The significantly undercapitalized Charter Bank in Sante Fe, N.M., must come up with a plan to sell itself if it cannot boost its capital ratios by yearend.

The Office of Thrift Supervision said last week that it had issued cease-and-desist orders to the $1.25 billion-asset thrift and its parent company, Charter Cos. Inc. in Albuquerque.

The thrift, which had a total risk-based capital ratio of 1.98% at Sept. 30, must submit a plan by today detailing how it intends to become well capitalized again. It also has a Dec. 31 deadline for getting adequately capitalized.

Institutions typically must have a total risk-based capital ratio of 10% to be considered well capitalized and 8% to be considered adequately capitalized. Should its efforts to meet the capital requirements fall short, the thrift must develop a contingency plan with steps for selling or liquidating itself.

After charging off 10.18% of its loans, Charter Bank swung to a $69.7 million third-quarter loss from a $4 million profit a year earlier, according to data from the Federal Deposit Insurance Corp. Its noncurrent loans rose to 8.94% of total loans at Sept. 30, from 4.12% a year earlier.

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