Susquehanna Bancshares Inc. reported a surprise 7.3% increase in third-quarter earnings thanks to a surge in noninterest income offsetting soaring loan-loss provisions.

"The prolonged economic downturn has continued to impact customers in our markets as well as our own financial performance," Chief Executive William J. Reuter said. "However, outside of our increased credit costs, our core operations are showing solid performance."

Loan-loss provisions climbed to $48 million from $17.7 million, but that was largely muted by noninterest income doubling, primarily the result of a year earlier writedown.

Earnings rose to $6.9 million from $6.4 million.

Net chargeoffs rose to 1.48% of average loans and leases from 0.35% a year earlier and 1.07% in the second quarter. Nonperforming assets surged to 2.83% from 1.15%, but were flat sequentially.

Susquehanna, a Harrisburg, Pa.. company with 220 branches in the Middle Atlantic region, reported 4% loan growth from a year earlier and a 3% drop in deposits.

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