UPDATE 1-Cullen/Frost Bankers Q1 profit beats Wall Street view

Wed Apr 28, 2010 9:33am EDT

* Q1 EPS $0.79 vs est $0.75

* Q1 net interest income up 9 pct

* NPAs down 5 pct sequentially

April 28 (Reuters) - Cullen/Frost Bankers Inc (CFR.N) reported a better-than-expected quarterly profit, helped by an improving Texas economy.

Net income for the first quarter was $47.8 million, or 79 cents a share, compared with $45.0 million, or 76 cents a share, in the year ago period.

Analysts expected the parent of Frost Bank to earn 75 cents a share, according to Thomson Reuters I/B/E/S.

"We believe that the worst of the recession is behind us, and as expected, Texas is leading the way," Chief Executive Dick Evans said in a statement.

As confidence returns, the company expects customers to begin to rebuild inventories, expand facilities and add employees, all of which should increase loan demand.

Net interest income on a taxable-equivalent basis increased 9 percent to $150.3 million.

Provision for loan losses was $13.6 million, up from $9.6 million in the year-ago period.

Non-performing assets at quarter-end were $171.6 million, compared with $180.2 million in the previous quarter.

Shares of the San Antonio-based company were up 2 percent at $58.87 Wednesday early morning on the New York Stock Exchange. (Reporting by Sweta Singh in Bangalore; Editing by Anne Pallivathuckal)