UPDATE 2-Cullen/Frost posts weak Q3 results, sees FY in line

* Sees '09 charge-offs at $45-$47 mln

* Q3 EPS $0.75 vs estimate $0.77

* Loan-loss provision $16.9 mln, net charge-offs $16.3 mln

* Says weak Texas economy continues to bite

* Shares fall as much as 6 pct (Recasts, adds conference call details, analyst comments)

By Anurag Kotoky

BANGALORE, Oct 21 (Reuters) - Cullen/Frost Bankers Inc (CFR.N) posted a weaker-than-expected quarterly profit as charge-offs and provision for loan losses remained high in its home state of Texas, but forecast 2009 earnings in line with analysts' estimates.

Shares of the San Antonio-based bank, which fell as much as 6 percent in early trade, pared some of their losses and were down 3 percent at $49.20 in afternoon trade on the New York Stock Exchange.

Cullen/Frost, which had held up fairly well till late last year due in part to conservative underwriting standards, has suffered of late as earnings were hit by falling energy prices and rising levels of unemployment in Texas.

The company expects net charge-offs in the range of $45 million to $47 million for 2009, a top company official said on a conference call with analysts.

While provision expense remained elevated at the company, a sharp drop in net interest margin and low reserve build were of greater concern, Morgan Stanley analyst Ken Zerbe said.

"The company still remains solidly profitable, but these smaller headwinds may continue, and could limit the near-term upside to the shares," Zerbe said.

Cullen/Frost Chief Executive Dick Evans said charge-offs and loan loss provisions remain at elevated levels, as businesses and consumers focus on conserving cash and reining in spending in Texas, which went into recession later than other parts of the United States. Cullen/Frost earned $44.7 million, or 75 cents a share for the third quarter, compared with $49.0 million, or 83 cents per share, a year earlier.

Analysts on average were looking for a profit of 77 cents per share, excluding special items, according to Thomson Reuters I/B/E/S. (Reporting by Anurag Kotoky; Editing by Vikram S Subhedar and Gopakumar Warrier)