SAN FRANCISCO - The government may face an uphill battle trying to unload the failed Homestead Savings because of its long history of trouble, banking experts say.

Homestead, based in the San Francisco suburb of Millbrae, was seized Friday. It was the largest Northern California thrift to be put into the hands of the Resolution Trust Corp. since passage of the bailout law in 1989. The thrift has about 20 branches that held about $1.3 billion in deposits.

Bargain Hunters

Analysts said they expect only a handful of institutions to bid for Homestead, mainly those that specialize in buying badly distressed properties at rock-bottom prices. They cite French-owned Bank of the West's 1991 purchase of the Northern California units of Imperial Federal Savings Association for a premium of less than 0.3% of deposits.

Homestead was once one of California's fastest-growing thrifts, leaping from $500 million in assets in 1980 to nearly $6 billion by 1988.

The thrift's growth was fueled by investments in real estate development, including apartments and raw land, funded largely by brokered deposits.

Asset Sales Program

Homestead's real estate investments started going sour at the end of the 1980s, producing losses in 1988, 1989, and 1990. The thrift launched a program to sell off assets but was unable to stay within federal capital standards.

By 1990, it was already warning investors that a federal takeover was possible. Last year, the thrift persuaded bondholders to swap debt for equity, but the maneuver failed to restore capital to required levels.

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