but could you just give us your perspective on what ZIRP is doing to the rest of the economy?

Sorry, on what is doing?

ZIRP, zero interest rate policy.

Okay, that's what I need, a new buzzword. Look away from what's happening inside of bank, I think a couple of things. There is not a single CFO, CEO person that I've met anywhere inside of this country who has suggested they're going to change their investment decisions or purchasing behavior as a function of 25 basis point change in interest rates. I personally believe that the practical impact on the economy of raising rates back to a more normalized level, figure out what that is, is a lot less than what people are assuming it is because I think they were pushing on a string when they dropped rates from the 1% level down to zero. I think that in effect the destruction of retirement income for retirees, we have trained people their whole lives that once they retire and they are supposed to change their 401(k) and put it into kind of a less risky fixed rate investment portfolio, today they can't do it, they can't live on it. So we are stretching out the need for people to work, we are destroying their ability to retire with the savings they have today and we are basically in the extreme bailing out the younger generation and putting it on the backs of retirees with this interest rate policy and I continue to think it's wrong, I've been critical of it, I'm biased because it hurts the banking industry, but I just think that zero on rates is a different starting point than when rates were at 3% and thinking that they are supposed to tighten from 3%, and for some reason that seems to be lost.

So when they do decide to move and let's assume it's 25 basis points which seems to be the consensus, does it make any difference?

That's right, I don't think it does, I mean at the margin it helps us. For no other reason they're going to do it through the interest paid on excess reserves and we sit with 35 whatever billion dollars sitting there, but no, I just don't think it has a direct impact on the economy. People come back and they say it's going to move the dollar more than it has and in turn hurt exports. Perhaps, but is that on a 25 basis point move, is it on a 50 basis point move, is it on a 1.5% move, it's just not obvious to me. And I think the fact, I think there was something to this general notion that by choosing not to move rates they were signaling a real lack of confidence in the economy, which is playing out now in the sentiment you are seeing from surveys with consumers and corporations, and confidence matters.

All right, thank you.

We are approaching the hour, so at this point we're going to conclude our call. We thank all of you for participating in today's call and look forward to talking to you later on. Take care.

This concludes today's call. You may now disconnect.