It’s — the incremental NPA this quarter is really just concentrated in a small number of lower LGD credits, that at this point we think we’re pretty well reserved for.Brett Rabatin Okay. That’s helpful. And then the strength of the investment banking this quarter, do you think that’s sustainable or is that a couple of transactions that maybe won’t be quite as meaningful going forward as you see the pipeline?Rob Holmes No. That it — really that’s highly sustainable. In my comment, I think I mentioned that it was broad based. So, there’s multiple products and services that our clients are using. Some new for the first time, others much improved. And so you have capital solutions, which is rates, you’ve got syndications. You have M&A. You’ve got sales and trading, capital markets and there is a broad acceptance in the market across the entirety of the platform that frankly I’m surprised has matured as quick as it has.And so, we’re probably — we’re highly confident in — the other thing is really encouraging is the model itself is working the way it should.
So a lot of these referrals — remember we didn’t build the investment bank for a different set of clients. We built the investment bank for our current clients and new clients in our target markets. So it’s not a disparate line of business. It’s wholly one. And they are being referred to the investment bank through private wealth advisors, through middle market bankers, through corporate bankers, if the model is working, and the platform is working as intended.Matt Scurlock Which, Brett, as you know –Brett Rabatin Okay.Matt Scurlock Exactly how we believe you’re going to start to see expansion and returns over time. I mean, that’s $3 billion of C&I loan growth over the last year to Rob’s point. That balance sheet that we’re giving to clients who are going to benefit from the rest of the platform.Brett Rabatin Okay.
That’s helpful. And if I could sneak one last one in on follow-up on the expense guidance, is the pivot to lower expense guide, is that do you think totally a function of just a lower revenue environment? Can you talk maybe about there could be a thesis of, hey, you take market share more proactively while others pull back from a credit availability.Rob Holmes I’ll comment then I’ll let Matt to fill in with –Brett Rabatin Okay, Rob.Rob Holmes I’ll comment let Matt fill in with numbers. This is the expense guidance is due to a structurally improved operating platform, which has been not only processes being reengineered in automation, but the entirety of the platform working together, it is totally rebuilt and fit for purpose. And so the guidance is not like a one-time save.
We think our efficiencies will scale as revenue grows.Matt Scurlock Brett, the only thing I would add to that is that, these are enhancements that we’ve been working on for a long time. Rob, spent a good portion of the fourth quarter call discussing that discipline and pretty significant reengineering. So as those enhancements mature, we were able to actually get the efficiency at the end of this quarter. An important point of Rob’s earlier comments is that, these are largely operational reductions. So, frontline employees are still up two times since after arrival first quarter of 2021.So we’re proactively in market this quarter, on March 13, Monday after the SVB issues, proactively calling on clients availing to them the entirety of our platform and trying to go bank the best clients in our markets.Rob Holmes Just one more comment –Brett Rabatin Okay.Rob Holmes Just not pile on, but in the proxy, you may have seen the CEO goals.
Last year, one of them was — it seems kind of trite for a lot of companies, but for us, it wasn’t. One of my goals that we had as a firm was cost allocation and to understand that much better through the entirety of the platform, and that was leading to our ability to be able to have the structural operating and tech improvements. So it’s all tied together.Brett Rabatin Okay. That’s really helpful. Thanks so much for the color.Operator Thank you. The next question goes to Brody Preston of UBS. Brody, please go ahead your line is open.Brody Preston Hi, good morning, everyone. Thanks for taking all my questions. I wanted just to — I guess maybe put a finer point on the expense front, here everything you’re saying from an operational perspective, but maybe, Matt, if I could try to dive into the numbers, right, the — I guess, the mid-single digits, kind of assuming 5% assumes that like the average quarterly run rate for the remainder of the year would step down like by about $20 million or so.
I guess, could you — I guess maybe could you help us think about the glide path of how the quarterly run rate is going to look throughout the remainder of the year?Matt Scurlock Yes, happy to start on all expenses, not called salaries and benefits. So, coming off the fourth quarter call where we had the non-recurring items. You said, when that [$81 million] (ph) down to about $65 million to $70 million a quarter through 2023. Brody, I think that’s still the right assumption. If it moves towards $70 million, that’s an indication that rates are elevated if that blends down to $65 million it’s that the forward curve has been realized and the status stopped tightening.So, then on the $128.7 million, which is salaries and benefits expense for the first quarter.
As I mentioned in my comments, about $7.5 million of that is seasonal, which takes you at $121 million and then about $12 million of that $121 million is that annual reset on healthcare and incentive accrual. So, $121 million is the right starting number as you look out for the duration of the year.And then we would expect the majority of the reduction in non-interest expense guide to occur from previously implemented actions to reduce salaries and benefits. And you see it start to show up this quarter.Brody Preston Got it. So seems like it’s a little bit more immediate then is how I should interpret that.Matt Scurlock Yes. We took the actions, Brody.Brody Preston Got it. Okay. And then on the mortgage warehouse, front. I think it seems like at least from my perspective that was an area of strength for you all this quarter with the balances being relatively flat, and we should have seasonally stronger warehouse going forward.
And so could you talk maybe about how you’re expecting warehouse balances to flow in the second quarter? And then importantly, how that positively impact deposit flows particularly NIB here in the short-term?Rob Holmes I’ll comment and Matt can, answer your question. I would say that the strong performance in mortgage is the continuation of our ability to do more business with the best clients in that space, as a direct result of having created a very broad product offering with really good operating capabilities and great professionals.So, we see us rotating to do more business with the best clients with deeper relationships, which sends when it — and as such, they send more deposits and loan balances to us. Matt, do you have anything else?Matt Scurlock Yes.
I’d say the ending period balances, Brody, were 24% higher than average, which does indicate strong momentum going into Q2. Ending balances were about 2% higher than average in the first quarter of last year. We still believe that warehouse balances are likely to be about — the reduction of warehouse balances through the year likely to be about 75% of aggregate 1 to 4 family mortgage originations, which Moody’s is now forecasting that to be down by about 30%. And then the previously established guidance on deposit — average deposits relative to mortgage financed loan balances is 100% to 120%, I think we’re likely to land toward the higher end of that range. As to Rob’s point, we’re able to do more with the clients that we have on platform.Brody Preston Got it.
That’s helpful. And then if I could just switch over to credit, I guess on the on off charge off that you called out, could you give us a sense for what industry that was in? And then I think you’d previously mentioned last quarter that there was some of the charge offs from last quarter related to some older vintages. Does this kind of fall into that same category?Rob Holmes So, I’ll comment then let Matt. Look, this is a — I think Matt said in his comment the C&I client, Texas public company, a lot of high quality banks were in this credit. And it’s stemmed from a seemingly unforeseeable risk, there was a consumer awards matrix this business, which had a large exposure to Eastern Europe. And the war in Ukraine actually really negatively impacted the consumer behavior and confidence and it led over to the Americas businesses.
So, I would say it was a unique credit because we don’t have a lot with international exposure like that. We did like this management team, the company was strong and had a great bank following, but that risk is hard to foresee. And it migrated very, very fast obviously. But, no, that is — that was a new vintage non-legacy risk exposure that was highly correlating consistent with our strategy, unfortunately. Matt, do you have anything else to note?Matt Scurlock Nothing from me.Rob Holmes Did that answer your question?Brody Preston Yes. That’s very helpful. And then just lastly, on the non-accrual balances, I noticed that the non-accruals, it’s off a very low level obviously, but I noticed the non-accruals ticked up from $48 million to looks like about $94 million.
So, wanted to get a sense for what drove that. If it was related to this credit that you charged off or if it was more related to some of the other credits that you talked about with the criticized and classified moving higher?Matt Scurlock Yeah. Brody, not related to the credit that was charged off. It’s concentrated to a small number of lower LGD credits that we at this point believe are appropriately reserved for.Brody Preston Got it. Okay. And then just one last one on that. That’s the C&I credit that you did charge off. Did you charge off the bulk of that loan? Or just wanted to get a sense for if the charge offs would be fully behind you there?Rob Holmes Yeah. It’s behind and its strong.Brody Preston Thank you very much for taking my questions, everyone.Rob Holmes Of course.
Thank you.Brody Preston Awesome. Thank you very much.Operator Thank you. And the next question goes to Matt Olney of Stephens. Matt, please go ahead. Your line is open.Matthew Olney Hey, thanks. Good morning everybody. Wanted to dig into the revenue guidance that you guys provided. I’m trying to separate the fees from the NII. Any color you can provide us as far as what that implies, the NII growth in 2023? Thanks.Matt Scurlock Yes, Matt. I’m happy to take that. I think Rob articulated really well in his comments that we are focused exclusively on banking really strong clients with a solution set that we believe increasingly enables them to address their needs, while over time enables us to earn the right return on allocated capital. And this is the exact same playbook that we’ve been operating from since we rolled out the strategy in September of 2021.
But while that playbook hasn’t changed the marginal – the math on the marginal transaction has changed a little bit as the cost of capital and liquidity has increased for everybody in the industry including us. So our views as to guidance is that is going to slow — result in slower than previously expected loan growth and likely result in higher funding costs, which is going to drag on industry and NII. So adjusting to that reality is what’s caused the move down from mid double digits year-over-year to low double digits. And then I’d also point out that in our guidance, we, of course, assume not the PCBI curve, but the market curve. And that market curve has moved down 25 to 50 basis points relative to when we announced full year guidance on our last call.
And that certainly has an impact on the NII outlook.Matthew Olney So it sounds like incrementally, Matt, from, I guess, the guidance down from last quarter, it’s going to be substantially all on NII relative and not as much on fees. Is that fair?Matt Scurlock Exactly. Structural changes across the industry as well as reduction in forward rate outlook.Matthew Olney Got it. Okay. That’s helpful. And then I guess on the interest rate sensitivity discussion, Sounds like you guys made some good progress moving that a little bit lower this quarter with the securities purchases and some more swaps. Are we now where the bank wants to be or is there still more work to be done here in the future?Matt Scurlock Yes. As of now we’re where we want to be Matt.
So we’ve laid out a target to get to mid-single digits by the middle of the year. The market backdrop was conducive for us to move there a bit quicker. As an example, we have received 6 swaps we put on this quarter had a receive rate of 4.4, same swap as of yesterday would have a receive rate of 3.89. So we took advantage we thought was a pretty good market opportunity and are comfortable with where we reside now in terms of earning the risk both in a up and down scenario.Matthew Olney Okay. Thanks for taking my questions.Matt Scurlock You bet.Operator Thank you. The next question goes to Brad Milsaps of Piper Sandler. Brad, please go ahead. Your line is open.Brad Milsaps Hey, good morning.Rob Holmes Hey, Brad.Brad Milsaps Thanks for taking my questions.
