I think as we think through 2Q, I think that’s where we’ve got big reinsurance coverage, and that is renewed, is in place and so the outlook would be for 2Q for that to be sort of covered and protected.But obviously, we watch a lot of this hail storms. They pop up quickly, they’re hard to navigate. Otherwise, the dealer body does a great job of moving cars, trying to get cars protected in known weather events when you see a weather event coming. But unfortunately, the hail storms are just hard to predict and it kicked us up in the first quarter, we don’t — but again, the reinsurance coverage is there to protect us this quarter. So it shouldn’t be a big driver.Operator Thank you. One moment for our next question please. And it comes from the line of Ryan Nash with Goldman Sachs.
Please proceed.Ryan Nash Brad, a couple of questions on NIM, I guess, one, how have beta expectations evolved, I guess, second, where and when do you expect the NIM to trough? And third, can you maybe just parse out the comment that you made that you expect the NIM to migrate back to the 3.75% to 4% even in the higher for longer? What are some of the drivers that would get you back towards that level? And I have a follow-up.Brad Brown So on beta, a couple of things, and I talked about in the prepared comments as well that certainly pricing and deposits really did proceed within expectations that we talked about on fourth quarter through the first quarter. I think looking forward, fundamentally, we don’t really see anything that is changing our outlook at this point.
We had sort of this through the cycle, upper 60s, 70-ish percent on liquid savings from a beta perspective, and we did call out as well.We have seen some rotation into that 11- and 18-month CD product. And that is not surprising given where we are in the cycle and customers feeling a bit more confident to try to a little — lock in a little bit of term from that perspective. But overall, liquid savings and portfolio holistically really don’t have any significant update or change in expectations on beta.Regarding NIM overall, I would say a couple of things. One is we did experience the pressure that we’ve talked about, near term, certainly that was evident this quarter. I would say there’s nothing structural that’s changed there in terms of the guidance that we have out there in that 3.5% range.
Auto pricing continues to be a huge driver there in on printing on originations at almost 11% so that full year 2023 probably at 10.5%-plus for full year 2023.So again, significant tailwinds for this year, but ultimately, kind of get into that question too in terms of higher for longer. That is going to benefit us now, but even more so in the outer period as deposit pricing stabilizes and ultimately declined, just given the re-pricing dynamics of the balance sheet that we continue to highlight.I think as far as trough goes, we see that really this year, as we said, we’ll bounce around that 350, maybe slightly below some quarters. And there’s just a lot of dynamics there, as you well know. We’ve tried to be very transparent around the hedge position that we have and really leveraging the power of the balance sheet to make sure we can mitigate the near-term pressure that we’ve talked about.And then from an overall Fed funds perspective, those expectations are all over the place.
So it makes it probably even more difficult to put something really prescriptive, but again, confident in that range, 3.5% trough, probably you’ll see us sit down this quarter and third quarter as well. But again, we don’t think that’s below 3.4% or something like that.So overall, structurally, no shift, but some tweaks here including, don’t forget, we’ve been very conservative from a liquidity pose perspective, protecting Ally J.B. highlighted the importance of liquidity and that does matter. Cash balances at almost $10 billion at the end of the quarter. So, again, that’s something we’ll be continuing to be watching and optimize where we can, but I don’t think there’s anything more important at this point than making sure we’re liquid and can support our customers through volatility.Ryan Nash Got it.
And maybe that’s one of exchange’s questions in a little bit of a different way. So you’re now with — J.B., you’re now expecting a little bit lower originations. How much of this is really macro-oriented concerns versus specific concerns that or behaviors that you’re seeing in the market in terms of performance? And if I look at some of the comments on Slide 20, it seems like even though unemployment is better, losses or not. So how are you factoring sticky inflation into the forecast and both from an allowance and from a charge-off perspective? Thank you.Jeff Brown Yes. I mean, Brad kind of covered and Brad, feel free to dive in overall reserve levels, and we feel comfortable there. I think, Ryan, we’re closely watching EQ trends, about 30 days, 60 days.
They’re a little higher than we’d want to see. But importantly, flow to loss has been performing better. And the big question is. How does that stick? Do we consumers have they been able to fully absorb this higher inflation environment. And that sort of — our outlook is really let’s be more conservative and posture to protect the house going forward. And if that means we give up a couple of billion dollars originations, we’ll do that.Again, to my earlier comments, to the extent we start to see DQs perform maybe favorably. You start to see more of these tailwinds later reference on that page start to materialize. I think we’d lean back into originations a little bit more. And that’s the nice thing. I mean I talked about we see $100 billion of paper every quarter.
You see tightening in approval rates. I think they were down to like 31%.I mean you can tweak the wheel pretty quickly and get back to higher degrees of flow. So to the extent we see a stronger consumer continuing to emerge, then that would give us more confidence to lean into originations a little bit more. So those are some of the watch items. I also think let’s be honest, there were a lot of changes that transpired from March 8 going forward. And capital preservation is certainly on everyone’s mind and on regulators mind. And we think just being prudent, building a little bit more excess capital right now is probably a smart thing to do.Obviously, we don’t know what regulatory changes may or may not come with respect to capital, but we think being a little bit more in preservation mode right now probably makes the most sense.
And that’s obviously factored into the guidance and the outlook and the direction we’re having with our auto teammates and our broad team in here at Ally.Operator Thank you. One moment for our next question please. Yes, it’s coming from the line of Betsy Graseck with Morgan Stanley. Please proceed.Betsy Graseck Okay. One follow-up and then another question. Just on the follow-up side there. I know we had the discussion earlier around the outlook for net charge-offs. And I know last quarter, you put in the slide deck, the trajectory, I think expecting that NCOs are going to go to 1.2 million this coming quarter. And I just wanted to understand — take your temperature on how you’re feeling about the trajectory that you put in there. Does that make sense?
