BAY CITY, Mich. - Mutual Savings Bank has sold all of its shares in a mutual fund investment to help reduce interest rate risk and increase regulatory capital ratios.

At Dec. 31, Mutual had more than 3.5 million shares in Asset Management Fund Inc.'s Immediate Mortgage Securities Portfolio, with a cost basis of $35.51 million and a fair-market value of $32.66 million. The company's unrealized loss of $2.85 million was included as a reduction of stockholders equity.

Mutual realized proceeds of $33.12 million in the Feb. 15 sale, bringing its realized loss to $2.39 million.

The Office of Thrift Supervision began bringing new management into the institution in 1990 after capital troubles led to a run.

Mutual has one remaining mutual fund investment that it also is considering selling, said Robert N. Shuster, chief executive officer since late last year. It has more than 2.4 million shares in Asset Management Fund's Adjustable Rate Mortgage Portfolio. The fair-market value of that investment was $24.47 million at Feb. 15.

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