Few people are thrilled that megabanks like Citicorp and Bank of America are getting wracked by massive financial difficulties. But while banking giants are licking their wounds, healthy regional banks can charge into their territory and scoop up more market share, their former employees, or other ceded turf.

The past week or so has brought a further slew of dark headlines for these banking Goliaths, who have had to focus more on damage control than on acquiring new customers, said Jim Jones, president of First Wellesley Consulting.

“You can only have so many priorities at once,” he said.

And that’s just the immediate fallout: as time passes, large banks might have to abandon bank branches, make larger layoffs or divest themselves of a number of operations, all of which spells opportunity for their smaller, healthier competitors.

Davids Lookin’ Good

Although almost all banks are feeling anxious right now, New England’s regional banks – those with roughly $500 million to $1 billion in assets under management – are doing relatively well, Jones said.

They have clean balance sheets and a comfortable amount of capital, which means they can concentrate on going after the dissatisfied former customers of the larger guys, including commercial and mortgage borrowers, as well as individual retail clients.

Many such banks have already seen some benefit.

“We’ve grown more in the last year than in any one year in our history in top-shelf commercial credit,” said Jim McCarthy, chief operating office for Danvers bank, who added that residential lending has also seen a boost. Big-bank customers are seeing their credit lines lessened or cut altogether, which sends them back to community banks.

Also, “People in our markets want to deal with a bank they know,” he said.

Customers may have been lured away in years past by an extra percentage point of interest, said William Kozak of Rockport-based consultancy firm WTK Associates, but now those limits are tightening up and larger banks’ competitive edge is disappearing.

And borrowers who want to adjust their loans now are also learning about the pitfalls of dealing with a larger bank, Kozak said: those loans have been resold a dozen times and now the borrower doesn’t know who to talk to about it. All that helps make the community bank look much better by comparison, even without the bad headlines hurting large banks’ reputation as they deal with government bailouts and subprime loan difficulties.

John Heerwagen, CEO of Middlesex Bank, said with larger banks, national conduits and insurance companies removing themselves from real estate market lending, his bank has been able to pick up more business.

“In some different corners of the lending markets, there’s been some changes in terms of who’s playing and who’s not,” he said.

But it goes beyond gaining new customers, Jones said. Layoffs have already hit the financial sector, and the upcoming months could see more of the same, as well as divestitures of branches and whole lines of business by some large banks. All that could be picked up by community banks. After all, it’s a lot cheaper to buy a newly deserted branch than to build your own, he said – that kind of deal can get done in 90 days.

All that is mostly speculative at this point, Jones said, but many banks are staying vigilant to watch for their opportunity, and it could be a battle to see who wins over the abandoned territory.

“It’s going to be a competition,” he said.