WHEN THE GREAT RECESSION sank its teeth into the American economy in 2008—eventually swallowing 250 banks, and counting—Umpqua Bank president and CEO Ray Davis learned a surprising civics lesson: accepting a government handout wasn’t just an option, it was American.

At least that’s what the federal Office of the Treasurer told Davis when they called to urge Umpqua to accept a $214 million investment in preferred stock from the Capital Purchase Program under the Troubled Asset Relief Program (TARP). “They made it seem like a patriotic duty,” he recalls.

Umpqua, Davis says, didn’t actually need the money, but he saw the good for his country—and moreover for the growth of his bank. In the last 18 months, Umpqua made $1.7 billion in loans and took over four failing banks, which allowed them to expand further into Washington and into the Silver State, with Nevada Security Bank. Plus, Umpqua became the first Oregon bank to pay TARP back, with, Davis emphasizes, 8 percent interest going to taxpayers.

Now Oregon’s largest bank, Umpqua has flown through the era of financial bad and ugly thanks to a radically simple business plan: to become a community bank that can operate “at any size.” That means no fancy “financial instruments” like derivatives—just loan money for more than you’re borrowing it and pay lots of attention to customers. For example, Umpqua calls its branches “stores.” The Ritz Carlton Hotels trains the bank’s new employees in customer relations. Pick up a phone in any branch and dial 8, and you get Davis himself.

Of course, even the homiest approaches to business can’t ward off all the damage done by the financial crisis: Umpqua’s share prices are down by nearly half from mid-2007, and its quarterly dividends can be measured in pennies. Analyst Brett Rabatin of Sterne Agee rates Umpqua’s stock “neutral.”

Still, that’s a helluva a lot better than the many other regional banks that fell and, Davis notes, are still likely to implode.

“You build or fail,” says Davis of Umpqua’s expansion. “It’s not about size. It’s how you choose to operate.”