Senators under investigation for ties to savings and loan executive Charles H. Keating Jr. began their final defense before the Senate ethics committee yesterday with an acknowledgment by Sen. John McCain (R-Ariz.) that they probably created "an appearance" of impropriety in a 1987 meeting with thrift regulators.

But McCain, the only Republican among the "Keating Five," said all the senators had valid reasons for attending one or both of two meetings held with federal regulators in April 1987, on behalf of Keating's Lincoln Savings and Loan in its fight with federal regulators.

McCain said his concern about appearance was a personal view that might not be shared by the others.

Testifying next, Sen. John Glenn (D-Ohio) proved him right on that point by asserting that lawmakers should be concerned with conduct, not appearance, in complying with ethics standards.

McCain, Glenn, Dennis DeConcini (D-Ariz.) and Alan Cranston (D-Calif.) met April 2 in DeConcini's office to discuss Lincoln's troubles with Edwin J. Gray, then-chairman of the Federal Home Loan Bank Board. Those four were joined by Sen. Donald W. Riegle Jr. (D-Mich.) in a meeting a week later with San Francisco-based regulators, also to discuss Lincoln's problems.

Gray and two of the San Francisco regulators testified that they felt improperly pressured by the senators to withdraw an investment regulation that Lincoln opposed.

In hearings that are approaching the end of their second month, the Select Committee on Ethics is attempting to determine if any or all of the five senators intervened improperly on Keating's behalf at a time when he was raising more than $1.3 million for their political campaigns and causes.

All five have denied any wrongdoing, and McCain and Glenn did so again yesterday. The committee's special counsel, Robert S. Bennett, earlier recommended that the panel proceed against Cranston, DeConcini and Riegle but take no further action against Glenn and McCain.

McCain testified that he was concerned about the propriety of four senators meeting with a regulator without the presence of any aides but went because he wanted answers to questions involving a constituent and major employer in Arizona. Although he said he believes nothing wrong was done, he said in retrospect it probably created "an appearance that something was improper."

Asked if he had any advice for other senators in view of the experience, McCain said: "In public life you not only have to be careful about what you do but you have to be careful about what you appear to do."

Glenn made it clear from the start of his testimony that he saw nothing wrong with four or five senators meeting with a regulator or with the appearance of such a meeting. The test should be "whether the case has merit, whether it is right or wrong" and not how many senators are in attendance, he said.

Before McCain left the stand, he came under sharp questioning from committee Chairman Howell T. Heflin (D-Ala.) for his previously acknowledged delay in reimbursing Keating's company for flights for his family that included trips to Keating's vacation retreat in the Bahamas.

McCain said he was unaware that reimbursements had not been paid in full until he was notified by Keating's company and then repaid more than $13,000. While he conceded he made a "mistake," he said he intended no breach of ethics and became angry when Heflin started adding up costs and suggesting he had underpaid the bill.

"If you can find some flight that I didn't pay for . . . I'd like to write you a check {and} you can fill it out for whatever you want to," McCain said, adding that he had paid and even "double paid" for all of the trips he is aware of.

"I wasn't present on those flights. I'm asking you," Heflin responded with exasperation.

While McCain stepped gingerly around several points of dispute in the tense relations between himself and DeConcini, he made clear that he disagreed with a proposal made by his Arizona colleague at the 1987 meetings with regulators to help bring an end to their lengthy investigation of Lincoln. According to notes made by a regulator, DeConcini said Lincoln was prepared to make more home mortgage loans and suggested the regulators ease enforcement of a rule curtailing other high-profit, high-risk investments.

"I would not have made those statements," McCain said.

Riegle will take the stand Monday.