When we walked into the year, we were expecting, frankly, a pretty ratable trend in NIM over the course of the year. I think at the time we provided some guidance around single-digit basis points kind of trajectory throughout the course of the year. Most of that we now see kind of front-loaded just based on the shape of the curve and kind of how the outlook has shaped up at this point. So that’s really the driver. Overall, my outlook for NIM is going to be 5 or 6 basis points lower on a 400 basis to give you a sense a portion of which is yield with both of which is just funding costs being slightly higher.Scott Siefers Okay.Steve Steinour Remember, we are a large equipment finance lender. And that generally has much more activity in the fourth quarter.
That’s part of this second half build-a-tech, records.Scott Siefers Okay. Perfect. Thank you. And then can you guys speak broadly to some of the trends you’re seeing in the auto portfolio. I mean I know your portfolio, just given the quality and tenure of it, it tends to be a lot different than the industry as a whole. But at least in the media, you would think the industry is sort of collapsing, I guess. Just curious at top level trying to sort of appetite from you guys and then what you’re seeing at sort of overall?Rich Pohle Scott, it’s Rich. I can take that and then Zach and Steve can tack on to it. So from my standpoint, on the credit side, as we showcased during Investor Day, I mean, this is really a business we like through all sorts of cycles.
I mean it just become truly the core competency of the bank. If you look at what we saw in the first quarter, it was a continued gradual normalization in both delinquencies and charge-offs. But it’s still trending well below the historic losses that we would normally see. It was 14 basis points in the first quarter, up from 12 in the fourth quarter. From my standpoint, I look really closely at the origination metrics that we’ve got, we’re still originating at FICOs north of 17-18 and the loan to values are remaining relatively constant, reflecting a little bit more mix in new versus used. So from my standpoint, we’re going to expect this portfolio to continue to surpass [ph] that past performance. And unemployment rates are still low, which is certainly going to help the credit metrics here.
That’s the big driver of losses. So I’m feeling good about it. And maybe Zach can talk about the optimization that we’ve got from a return on capital standpoint.Zach Wasserman Sure. I’ll just tack on to that. Just I second the comment that the first feel great about the trajectory of the portfolio and we still see sustained demand and great relationships by the way, by a dealer. So I think we’re a core and integral funding partner for our dealers, which really gives us great access. In terms of optimization, that is one of the loan categories that we are actively modulating. We kind of detailed this at Investor Day last November, should you remember, that’s a business that is so effectively managed with respect to pricing and volume trade-offs that you can really pull those levers quite effectively to drive higher return and higher yield times that we want to need to, and this is certainly one of them.
And so we’re bringing back production a bit and seeing really strong returns as a result of it. So we’ll see some of that and continue to optimize as we go forward for the rest of the year. But that is still a really important business for us and one we’re pleased with kind of where we have seen it. Scott Siefers Okay. Perfect. Thank you for all the color. Zach Wasserman Thank you. Operator Our next question comes from Erika Najarian with UBS. Please state your question.Zach Wasserman Hi, Erika. Erika Najarian I just had 1 follow-up question for Steve. Steve, your starting point of CET1 is 9.5%. You accrete about 20 basis points of capital or more in the quarter. And like you said, your allowance already accounts for a tougher economic environment.
I think your shareholders absolutely appreciate the focus on returns. But do you see an opportunity for Huntington to perhaps, as we have a little bit more clarity on the downside to the macro backdrop, take advantage of that capital and reserve resilience, so to speak, and perhaps start thinking about being more opportunistic in market share taking?Steve Steinour Yeah, Erika, thanks for the question. We do — we have focused on and will continue throughout the year building the capital position of the company, strengthening it. We’re quite pleased with the results delivered in the first quarter and look for comparable results as we go through the year. We’re intending to be at or near the high end of our CET1 rank. And we’re doing that with a view that this threat of a recession is increasing.
And there’s also a backdrop of that there’s going to be some kind of regulatory action at some point in the foreseeable future around capital requirements. So with that in mind, that’s the purpose of it.Having said that, we intend to be opportunistic. We’ve got a lot of organic growth potential in the business lines. We’re very focused on our execution. And as you saw last year with the acquisition of Capstone and Torana, we’re always looking to build out ancillary fee businesses within the company. Beyond that, in times of disruptions, there tend to be people or teams that might be available, and we will again be — look to be opportunistic there. And we see this in aggregate as a moment to take market share, and that’s what we’re driving towards.
