Cherokee Bank in Canton, Ga., must boost its capital and reduce its problem assets to satisfy a regulatory order.

The order from the Office of the Comptroller of the Currency requires the $227 million-asset bank to submit a plan for increasing its total risk-based capital ratio to at least 12% and its leverage ratio to at least 8%.

As of March 31 the unit of Cherokee Banking Co. had a total risk-based capital ratio of 10.67% and a leverage ratio of 7.37%, according to data from the Federal Deposit Insurance Corp.

The OCC, which issued the order April 29, but made it public Friday, said that unless the bank comes up with an acceptable capital plan, it could be required to sell itself or liquidate its assets.

The bank's first-quarter earnings shrank 92% from a year earlier, to $16,000, as noncurrent loans swelled to 8.12% of its loans, from 2.39%.

Cherokee Banking Co. said Friday that it aims to achieve the elevated capital levels using a three-year strategic plan it adopted in June 2008. "We plan to continue progressing along the path toward the benchmarks we have established and look forward to continuing to work closely with our regulator to do so," Dennis Burnette, the president and chief executive officer, said in a press release.

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