With economic conditions akin to a biblical plague, Lancaster, Calif., would seem an unlikely place for banking success.

Sixty miles north of Los Angeles, Lancaster and nearby Palmdale have been besieged by falling real estate prices as defense cutbacks have forced aerospace contractors to lay off thousands in the area.

Add in military personnel cutbacks at nearby Edwards Air Force Base and you have the makings of a disaster. In Palmdale, a community of slightly more than 100,000, about 140 homeowners lose their homes each month through foreclosures, distress sales, or by simply walking away.

Now known as the foreclosure capital of California, the area has seen median house prices fall more than 20% and unemployment rise more than 30%.

But at least one bank has managed to keep its head above water. The Antelope Valley Bank even posted its most profitable month on record this fall.

Officials at the Lancaster bank attribute their track record to prudent decisions and wise lending. But you won't find president and chief executive Jack D. Seefus gloating about his bank's success.

In fact, Mr. Seefus and his staff have gone so far as to set up the Antelope Valley Bank Community Fund, which helps provide financing to individuals with low and moderate incomes beyond the means of conventional lending.

Begun in May 1994, the program was based on a similar fund set up by Santa Barbara-based California Thrift and Loan to assist individuals in the Los Angeles area after the 1992 riots.

Mr. Seefus said running the program has been a learning process.

"We've had to change direction a number of times," he said. "We were more understanding in the beginning, maybe a little too understanding, and it came back to bite us a few times. But the majority of people are paying and paying properly."

Antelope Valley, which has assets of $131 million and is projected to post a return on assets of 1.3% in 1995, set aside $150,000 for the fund, which was for loans of $2,000 and less.

"What we're doing is using the fund to make small loans, around $500 or $1,000, loans that banks typically aren't anxious to make," said Larry Tepstein, a bank vice president and coordinator of the fund. "We've relaxed a lot of the requirements and have been able to reach a lot of people who might not have otherwise been able to get a loan."

Antelope Valley allows a 24-month repayment period and all loans are unsecured, fully amortizing, with an annual percentage rate of 15% with no loan or orientation fees charged to the borrower.

The only requirements are an ability to repay, demonstrated willingness to repay based upon satisfactory credit reports and references, no derogatory credit, and annual family income of $28,000 or less.

"Our intent wasn't to make money," Mr. Tepstein said. "It wasn't to lose money, either. It was to help people in the community. We are a community bank and we feel good about it because we're doing something for the community."

Mr. Seefus said the community fund, which currently has about $35,000 outstanding, has helped area customers through hard times with needed money and brought many of them into the credit realm.

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