Pretax operating results were down by $79 million from the previous quarter, but the company estimates that by the end of the year, servicing income should be more than four times higher than the second quarter’s results.

The Seattle-based bank underestimated single-family loan declines in the larger market but was able to improve margins slightly with cost-cutting and by diversifying with a shift toward apartment lending.

The mortgage investor reported core earnings per share slightly below estimates and a loss in comprehensive income but may ultimately outperform competitors, analysts said.

Earnings posted by the two bank holding companies show increased production on a quarter-to-quarter basis, although gain on sale sank at both.

Like other mortgage lenders, the San Francisco megabank has been cutting staff since refinancing volumes started to fall. Additional layoffs are expected over the next couple of quarters, according to the bank’s chief financial officer.

These results are likely to be mirrored by the nonbank lenders when they report earnings, said Keefe, Bruyette & Woods.

Wells Fargo missed analysts’ earnings estimates as home lending slowed and the bank set aside more than expected for potentially soured loans as the Federal Reserve’s rate hikes started to cool the once-hot housing market.

The San Francisco bank reported a 31% increase in loan originations during the second quarter. Analysts are wondering whether it will be able to secure enough low-cost funds to avoid eroding margins.

Capital adequacy at the four largest underwriters remained strong at the end of 2021 even with a slight decline from the prior year, Fitch Ratings said.

The fast-paced rise in rates should be good for banks — until it isn't. The higher interest earned on loan payments will at some point be offset by higher interest paid on deposits. The only questions are: When, and by how much?