Umpqua Bank CEO Ray Davis received the call at the corporate office in Portland on Oct. 20. It was the U.S. Treasury Department calling.

Two days later, his bank was approved to receive a portion of the government’s bailout. Davis calls the $700 billion bailout a buy-in, because the Treasury Department purchased more than $214 million in preferred shares from Umpqua. The sale closed Friday.

“The major purpose for putting this money out is to loan it out,” Davis said. “The government wants to unfreeze and get the economy moving.”

That means more loans will be available for the local community. Types of loans will be across the board, he said, from mortgage loans to small- and medium-sized business loans.

The phone calls came from Treasury Secretary Henry Paulson’s office. Davis was asked how many loans, especially developer loans, the bank was carrying that were going bad.

Umpqua Bank is fortunate, the banks’ chief financial officer, Ron Farnsworth, said Wednesday. As of Sept. 30, only 1.6 percent of its assets fell into this bad loan category, and less than 8 percent of its loans are residential, according to Davis.

“We saw this on the horizon about a year and a half ago and started making adjustments,” Farnsworth said.

Once the bank realized it had these types of loans, it began slowing down lending to developers and selling off the loans to other banks.

“What we did is take our foot off the gas,” Farnsworth said. “Many other banks didn’t slow down.”

Other community banks in the state that have announced they are part of the government’s $250 million bailout are Washington Federal and Banner Bank, he said.

“Others may or may not have applied, but they haven’t announced anything yet,” Farnsworth said. “We’ll have to wait a few weeks before the dust settles.”

Umpqua Bank was the 14th bank in the nation to receive these funds, Davis told an audience of about 180 at The Mill Casino-Hotel  Wednesday.

“It’s only the strong institutions that are going to get it,” Davis said. “What the government wants to do is strengthen. Strengthen means getting rid of the very, very weak.”

As part of the agreement, Umpqua Bank will pay an annual 5 percent dividend on the stocks to the government, which would go up to 9 percent if the stocks are not redeemed in five years. Davis said the government is hoping stocks will rise within this time.

Davis said he hopes Umpqua Bank will have opportunities to consolidate with other banks.

“We’re in an enviable position,” he said.

In his presentation, “Navigating Today’s Challenging Economic Environment,” Davis said up until now, the media has focused on only negative news about the economic crisis, and justifiably so.

“We need good things to happen in order to report it,” he said.

Davis encouraged people to set a good example and be positive that the storm will end.

“Attitude is so important right now because people have been almost traumatized by the national economy,” said Ron Opitz, executive director of South Coast Development Center, a clearinghouse that works to recruit new businesses.

Davis said the current economic situation is unlike any other in the past 70 years and the potential for disaster is just being realized in foreign countries. He said Oregon is actually going to fare better than California because development is kept in check through urban growth boundaries.

“There is a credit crunch with larger institutions that loan money to each other, but not in community banks,” Davis said.

His company is loaning money to small- and medium-sized businesses and those who want to buy a home as fast as it ever has.

“I personally felt that he took a bad thing and turned it into the good,” said Sandi Brown, there representing the Business Resource Center. “I think in the crisis we’re in, his attitude is what we need.

“I think he was the one little break of light in a very dark hall.”