Summer doldrums and fears of a stock market correction have depressed sales of mutual funds at many banks.

Presidents of bank brokerage units said their customers' appetites for mutual funds are tapering off, after record sales in the first and second quarters. Amid stock market highs, some have been waiting for a correction, the executives said.

"My customers are leery, they're watching, and they're cautious. And they should be," said Alan Leach, president of the brokerage at Deposit Guaranty, a $5 billion-asset bank in Jackson, Miss.

Mr. Leach's June sales were flat with May's, and he expects no improvement this month.

The pattern seems to be widespread. Some $15.5 billion of new money flowed into stock funds last month, 38% less than in May, the Investment Company Institute estimated. The fund trade group will release more exact data later this month.

Despite June's dropoff, the institute estimated that net cash flows into stock funds totalled $138.5 billion in the first half, more than in any previous full year.

Deposit Guaranty's Mr. Leach said that summer was largely responsible for the flattening of sales."One-sixth of our salespeople are on vacation," he said.

But bankers also blamed volatility in the stock market caused by weak second-quarter earnings among technology companies.

June's sales at the brokerage unit of Wilmington Trust Co. in Delaware were 15% thinner than May's. As for July, "I'm not real enthusiastic," said Mark Mathias, president of Wilmington Brokerage Services Inc.

But Mr. Mathias doesn't intend to change his unit's style of selling stock funds for long-term investors. "We just intend to persevere," he said. But "in a churning market like this, that gets harder to do," he added.

Sales have also flattened at $26.2 billion-asset First Bank System, Minneapolis. Joseph Tessmer, president of the brokerage there, noted that volume historically drops in summer, after the March-April surge of investment in tax-deferred retirement funds.

Indeed, April's cash flow into stock funds was second only to January's, which had set a record.

Though investors may expect a stock market correction, Mr. Tessmer said he doesn't expect a selloff - or a repeat of 1994, when ailing stock and bond markets sent bank sales plummeting by as much as 50%. "The investor base we're working with today is substantially more sophisticated than the investor base of three years ago," he insisted.

Mr. Tessmer said his unit, FBS Investment Services, continues to sell aggressive stock portfolios, including the bank's own First American Investment Funds. The proprietary portfolios make up 40% of sales, much of them in two aggressive growth funds: First American Special Equity Fund and First American Regional Equity Fund.

Even on the fixed-income side, customers are developing a passion for the riskier end of the spectrum. One top-selling bond fund is Putnam Investments' Strategic Income Fund, which invests in domestic government bonds, corporate bonds and foreign bonds. "Run-of-the-mill bond funds are not selling at all," Mr. Tessmer said.

Mutual fund companies are telling the same story as banks. At Aim Management, first-half sales through financial institutions were up 185% from the year-earlier half, said Michael C. Vessels, senior vice president. But over the past eight weeks, sales have declined 15% to 18%, he said.

Aim, based in Houston, is a relatively new player in the bank marketplace, but its stock-fund focus has helped boost it to the top ranks.

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