Shares of BankAmerica Corp. and Wells Fargo & Co. fell sharply Wednesday amid mounting investor uneasiness about California's slack economy.

In afternoon trading, BankAmerica was off as much as $2 at $41.75, a drop of 4.6%, while Wells had fallen as much as $1.875, to $71.75, or 2.5%. Other banks fell, as did stocks in general, but by much smaller amounts.

Some Wall Street analysts are worried that California's two largest banks, as well as No. 3 First Interstate Bancorp, are overvalued. First Interstate was off 50 cents Wednesday at $41.

Caution Is Byword

In contrast, shares of the state's smaller banks more closely reflect business conditions, these analysts say.

Even analysts who recommend the stocks are cautious.

"Subdued prospects for revenue growth" face BankAmerica and its competitors, said John D. Leonard of Salomon Brothers, who cut his 1992 earnings estimate for the bank last week but retained a buy rating for the stock.

A recession in the state's real estate market has had the most immediate impact on the state's banks, increasing nonperforming loans and depressing earnings.

But new problems are emerging. The state's unemployment rate recently hit 9.5%, the highest in any major state. Fresh rounds of layoffs by military contractors may further weaken the labor market and cloud consumer confidence.

Inaction by Lawmakers

The economic gloom has been thickened by the California Legislature's failure to reach a budget for the new fiscal year. In response, the government has been forced to issue scrip for the first time since the Great Depression.

Share prices for BankAmerica, Wells Fargo, and First Interstate as of June 23 were 13.8% below their 52-week highs, according to Prudential Securities. That was worse than regional banks generally, which averaged 6.4% under their highs, and worse than the Standard & Poor's 500, down 4%.

At the same time, however, seven community banks in Northern California were 27.3% under their peaks on average, and 13 banks in Southern California were submerged a whopping 32.4% below their best mark of the past year. Southern California's economy has been hit harder than in the northern section.

Individual Stories

Each of the big three banks has "something positive and special that masks the California economy's adverse effects," noted George M. Salem, bank analyst at Prudential.

"BankAmerica has the Security Pacific merger excitement, Wells Fargo has a strong interest margin and the |mystique' of an excellent bank, and First Interstate has takeover hopes and only 30% of its assets in California," he said.

Price Warnings

But Mr. Salem, whose report appeared before the state budget impasse and the latest unemployment report, warned: "Their propped-up price trends appear temporary, and the economy seems to be weakening noticeably."

Investors in the smaller California banks "have assessed the situation more realistically than those in the big three," he said.

A California analyst, Campbell K. Chaney of Sutro & Co., San Francisco, generally agreed, saying the state economy is continuing to "slide toward a bottom."

Shares of major banks slumped Wednesday as investors, nervous about second-quarter results and a sluggish economy, continued an across-the-board selloff.

MNC Financial Inc., Baltimore, was among the few gainers, rising 25 cents, to $11.75, on continued takeover speculation. volume was strong again, with more than 750,000 shares changing hands.

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