Sterne Agee analysts warn that rising interest rates could cause a steep drop off in mortgage banking profits.

"In our view, as treasury rates continue to climb, companies exposed to mortgage banking will face challenges maintaining gain on sale revenues, particularly institutions benefiting from mostly refinance activity," said Matthew Kelley, an analyst with Sterne Agee.

Meanwhile, the sharp drop off in refinancing volume is attributed to seasonal factors and rising mortgage rates.

The company says banks focused primarily on refinancing are most at-risk for losing revenue.