Last week started with the collapse of First Republic, which made some bank investors worry that the turmoil in regional banks will continue to spread. But PacWest said that the majority of its deposit outflows occurred on May 4 and 5, after news reports that said PacWest was exploring a potential sale.

The KBW Nasdaq Regional Banking Index fell about 1%, and shares of other regional banks including
Metropolitan Bank,
Zions, Comerica and Bank of Hawaii were down between 2% and 5%. Shares of the biggest U.S. banks, including
JPMorgan
Chase and Bank of America, were down slightly. 

Bank shareholders have been on edge since March, when regional banks started showing signs of stress in the face of high interest rates. Several banks have collapsed since then. Investors have been wondering what is in store for banks that remain, and the extent to which stress in the sector will spill over into the broader economy. Bond investors are demanding higher yields to own the bonds of regional banks, which could further pressure the lenders. 

PacWest shares have lost about 80% since March 8, when Silicon Valley Bank set investors on edge by disclosing a loss. However, the shares are up more than 40% since May 4, the day they hit their lowest close ever.

Bank analysts expressed optimism that the worst is over, despite the drop in PacWest’s shares. Research from the Federal Reserve Bank of New York on Thursday said that small banks have shouldered interest-rate increases and the recent market mayhem quite well. 

“The risk that we’re seeing is isolated to certain portfolios of certain companies,” said Christopher McGratty, head of U.S. bank research at Keefe, Bruyette & Woods. 

Western Alliance, another bank whose stock has been hammered hard since March, was up about 1%.

The bank said total deposits were $49.4 billion as of Tuesday, up $600 million from a week earlier. 

“There is no threat to the system, and these two updates demonstrate that,” said Jefferies managing director Casey Haire.

Shares of
First Citizens Bancshares
were up about 3%. Shares rose more than 7% Wednesday after the bank reported earnings that topped analyst expectations. 

First Citizens acquired most of the failed Silicon Valley Bank.

The disparate stock performance “is hopefully telling you that there is differences, and those differences matter,” said Mr. McGratty. 

Elsewhere, JPMorgan Chief Executive

Jamie Dimon
said Thursday in a Bloomberg Television interview that the Securities and Exchange Commission should look into short selling of bank stocks. 

“If someone’s doing anything wrong, people are in collusion, or people going short and then making a tweet about a bank, they should go after them, and vigorously, and they should be punished to the full extent the law allows it,” Mr. Dimon said. 

Mr. Dimon added that he has no evidence of wrongdoing, but said “it’s possible it’s taking place.”

An SEC representative declined to comment on Mr. Dimon’s remarks.

Short sellers, who bet that a stock will fall, have been betting against PacWest and other regional banks. Critics have said that the recent shorting spooked bank customers into withdrawing their deposits. 

—Eric Wallerstein contributed to this article.

Write to Charley Grant at [email protected] and Hannah Miao at [email protected]