And so, I think you guys are in a good position to maybe handle this question, specifically for commercial real estate. Can you guys share with us the differences that you are seeing in the current commercial real estate market in your portfolio versus what it was like in ‘08, ‘09. Now granted, I know you’ve lowered the exposure. So, that’s a major difference. But in terms of the cap rates, obviously, have moved up, the refinancing risk is here. But can you share with us how you guys could handle that more — I’m assuming more easily today than what happened in ‘08, ‘09.John Turner Yes. Gerard, this is John. I would say we rebuilt our business beginning in kind of the ‘09, ‘10 time frame, recognizing that it’s very much a specialized business.
And we’ve built it around professional real estate bankers who are working with professional real estate developers. Generally, they are either regional or national developers. They have strong capital positions, good access to liquidity, strong track records. They’re operating in some of the primary markets across the U.S.We rebuilt our business with a focus on concentration risk management. So it’s well distributed, portfolio is across different segments of the industry as well as across geographies. We have built a business, I think, very conservatively from a structural standpoint requiring good equity in projects. And we’re constantly stressing our exposure. It’s a relationship business for us. We’re transacting with customers who maintain deposit relationships with us who use our capital markets capabilities.
We’re very close to those customers. And as a consequence, I think we have a very good handle on the exposure that we have across the business.And we have the benefit of operating in some of the best markets in the country as well. If you look at markets like Dallas and Houston, Orlando, Charlotte, Atlanta and Nashville, where we’re doing business and where the majority of our portfolio resides, we have good underpinning economy to help support the projects as well.Gerard Cassidy And maybe, David, on a technical question regarding the commercial real estate, how does the elimination of TDRs now help or hinder you’re guys working out with some of your customers that may inevitably have an issue with their property?David Turner Well, we’re not going to let an accounting change, change or what we’re going to do for our customer.
If we need to have a restructuring, then that’s what we’ll do. And we’ll let the accounting is what it is. So I don’t think that will impact us at all, Gerard, from moving forward just like we always have.Gerard Cassidy Very good. And then just as a follow-up question, another technical one for you, David. Can you just remind us about the CECL being phased into capital, just the time range and how that may affect your capital ratios going forward?David Turner It’s roughly the same number you just saw. It’s almost a straight line number over, I think, it’s four periods. So we’ve got more of these coming. It’s $100 million in round numbers, Gerard, in the first quarter of each of the next three years, about 7 points — I’m sorry, two more years.
And so, it will be about a 7 basis-point hit to us each of the next two years.Operator Our next question comes from the line of Peter Winter with D.A. Davidson.Peter Winter You guys had pretty solid average loan growth this quarter and did maintain the period-end outlook. Can you just talk about loan demand? And then, secondly, if there’s any areas maybe where you’re tightening underwriting standards or being more selective at this stage?John Turner Yes. So, we — obviously, in this economy, we want to be thoughtful about any new relationships that we acquire and any new credit that we book. I think I would like to think that we’re not changing our underwriting standards that they are consistent across all economic cycles. But at the same time, when you think about allocation of capital and lending into this environment, we want to be thoughtful and prudent.We want to make sure that any new business we get as a result of calling activity that’s been ongoing for some time.
We understand the relationship potential and opportunity that we have a good plan. The bulk of the loan growth that we’ve experienced in the wholesale business has been loans to existing customers. And in the last quarter, a good bit of the growth was in our industry verticals, particularly in power and utilities, energy and the industrial space.We’re also seeing a little growth within our Regions Business Capital business, asset-based lending business during this period of time. And then on the consumer side, mortgage grew and Interbank grew as a result of putting mortgage because we’re generating some arms during the period — on balance sheet arms in a period like this. I think loan growth, clearly, our loan pipelines, I should say, on the wholesale side of the business are down.And I think that reflects caution on the part of customers as well as projects, just the economy is slowing a bit as a result of rising rates and increasing cost.
We still believe, given sort of our view of the future and known projects that are either underway or will get underway, there is — we have an opportunity to grow loans. I think we’re guiding to about 4% between now and end of the year and should see growth in the same categories that I just described.David Turner I think, Peter, I’ll add to that, as part of the growth outlook, because of the markets that we operate in, we’ve been the recipient of a lot of migration of people and businesses into where we operate. And so, our economy here is a bit different than certain other economies around the country. And I think that’s given us some confidence that our 4% loan growth is reasonable.Peter Winter Got it. Very helpful. And if I could ask about the guidance on the deposit service charges, still $550 million.
Question is how should we think about the second half of the year from the impact of that grace period? Will it step down to, I guess, around $120 million. And could you offset some of that with just account growth and cross-selling treasury management services?David Turner Yes. So, you can see that our — if you annualize where we ended up in the first quarter, we would be above the $550 million, and that’s an acknowledgment that our last change of 24-hour grace actually goes in the beginning of the second — of the third quarter. And so you’re going to see that step down more so in the third and fourth quarter than you have seen because we haven’t made the change.One of the things that we’ve been — the recipients of is our treasury management investments we’ve made on people and technology have really helped offset to some degree at least, the decline we’re seeing from the consumer service charges, and we expect that to continue.
So, we’re up some 8% there in TM. And if this continues at that pace, we might have a better answer for you next earnings call. But right now, we’re calling for $550 million and with a step down in the second half of the year.Operator Our next question comes from the line of Ken Usdin with Jefferies.Ken Usdin Just a follow-up also on the fee side. I know, obviously, it’s been a tougher start to the year in capital markets and you’re reiterating that 60 to 80 zones that you kind of were in, in the first quarter. Just maybe you give us color on just how the business is feeling and acting in terms of pipelines and expectations and whether or not you anticipate there being a — is there a bounce built into your expectation in the second half?
Thanks.John Turner Yes. We do, Ken, expect the business to pick up in the second half of the year. It’s still I would say, modestly improving, but the second quarter will probably look a lot like the first is our guess. Our business is — a good bit of our business is built around real estate capital markets and our real estate customers, and that business has just been really, really slow.If you look at the component parts of our business, generally speaking, whether it’s syndication revenue, revenue generated from fixed income placement or derivative sales, has been pretty good over the course of the first quarter. But real estate capital markets has been very soft. M&A was pretty good in the first quarter. We expect that to be true through the balance of the year.
