The obligations, as defined in Section 1480, excepting the obligations described in Section 1485 and the obligations described in Section 1483, of any one person owing to a commercial bank at any one time shall not exceed the following limitations:

(a) Obligations which are unsecured shall not exceed 15 percent of the sum of the shareholders’ equity, allowance for loan losses, capital notes, and debentures of the bank.

(b) Obligations, secured and unsecured, in all shall not exceed 25 percent of the sum of the shareholders’ equity, allowance for loan losses, capital notes, and debentures of the bank.

The calculation in subdivision (a) and this subdivision shall conform to a commercial bank’s one-time election to opt out of the requirement to include all components of accumulated other comprehensive income pursuant to, and in accordance with, the authority granted in paragraph (2) of subdivision (b) of Section 324.22 of Part 324 of Title 12 of the Code of Federal Regulations.

Obligations arising out of the discount of commercial or business paper actually owned by the person negotiating the same and endorsed by such person without limitation, together with the secured and unsecured obligations, if any, of such person, shall not exceed 40 percent of the sum of the shareholders’ equity, allowance for loan losses, capital notes, and debentures of the bank.

No commercial bank shall be required, solely by reason of the amendments of this article, to dispose of or reduce any loan which complied with the applicable limitations of this division at the time such loan was made, nor shall any such bank be prevented solely by reason of the provisions of this article from renewing any such loan from time to time.

(Amended by Stats. 2022, Ch. 452, Sec. 101. (SB 1498) Effective January 1, 2023.)