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Hedgehog Intelligence | Prepared by PolicySight

Policy & Stakeholders

California: from fee cap to planning decision

SB 1075 is effective. The question is whether it materially changes a state chartered credit union's financial assumptions.

Effective January 1, 2026

SB 1075: when a fee cap changes the plan

Whether the capped historical revenue stream materially changed a specific institution's earnings, deposit, funding or balance sheet assumptions, and whether actual 2026 outcomes should trigger a reforecast.

Verified law / formal authority

California Financial Code section 14053, as amended by SB 1075, caps qualifying overdraft / nonsufficient-funds fees at $14 or a lower CFPB amount beginning January 1, 2026. Notice requirements include notice on the same business day when an account is overdrawn. This is a current effective requirement, not a proposal.

Affected California state chartered credit unions subject to section 14053. DFPI regulates and examines California state chartered credit unions. Industry implementation guidance from California's Credit Unions tells affected institutions to model income impact and document changes and controls for examiner review.

Industry guidance is supplied research context; a direct guidance URL was not supplied and has not been independently retrieved.

Related 2026 fee policy: AB 2017

AB 2017 prohibits a DFPI-regulated bank or credit union from charging a nonsufficient-funds fee when a transaction is declined instantaneously or near-instantaneously for insufficient funds. Effective January 1, 2026.

A related fee-economics policy alongside the SB 1075 cap. Applicability depends on the statute and charter; not generalized to federally chartered institutions.

Why it matters

A capped historical revenue stream raises a planning question, not proof of materiality or a specific balance sheet action. The more useful framing is a bounded scenario analysis and a planning conversation comparing expected results with actual results, not a Hedgehog compliance product opportunity.

No institution is asserted to have changed its balance sheet or to be seeking a vendor.

Business implications

When the cap materially changes an institution's assumptions, earnings, deposit, funding and product plans may need to be revisited and tested against actual 2026 outcomes. That creates a bounded planning conversation, not a compliance product opportunity.

This is not an SB 1075 compliance product opportunity.

What happens next

Actual 2026 earnings and noninterest income results; management commentary on deposit, funding or fee strategy; further DFPI guidance or examination emphasis; availability of newer institution level fee reporting. Reassess if the planning effect is immaterial or existing tools already meet the need.

Recommended focus: Watch how the $14 overdraft cap changes assumptions about deposit product economics, noninterest income and funding strategy.

Recommended focus: material planning impact

Decision path

California decision path

From effective law to the next planning decision

  1. 1
    Verified law / formal authority

    California Financial Code section 14053

    Effective SB 1075 requirement from January 1, 2026: qualifying fees capped at $14 or a lower CFPB amount, with notice requirements.

  2. 2
    Verified law / formal authority

    DFPI Commissioner

    Formal regulator authority, not an institution-specific assignment.

  3. 3
    Verified law / formal authority

    Corporations & Financial Institutions

    Relevant division leadership within DFPI.

  4. 4
    Verified law / formal authority

    Credit Unions supervisory / examination function

    DFPI regulates and examines California state chartered credit unions.

  5. 5
    Institution decision

    Institution implementation

    The affected credit union updates fee, notice, systems, policy and controls. Industry implementation guidance calls for modeling income impact and documenting changes for examiner review.

  6. 6
    PolicySight interpretation

    Finance / Treasury / ALCO or equivalent

    If material, institution leadership revisits earnings, deposit, funding and balance sheet assumptions. These functions are role categories, not named buyers.

  7. 7
    PolicySight interpretation

    Actual outcomes / next decision

    Management compares actual 2026 outcomes with revised assumptions and decides whether to reforecast or change strategy. This is PolicySight interpretation, not a required Hedgehog workflow.

Affected institutions

Ten state chartered credit unions with verified 2024 fee baselines. Five highlighted below, without a score or inferred materiality.

2024 historical baseline · December 31, 2025 assets · 2026 effective law

NSF + overdraft fees and their share of total income are from 2024. Assets are from December 31, 2025; charter status is current at the research cutoff. DFPI confirms a 2026 annual fee report exists, but its underlying file could not be reliably retrieved. No 2025 fee figures or current 2026 fee income are inferred.

Current California state chartered credit union

Frontwave Credit Union

2024 historical NSF + overdraft fees
$8,084,497
2024 fees as % of total income
8.66%
December 31, 2025 assets
$1.700B

Separate verified context

Purchase and assumption of Community Valley Bank effected September 30, 2025. Transaction and fee-cap effects must be assessed separately.

Decision consideration

Watch how the $14 cap and the Community Valley Bank transaction changed Frontwave's deposit, funding and noninterest income assumptions for 2026.

Current California state chartered credit union

Educational Employees Credit Union

2024 historical NSF + overdraft fees
$18,530,071
2024 fees as % of total income
7.74%
December 31, 2025 assets
$5.255B

High historical fee concentration plus a large balance sheet; materiality is not established.

Decision consideration

Watch how the $14 cap changed 2026 noninterest income assumptions and which other deposit or funding assumptions were revised with it.

Current California state chartered credit union

SAFE Credit Union

2024 historical NSF + overdraft fees
$14,946,621
2024 fees as % of total income
5.87%
December 31, 2025 assets
$4.403B

Separate verified context

Merger into Boeing Employees’ Credit Union filed with DFPI January 26, 2026. Filing is not approval or completion. Separate from SB 1075.

Decision consideration

Watch whether fee cap assumptions were incorporated into the standalone and merger planning forecasts.

Current California state chartered credit union

San Diego County Credit Union

2024 historical NSF + overdraft fees
$15,258,790
2024 fees as % of total income
3.61%
December 31, 2025 assets
$9.287B

is listed on the California Credit Union Advisory Committee. Advisory only; no policy position is inferred.

Decision consideration

Watch what management replaced or reforecast when a historically material fee stream was capped, and how actual 2026 results track the revised plan.

Current California state chartered credit union

Redwood Credit Union

2024 historical NSF + overdraft fees
$12,952,121
2024 fees as % of total income
2.46%
December 31, 2025 assets
$9.758B

Decision consideration

Watch whether the fee cap was large enough to change the 2026 earnings plan, deposit strategy or funding assumptions at Redwood.

Cases & activity

2026 activity reported in DFPI monthly bulletins. None of these transactions is attributed to SB 1075.

Filed January 26, 2026

SAFE Credit Union → Boeing Employees' Credit Union

SAFE Credit Union of Folsom filed to merge into Boeing Employees' Credit Union. A filing is not an approval or completion.

Approved and effected June 1, 2026

Inland Federal Credit Union → Cabrillo Credit Union

Inland Federal Credit Union of El Cajon merged into Cabrillo Credit Union of San Diego.

Approved and effected May 1, 2026

Jones Methodist Church Credit Union → Upward Credit Union

Jones Methodist Church Credit Union of San Francisco merged into Upward Credit Union of Burlingame.

Filed April 30, 2026

First Entertainment Credit Union charter conversion

First Entertainment Credit Union filed to convert to a federal charter. A filing is not an approval or completion.

Bank activity, April 2026

Secondary activity from the DFPI May 2026 bulletin. Bank activity is separate from the credit union fee-cap context.

Effected April 2026

First Foundation Bank → Sunflower Bank

Bank merger activity reported in the DFPI May 2026 bulletin.

Effected April 2026

Heritage Bank of Commerce → Citizens Business Bank

Bank merger activity reported in the DFPI May 2026 bulletin.

Effected April 2026

United Security Bank → Community West Bank

Bank merger activity reported in the DFPI May 2026 bulletin.

Stakeholders & authority

California authority and stakeholders

Formal authority, institution decisions and advisory input are distinct. No personal policy position or institution-specific assignment is inferred.

Financial legislation

Policy committees that hear and vote on referred financial-institution measures.

  • Chair, Senate Banking and Financial Institutions Committee · Senate Banking and Financial Institutions Committee

  • Chair, Assembly Banking and Finance Committee · Assembly Banking and Finance Committee

  • Vice Chair, Senate Banking and Financial Institutions Committee · Senate Banking and Financial Institutions Committee

  • Vice Chair, Assembly Banking and Finance Committee · Assembly Banking and Finance Committee

Bank and credit-union supervision

DFPI leadership and the divisions that charter, examine and supervise state institutions.

  • Commissioner · DFPI Executive Office

  • Chief Deputy Commissioner · DFPI Executive Office

  • Senior Deputy Commissioner, Corporations & Financial Institutions · Corporations & Financial Institutions

  • Deputy Commissioner, Banks · Banks

  • Deputy Commissioner, Credit Unions · Office of Credit Unions

Consumer protection and enforcement

Consumer financial protection, enforcement and cross-cutting Department of Justice authority.

  • Senior Deputy Commissioner, Consumer Financial Protection · Consumer Financial Protection

  • Deputy Commissioner, Enforcement · Enforcement

  • Deputy Commissioner, Supervision and Registration of Covered Persons · Consumer Financial Protection

  • Attorney General of California · Attorney General's Office

Funding and regulatory capacity

Budget and appropriations gatekeepers that shape DFPI resources and fiscal legislation.

  • Director · Department of Finance

  • Member, Senate Rules Committee · Senate Rules Committee

  • Chair, Assembly Budget Committee · Assembly Budget Committee

  • Chair, Assembly Appropriations Committee · Assembly Appropriations Committee

  • Member, Senate Banking and Financial Institutions Committee · Senate Banking and Financial Institutions Committee

Appointments and formal rulemaking

Appointment, confirmation and procedural rulemaking review before regulations are filed.

  • Governor of California · Governor's Office

  • Chair, Senate Rules Committee · Senate Rules Committee

  • Director · Office of Administrative Law

  • Secretary of the Senate · Senate Rules Committee

Supported authority relationships

Commissioner appointment requires Senate confirmation. KC Mohseni was confirmed September 8, 2025.

  • → appoints → DFPI Commissioner

  • Senate Rules Committee → reviews appointment → DFPI Commissioner

  • California Senate → confirms → DFPI Commissioner

  • → leads → DFPI

  • → leads → Corporations & Financial Institutions

  • → leads → Credit Unions

  • → leads → Banks

  • → leads → Consumer Financial Protection

  • → leads → Enforcement

  • California Credit Union Advisory Committee → advises → DFPI Commissioner

  • California Credit Union Advisory Committee → advises → Deputy Commissioner, Credit Unions

  • Senate Banking and Financial Institutions Committee → hears / votes on → referred financial institution measures

  • Assembly Banking and Finance Committee → hears / votes on → referred financial institution measures

  • DFPI → supervises → California state chartered credit unions

  • → member of → California Credit Union Advisory Committee

  • → member of → California Credit Union Advisory Committee

  • → member of → California Credit Union Advisory Committee

  • → member of → California Credit Union Advisory Committee

  • → member of → California Credit Union Advisory Committee

  • → member of → California Credit Union Advisory Committee

Policy watch

Implementation signals and market activity worth monitoring next.

Effective January 1, 2026

SB 1075 and AB 2017 implementation

How affected institutions implement the fee cap and the instantaneous-decline NSF prohibition, and how 2026 fee economics compare with the 2024 historical baseline.

Annual reporting cycle

DFPI annual NSF and overdraft fee reporting

The DFPI page explains the reporting cycle and definitions. The 2026 report file could not be reliably retrieved, so no 2025 fee figures are inferred.

Activity watch, not a new rule

Charter conversion and merger activity

2026 DFPI bulletins show ongoing merger and charter-conversion activity. This is market-structure activity, not a regulatory change.

Effective January 1, 2026

SB 825 enforcement posture

SB 825 clarified DFPI authority under the CCFPL for specified licensees. Indirect relevance only if pricing, product or enforcement changes materially affect financial assumptions.

Secondary context: SB 825

Shared authority where applicable: DFPI Commissioner → relevant licensing / supervisory division → Consumer Financial Protection → Enforcement. This is an operating authority path, not a new inferred person-level relationship.

Indirect relevance only if pricing, product or enforcement changes materially affect financial assumptions. Not a primary ALM or balance sheet trigger.

EffectiveAdditional context

SB 825: DFPI consumer-protection authority clarified and preserved

Law
SB 825, Chapter 355, Statutes of 2025
Effective
January 1, 2026
Applies to
California financial providers regulated by the DFPI, subject to the exact statute and charter or jurisdiction

What changed

SB 825 took effect January 1, 2026. It clarified and preserved DFPI authority under the California Consumer Financial Protection Law concerning prohibited unlawful, unfair, deceptive or abusive practices for specified DFPI licensees otherwise exempt from much of the CCFPL. Scope is not identical for every federally chartered institution.

Decision affected

Whether pricing, fees, product design, disclosures, servicing practices and governance assumptions should be reviewed for California-regulated offerings.

Why it matters

This is more about product and conduct risk than core ALM. It matters when pricing or fee strategies interact with consumer facing products, and it is secondary to the overdraft cap for Hedgehog's balance sheet use cases.

Business implications

Indirect. Scenario work may be relevant when product pricing or fee changes affect revenue assumptions. No compliance functionality is claimed.

What to watch

  • Exact charter and jurisdiction
  • Current product exposure
  • Whether practices changed before the effective date
  • Whether any financial effect is material

Recommended focus

  • Watch whether California product pricing or fee assumptions are revisited under the broader DFPI enforcement posture.

What to watch next: Material DFPI enforcement, rulemaking or guidance that clarifies application to a defined bank or credit union product.

Recommended focus