So I think we’re guiding to pick up in the second half of the year, and we believe that’s very possible.David Turner And just for clarification, make sure, Ken, that and John said you should expect the second quarter to look like the first quarter. That’s ex CVA, DVA. So, we’re talking about the flower in the — probably in the middle of the 60 to 80 range is about where we would expect that. And we don’t expect to have a CVA, DVA adjustment quite as volatile as you just saw this quarter.Ken Usdin I appreciate that. Yes. And second question, just on the loan side. As far as the outlook goes, when you think about just the combination of either your supply of credit and the demand of credit in this changing environment that we’re in, just what’s happening on the lending side of things in terms of how the environment is changing that?
Are you guys tightening up at all? Is it more about the end client that’s changing their demand functions?John Turner Well, naturally, in a softening economy, if you will, we are going to probably be a little more conservative, even though I would say that we like to — as I said a few minutes ago, we like to think that our underwriting standards don’t change from economic period to economic period. We are in some very good markets, as David pointed out, and while pipelines are softer, we see people that are — still have opportunities. We want to be smart about client selectivity all the time, probably even more so during periods like this. We want to support our existing customers and some 90 — almost 85% of — in round numbers of loan growth we’ve experienced in the last quarter was to existing customers.
So, we are acquiring some new customers but being very thoughtful about that.And then separately, while our economies are good, and we do see some opportunity, pipelines are down because of, I think, customer caution related to still difficulty acquiring labor. There are two open jobs in the Southeast for every one person looking for a job. So labor market is still tight. And costs, while moderating, have risen fairly significantly, including interest costs, obviously, which puts pressure on projects.So I think for the balance of the year, we’ll probably see pipelines will have moderated and stay fairly muted, but we believe we can deliver the loan growth that we’re projecting, despite that.Operator Our next question comes from the line of Betsy Graseck with Morgan Stanley.Betsy Graseck In the past, you’ve talked a little bit about the fact that you’re not going to need debt financing for, I don’t know, several quarters.
And I just wanted to see if you could give us an update on how you’re thinking about that, especially as you — even though your size doesn’t come into the current TLAC expectations there is the potential for that to happen over time. And I wanted to hear how you’re thinking about that. Thanks.David Turner Yes. So from a debt financing standpoint, we borrowed a little bit from the FHLB as you saw. But the larger term financing, we said we’d push off probably until the second half of the year. We don’t know what the regime is going to be, if there will be any change pushed down to us from a TLAC standpoint. At some point, whether we had that or not, we need some more term financing, some term debt that we’ll put on. And so, I think that we can make sure we deal with that over time.Betsy, I would say that the changes that are at least being bandied around right now.
You can’t move too fast because we all can’t go out there and raise a bunch of debt at the same time. It would be tough for the market to absorb. So I think any change that might be coming relative to that would be over time. And I still think there’s going to be some tailoring. What that looks like, what that means, we’ll have to find out to with our regulatory supervisors and policymakers decide. But outside of something like that, and we have a little bit of term debt that we need to get done, and that’s really pointed towards the back half of this year. And that’s included in our guidance.Betsy Graseck Right. And that was something that you had been talking about for a while. Just wondering if it’s feasible to give us a sense as to size, if that’s reasonable or not?David Turner No, we haven’t done that yet.
So, we’re still working out what that needs to look like and precise timing, too. But we don’t expect it this first half of the year.Betsy Graseck Okay. And then separately, could you just give us a sense on the expense outlook that you’ve got for 2023, the kinds of levers that you have to keep the expense guide in the range that you’ve got 4.5 to 5.5, and if there’s anything in particular that you could point us to in terms of opportunities for efficiency improvements from here? Thanks.David Turner Yes. It’s a great question. And we tried to — not tried, we gave guidance that our first quarter was going to be a high watermark. I’m not sure that made it into everybody’s expectations, but it is what it is. We’ve now given you guidance again that we think the first half of the year will be higher than the second half of the year.
We had some things that we knew were coming in the first half, including we moved our merit month, our merit increase up a month from April to March. So you’ve seen that in our first quarter.And any event, I think when you look at the way to work on expenses, the first thing are salaries and benefits and making sure that you’ve got the right people, right number of the right people doing the right things. And I think that’s always a challenge and we continue to look at process improvement, leveraging technology so that when we have attrition, natural attrition, perhaps we don’t have to backfill as people if we can move that at the same time.We’ve looked at our occupancy. I do think return to work is still trying to find its way and — but we likely have more square footage than we need, whether it be in the branch space or the office space.
And so, we have a team constantly working on square footage, which is our second highest cost. From a technology standpoint, we’re having to make room to go through our transformation we’re working on right now. And so, those costs are going up, and we’re able to have cuts in other places to pay for it.Vendor spend is another area where we really make sure that we limit our use of consultants or contracts with vendors. We just make sure we get the best deal we can, and we have a team working on that. So there is a cost pool in this company and that’s not going to go through some type of challenge during this year because you don’t have a tailwind in ‘24 for rates. So, you’ve got to do — start working on your expenses today to help ‘24, and we’re doing that.
And so, we have pretty good confidence in our expense number that 4.5% to 5.5% right now for this year.Operator Thank you. Our final question comes from the line of Stephen Scouten with Piper Sandler.Stephen Scouten I just wanted to ask a little bit about the adjusted revenue guidance. Obviously, I can appreciate that would be down a little bit given the funding pressures industry-wide. But as I look at your results from this quarter, it kind of feels like they were within guidance from last quarter and the NIM was exceptionally high. So, it just feels like you might be ahead of schedule versus having to pair that guidance back. So, I’m wondering if you can walk me through the main drivers of that reduction.David Turner Well, there are two primary drivers.
The first is we used in our guidance the March 31st forward curve that had 75 basis points worth of cuts in the year with one increase. So you’re down into the 450 range by the end of the year. So we then tried to sensitize that. We told you if that wouldn’t quite there, how much that may mean. And you can see that on page 7 of the deck. So that was number one.Number two, we just had — our capital markets was down quite a bit in the first quarter, primarily driven by — or at least a good portion of it driven by the CVA/DVA adjustment. We don’t think that will repeat at that level, but nonetheless, it’s in the number. And so, you’re already down that. So, we didn’t carve that out as an adjusted item. That’s in our core number.
