* Laurentian tops expectations, CWB falls short
* Laurentian buys MRS to distribute Mackenzie funds
* Laurentian shares up 1.2 pct, CWB down 1.5 pct
TORONTO, Sept 2 (Reuters) - Canada's small Laurentian Bank (LB.TO) and Canadian Western Bank (CWB.TO) reported higher core earnings on Friday, and Laurentian said it had acquired a group of asset management companies for C$165 million ($168 million).
Laurentian's shares rose as the bank's profit topped estimates, while Canadian Western's stock tracked the broader market lower, as its results fell just short of expectations.
Laurentian subsidiary B2B Trust will acquire MRS Companies - a group of four financial management companies with about C$850 million in assets - from Mackenzie Financial, a mutual fund company that is a subsidiary of IGM Financial (IGM.TO).
Montreal-based Laurentian also said it had reached a distribution agreement to offer Mackenzie mutual funds to Laurentian's customers in Quebec, beginning in 2012.
Laurentian said the deals will diversify its revenue streams and raise the amount of fee-based income it generates.
"Our business plan is being accelerated by the two transactions announced today," Laurentian Chief Executive Rejean Robitaille said in a statement.
Laurentian -- Canada's No. 8 lender by market capitalization -- earned C$35.3 million, or C$1.34 a share, for the quarter ended July 31, up from C$30.1 million, or C$1.13 a share, a year earlier.
The result -- driven by a drop in loan-loss provisions to C$8 million from C$20 million -- topped analysts' estimate of C$1.19 a share, according to Thomson Reuters I/B/E/S.
Laurentian shares were up 1.2 percent at C$44.12 on the Toronto Stock Exchange on Friday morning, outperforming an otherwise weak financial services sector
Canadian Western's core earnings per share rose to 52 Canadian cents from 48 Canadian cents a year earlier. But the result fell short of analysts' estimates of a profit of 55 Canadian cents a share.
On a net basis, profit was C$44.7 million, down from C$46.6 million in the year-before quarter, when a C$7.5 million income tax recovery boosted its earnings.
Revenues at the Edmonton-based bank, which does much of its business with companies active in Alberta's oil sands, rose 11 percent to C$123.1 million.
Canadian Western credited strong loan growth and bigger net interest margins for the stronger performance.
National Bank analyst Shubha Khan said the profit miss was due to lower-than-expected gains on securities, but said the bank's loan growth is superior that of its peers due to its exposure to the strong business-led recovery in Western Canada.
"We continue to believe that CWB merits a premium valuation," the analyst said in a note.
The bank's shares were down 1.5 percent at C$29.59.
The results conclude what has been a generally positive earnings period for Canada's banks, as most topped estimates due to stronger-than-expected loan growth.
However, the specter of continued low interest rates combined with expectations that loan growth will slow have raised concerns that the next few quarters will be tougher.
$1=$0.98 Canadian Reporting by Cameron French and Andrea Hopkins; editing by Peter Galloway