Oct. 10--SHARES OF REGIONAL BANKS -- including Sovereign Bank and Independent Bank -- got hammered yesterday amid investors' fears of more bank failures across the country.

The widespread sell-off of financial firms was sparked by Treasury Secretary Henry Paulson's warning that other institutions could fail despite actions by the government to stabilize the financial system.

Several research groups issued predictions yesterday that hundreds -- perhaps even more than 1,000 -- bank failures could occur due to turmoil caused by Wall Street woes.

Sovereign, which recently had a change in its Hub-based corporate leadership, saw its shares pounded yet again yesterday, falling 28 percent, to $3.26.

The bank has consistently said it is financially "solid," with billions of dollars in reserves, and analysts have generally agreed with that assessment.

Gerard Cassidy, an analyst at RBC Capital Markets, said Sovereign is "fundamentally" sound.

But he said Sovereign could be a candidate to eventually participate in a future Treasury program, still under discussion, that would pump capital directly into institutions to shore up their capital base. The government would then take a stake in such banks.

Rockland-based Independent Bank Corp.'s shares also got nailed yesterday, falling 13.4 percent to $22.92.

Other financial firms got clipped as well, including Boston Private Financial Holdings, which saw its stock drop 18 percent yesterday, to $6.54.

Experts say Massachusetts banks -- particularly community banks -- are in much better shape than institutions in states such as California and Florida, where the subprime-mortgage crisis is far worse.

jfitz@bostonherald.com

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