UPDATE 2-Wintrust Financial posts surprise Q2 profit, shrs jump

* Q2 profit $0.06/shr vs est loss $0.19/shr

* Net interest income rises 22 pct

* Non-interest income up 35 pct

* Shares rise 14 pct (Recasts; adds details, analysts' comments, share movement)

By Supantha Mukherjee

BANGALORE, July 29 (Reuters) - Wintrust Financial Corp (WTFC.O) posted a surprise quarterly profit as non-interest income soared on higher mortgage banking revenue, sending its shares up 14 percent.

Mortgage banking revenue for the quarter rose to $22.6 million in the quarter from $7.5 million a year ago.

Raymond James analyst Dennis Klaeser said the acquisition of the mortgage banking business of Professional Mortgage Partners (PMP) last year has helped the company to take advantage of increased refinancing.

Mortgages originated for sale totaled over $1.5 billion in the second quarter, compared with $484 million in the year-ago period, the financial holding company said.

"They will continue to have relatively high mortgage origination volume," Klaeser said. But, he added, "I don't expect third or fourth quarter to be as strong as the second quarter, which is a seasonally strong period."

For the second quarter, the company earned $6.5 million, or 6 cents a share, compared with $11.3 million, or 47 cents a share, a year earlier.

Analysts on average expected a loss of 19 cents a share, excluding special items, according to Reuters Estimates.

Net interest income rose 22 percent to $72.5 million. Total non-interest income jumped 35 percent to $45.5 million.

However, provision for credit losses more than doubled to $23.7 million.

AIG DEAL TO BOOST EARNINGS

On Tuesday, a unit of Wintrust bought from American International Group Inc (AIG.N) a majority of the U.S. life insurance premium finance business of AIG Credit Corp and A.I. Credit Consumer Discount Co for about $679.5 million in cash. [ID:nN28161156]

Wintrust is acquiring a pool of loans that have a face value of $941 million at a discount of about $261 million, Klaeser said.

"It's highly likely that a large majority of the discount will add to earnings over a six-year period, so the pre-tax earnings benefit from the acquisition I expect it to be about $40 million annually," Klaeser added.

These AIG units sell insurance premium financing products throughout North America to individuals and businesses. The products allow the insured to obtain coverage without premium payments.

Due to the perceived earnings power and profitability from the loans purchased from AIG, the bank is less susceptible to a excessively dilutive capital raise, Robert W. Baird analyst Bryce Rowe wrote in a note to clients.

Raymond James' Klaeser said given the company's strong growth prospects, the company may raise capital some time next year.

Shares of the Lake Forest, Illinois-based company were trading up $2.70 at $22.22 Wednesday afternoon on Nasdaq. (Reporting by Supantha Mukherjee in Bangalore; Editing by Aradhana Aravindan, Anne Pallivathuckal)