Shares of PacWest Bancorp were in free fall Thursday after the lender's attempt to reassure investors fell flat amid another pummeling of US regional bank stocks.

On an ugly day for financial stocks, two other midsized banks also suffered especially brutal trading days: First Horizon, which said its deal to be acquired by TD Bank had fallen apart; and Western Alliance Bancorporation, which denied a published report that it was considering selling itself.

Shares of PacWest dropped 50.6 percent, while First Horizon plunged 33.6 percent and Western Alliance Bancorporation tumbled 38.5 percent.

The rout comes one day after the Federal Reserve again lifted interest rates, a move that adds pressure to the sector.

It also comes on the heels of Monday's sale of the embattled First Republic Bank to JPMorgan Chase under a process orchestrated by the Federal Deposit Insurance Corporation.

"We did not have an extended period of calm following the deal for First Republic," said Oanda's Edward Moya. "The bullseye moved from one bank to another and this space is in trouble."

Other regional banks also fell significantly, including Cleveland-based KeyCorp (-6.4 percent), Dallas-based Comerica (-12.2 percent) and Zions Bancorporation (-12.1 percent) of Utah.

CFRA Research analyst Alexander Yokum described the dynamic as a "vicious feedback loop," where "fear has completely taken over." The tendency is exacerbated by short sellers, who make bets on falling stocks.

"There's a little bit of a self-fulfilling prophecy," Yokum said. "When the stock's down, shorts get emboldened, and depositors may take their deposits out."

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