Developer Resigns From Union Bank Board of Directors : Finance: Move preceded announcement of a write-down of loans to companies associated with William Lyon and another ex-director.

Developer William Lyon resigned from the Union Bank board of directors just before the bank announced that it has written down $20.7 million of loans to companies associated with Lyon and one other former director.

A spokesman for Lyon said the millionaire home builder’s resignation had nothing to do with problem loans, however.

Lyon’s resignation was tendered in a letter dated Dec. 9 but was not disclosed until the bank issued its annual proxy report earlier this year.

Word of Lyon’s departure from the Union Bank board follows last week’s disclosure that commercial developer Donald M. Koll did not seek reelection to Wells Fargo & Co.’s board this year. Koll’s decision came as his Newport Beach firm was linked to a $76-million problem loan at Wells Fargo Bank.

In its proxy statement, Union Bank also said it had revalued properties securing loans to associate companies of former directors Lyon and Roger L. Manfred, a San Diego developer. The report said the bank reduced the value of the properties a total of $20.7 million.

Peggy Aulisio, a bank spokeswoman, said Monday she could not say how much of the $20.7 million involved Lyon’s companies.

The William Lyon Co. is the state’s largest home builder and has been hard hit by the credit crunch in the residential development industry.

Lyon officials told The Times last week that traditional sources of funding for the nearly $800-million-a-year company had dried up, and said they are looking to Wall Street and Hong Kong for financing.

San Francisco-based Union Bank said Lyon interests had $131.7 million in loans outstanding as of Jan. 31, but could not say how much was loaned to the William Lyon Co. and how much was loaned to the developer’s other business interests.

Lyon has several independent ventures; is a major owner of the Presley Cos., another Newport Beach-based home builder; and owns Air Lyon, a Santa Ana-based aviation services holding company.

Rick Sherman, general counsel for the William Lyon Co., said Monday that the Union Bank write-downs have nothing to do with late payments of principal or interest by that company.

“Our loans are all current with Union Bank,” he said.

One reason banks these days are writing down the value of properties they have loaned against is that property values are falling because of the general recession.

Koll has said that is the reason one of his loans with Wells Fargo was classified as a troubled loan even though all payments are current.

In his Dec. 9 letter to Union Bank, Lyon says that he resigned to spend more time nurturing his home-building company.

“Because of the recent economic downturn,” the letter reads, “I have concluded that my various business interests will require substantially more of my attention than they have in the past.”

When Koll confirmed his decision to retire from the Wells Fargo board, he said his time was being taken up by hotel and condominium resort projects in Baja California.