Sensing an unprecedented opportunity to gain market share against banking behemoths like Wells Fargo (NYSE: WFC) and Bank of America (NYSE: BAC), small banks and credit unions have been diligently pursuing American consumers who have become disgusted and tired of the bailouts and attitudes of big banks toward their customers.

Consequently, many small banks and credit unions are banding together to market and continue to remind consumers about the poor performance and risky strategies of the big banks which has resulted in giant failures, like CIT Group (NYSE: CIT), which just recently filed for Chapter 11 bankruptcy protection.

Executives of small banks admit they can’t compete nationally with the banking giants, but they also say they can compete with the branches of these banks which are part of their particular local competition.

“We’re pretty convinced that the public is very upset with these big banks, and they don’t have much use for them anymore,” said Texas banker Edward Speed in a phone interview with the New York Times. “I can’t beat Wells Fargo and Bank of America nationally, but I can certainly beat their branch across the street.”

Part of Speed’s strategy within the Texas market is to remind Texas consumers that the local banks of their communities didn’t get involved with the credit-default swaps and derivatives which have been a major part of the fall of the big banks which resulted in the bailout from taxpayers, which has largely infuriated them. Speed adds that they do banking the way it should be done; receiving deposits and safely using the cash on low-risk loans.

Although 115 smaller banks have failed so far in 2009, and many more are expected to follow, it is still a small percentage of the over 8,000 community banks in the United States, in contrast to the failure of financial institutions like Lehman Brothers, Bear Stearns, and now CIT Group.

Combine the negative public sentiment, along with the continual practices of some of the large banks, like increasing credit card interest rates and in many cases charging stiff overdraft fees, and there’s not much to stop the smaller banks from gaining market share, and some have had some great success so far.

Good news from the Federal Deposit Insurance Corporation (FDIC) confirms that banks with under $1 billion in assets are positioned best because they’re better capitalized, which means as loan losses continue, they are in a stronger place to handle the resultant losses. In spite of a large number of smaller banks folding, it’s still a great marketing point that can be made, as the larger banks are even worse and more vulnerable to the ongoing loan crisis which will include an increase in Alt-A loans with mandated re-sets in the first half of 2010, along with the commercial loans which are projected to hit hard in the second half of 2010.

Smaller banks are also growing in favor among many consumers as they continue to offer credit to small businesses and consumers, who have had difficulty attaining loans with the larger banks. This all works hand-in-hand to offer a great opportunity as the large banking scene continues to disintegrate, in spite of assertions to the contrary.