UPDATE 2-Prosperity Bancshares Q4 profit beats Street

* Q4 EPS $0.65 vs est $0.63

* Expects net charge-offs to stabilize

* Net interest income, excluding provisions, up 25 pct

* Provisions for loan losses up 42 pct (Adds conference call details, share movement)

Jan 22 (Reuters) - Prosperity Bancshares Inc's PRSP.O fourth-quarter profit topped analysts' estimates, helped by a jump in net interest income, but provisions for credit losses increased 42 percent.

Net income for the quarter rose to $30.6 million, or 65 cents a share, from $22.7 million, or 49 cents a share, a year ago.

Analysts on average expected the company to earn 63 cents a share, excluding items, according to Thomson Reuters I/B/E/S.

"We expect our 2010 net charge-offs to stabilize and hopefully even fall from our 2009 level," Chief Executive David Zalman said in a post-earnings conference call to analysts.

CEO Zalman, however, said he expects non-performing assets to continue to fluctuate between 25 basis points and 75 basis points of total loans through 2010.

Net interest income, before provisions for credit losses, rose 25 percent to $80.0 million.

However, provisions for credit losses jumped to $8.5 million, compared with $6.0 million a year back.

"We will continue to consider the FDIC-assisted transactions and other opportunities as some banks exit our markets," CEO Zalman added.

Tier-1 capital ratio, which is a measure of a bank's financial strength, increased to 12.6 percent from 10.3 percent last year.

Net interest margin -- the difference between what the bank earns on loans and pays on deposits -- stood at 4.24 percent compared with 3.65 percent last year.

Shares of the Houston, Texas-based company were up 15 cents at $41.49 in afternoon trade Friday on Nasdaq. They have more than doubled in value since March last year. (Reporting by Jochelle Mendonca and Anirban Sen in Bangalore; Editing by Ratul Ray Chaudhuri)