U.S. Near Sale of Lincoln S&L; Branch Offices : Thrifts: Sources say the most likely buyer is Beverly Hills-based Great Western Bank.

Nearly two years after seizing high-flying Lincoln Savings & Loan, the federal government is on the verge of selling the thrift’s branch network and closing down the institution as an operating entity.

The Resolution Trust Corp., the federal agency charged with managing and liquidating failed S&Ls;, is expected to announce the sale of most or all of Irvine-based Lincoln’s 29 branches in Southern California, perhaps as early as Friday.

Government and industry sources said the most likely buyer is Great Western Bank in Beverly Hills, the nation’s second largest savings and loan. Great Western officials declined comment Wednesday.

The sources said Michigan National Bank in Farmington Hills, Mich., which owns Beverly Hills Federal Savings Bank in Laguna Hills, also put a bid in for Lincoln’s branches. Michigan National’s corporate chairman, Robert J. Mylod, would not comment.

Lincoln was declared insolvent and seized by federal regulators in April, 1989, after a lengthy battle with its controversial owner, Charles H. Keating Jr. The failure of the thrift, which invested in real estate projects and other risky investments, is expected to cost taxpayers more than $2 billion.

The resolution of the thrift has been a high priority for federal regulators, who put the institution on the block in November. The thrift’s troubled assets have kept many potential buyers at bay, although its branch system is seen as highly attractive.

The purchase price of the branches could not be determined. But industry sources said branches of failed thrifts generally are being sold for no more than 1% of their deposit base, and large, high-rate deposits are often given to buyers for no premium.

Lincoln had $2.2 billion in deposits and $2.6 billion in assets at the end of September. Year-end figures are not available yet. The thrift has lost $1.4 billion since federal regulators took over its operations, largely due to write-down of assets.

“The only thing salable (to a financial institution) is the deposit base,” Vernon L. Peckham, the RTC agent managing Lincoln, said in a recent interview. “There have been several financial institutions showing an interest in purchasing the branches, and we would like to sell the branch system.”

Peckham, however, would not comment Wednesday on any sale prospects.

The leading contender to purchase Lincoln’s deposits and branches is Great Western, sources said. When asked about the thrift’s interest, Great Western spokesman Ian Campbell said: “I don’t have an announcement to make.”

Great Western, which has nearly $40 billion in assets, has been expanding in the past year primarily through acquisitions of collapsed thrifts in Florida. It lost out to Security Pacific National Bank in buying the failed Gibraltar Savings in Simi Valley, but it picked up Gibraltar’s Florida operations, along with CenTrust Savings Bank in Miami, Pioneer Savings Bank in Clearwater and the Florida branches of two New Jersey-based thrifts, Carteret Savings Bank and City Federal Savings Bank.

The attraction to Lincoln is its substantial deposit base and loyal customers. Of its total deposits, more than $1 billion of that comes from Southern Californians who have been long-time depositors.

Times staff writer James Bates contributed to this report.