Umpqua Bank’s CEO Ray Davis, whose bank has 151 branches in Oregon, Northern California, and Washington, is also optimistic. He believes the economy is poised for improvement and that he might be seeing the bottom of the residential market in his region.

But it hasn’t been easy for Umpqua, which reported its first-ever quarterly loss in the first quarter of this year. The second quarter, though, showed improvement. Umpqua posted a surprise profit for its second quarter, earning $7.7 million, or 7 cents a share, when analysts expected the bank to lose 7 cents a share.

Like most other regional and community banks, Umpqua didn’t have anything to do with subprime lending or the exotic financial instruments that brought down the Wall Street giants. But what it did do was loan money to residential developers.

Then the housing market collapsed and with it the market for the new housing Umpqua had financed.

“It’s been catastrophic,” Davis said. In early 2007, as the housing market erosion became apparent, Davis went public with the loan problems his bank expected. After that, Umpqua worked through its loan portfolio, taking the losses when it needed to.

His bank has reached the point where capital is strong. Regulators require risk-based assets of 10 percent. Umpqua’s stand at 14.4 percent. The bank has $2 billion in liquidity. And its nonperforming loan ratio is 1.8 percent, better than average peers in the Northwest. And Davis doesn’t expect disaster from commercial loans, despite the prognostications of some. “I don’t think they’re going to be as catastrophic as (residential) real estate.” Davis said now is a difficult time to be a banker, but one filled with opportunity.

“What I’m trying to do right now is make sure this company is stronger,” Davis of Umpqua said. “We want to come out of this downturn stronger than we went into it.”