Updated from 3:22 p.m. ET

Shares of most regional banks slumped Tuesday afternoon as uncertainty surrounding the stability of the sector continued to weigh on the stocks.

Among the biggest decliners were SunTrust Banks ( STI - Get Report), which plunged $1.93, or 16.2%, to $10.02, and Marshall & Ilsley ( MI), which dove 87 cents, or 17.8%, to $4.03. Both stocks hit 52-week lows earlier in the session.

A disappointing earnings report from PNC Financial Services Group ( PNC - Get Report) underscored the pain regional banks are feeling as loan losses continue to mount.

Pittsburgh-based PNC, one of the nation's largest banks, said it swung to a loss during the fourth quarter because of charges tied to its recent acquisition of National City. But even excluding the National City costs, PNC's results missed analysts' expectations. The bank also said it would cut 5,800 jobs following the purchase.

PNC shares dropped $2.33, or 7.2%, to $28.85 in afternoon trading.

Meanwhile, Huntington Bancshares ( HBAN - Get Report) said it will eliminate about 500 jobs this month as it works to reduce expenses by $100 million this year. The Columbus, Ohio-based regional bank also said it has cut 2008 bonuses, will maintain all salaries this year at 2008 levels, and will suspend the company's 401(k) matching program.

Huntington shares slipped 21 cents to $1.81, after dropping 30% on Monday. The stock is down over 74% so far this year.

Financial stocks have been under considerable pressure this year as investors fear unrelenting losses from bad loans could lead to a major bank failure. Confidence in the financial sector has been further shaken by disappointing fourth-quarter earnings reports. Concerns about banks' capital levels have forced several banks, like Huntington, to drastically reduce their dividends and cut staff.

Meanwhile, investors are anxiously awaiting more details on a government plan to provide additional assistance to the nation's banks.

In a note to clients on Tuesday, Morgan Stanley analyst Ken Zerbe cut his 2009 earnings estimates on a number of regional banks, saying he expects the operating environment to remain challenging, if not worsen, over the next several quarters.

"The fourth-quarter earnings season was a very difficult one for the midcap banks. The group experienced considerably higher credit losses than we were expecting, leading to much lower-than-expected earnings overall," Zerbe wrote. "We still believe most of the banks are under-reserved given the overall environment."

Zerbe subsequently downgraded the shares of BOK Financial ( BOKF - Get Report) and Westamerica Bancorp ( WABC - Get Report) to underweight, but upgraded First Horizon National ( FHN - Get Report) to overweight and Synovus Financial ( SNV - Get Report) to equal weight.

"First Horizon has shown remarkable progress at addressing its problem credits by shrinking its balance sheet and building reserves more so than its peers," Zerbe wrote. "With Synovus, the market is now adequately pricing in the problems in its loan portfolio."

BOK Financial shares dropped $2.02, or 5.5%, to $34.45, while Westamerica fell $2.22, or 5%, to $42.08.Synovus fell 8 cents, or 2.2%, to $3.52.

Bucking the trend, First Horizon added 22 cents, or 2.4%, to $9.35.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.