A contingency funding plan for banks that is tested, not assumed: agents run each line's live test and count every pledged loan, and the Treasurer approves every step that moves money
A plan that works on the day it is needed, with every line tested and every loan counted.
See one case, screen by screen ↓A contingency funding plan for banks (CFP) sets out where a bank would borrow if deposits ran, how much each source would give, how it is tested, and when the bank escalates. Contingency Funding Plan keeps that plan current and tested: agents run each source's live test step by step, count every pledged loan at the value the lender would accept, rerun the stress scenarios and draft the next CFP version. The analyst prepares, the CFO checks every borrowing request, the Treasurer approves every money step, and ALCO approves the plan.
AI use cases in banking: a buyer's guide to agentic AI for bank and credit union operations →
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A contingency funding plan for banks adds up where the bank would borrow if deposits ran: the Federal Reserve discount window, FHLB advances, fed funds lines, brokered deposits, a securities repo line and its own cash. On paper the total is reassuring. On the day it is needed, it is only as good as three things nobody checks between exams: whether the people on the authorization list can still borrow, whether each line actually answers, and whether the loans pledged behind it would be accepted.
Loans downgraded at the risk rating review, loans 30 days past due and loans whose recorded mortgage was never imaged stay in the capacity table until the lender refuses them. A test borrowing leaves an email chain, a phone call to the credit desk and a printed wire confirmation, and a finding from the test is written into the ALCO minutes and fixed months later, while the stress scenarios keep counting the capacity that failed. Since July 28, 2023 the agencies expect every bank and credit union to test its contingency borrowing lines regularly, and to consider small test transactions at the discount window.
Estimated split of the treasury team's hours for one annual discount window test, the collateral check behind it and the plan update, by hand and with the agents. Our arithmetic, kept modest; the working solution records the real times on its audit trail.
Six agents test, count, stress and rewrite the plan; the analyst prepares, the CFO checks, the Treasurer approves every money step, ALCO approves the plan.
Tuesday, October 20, 2026, at Tessaly Community Bank, a fictional $3.4 billion community bank with 41 branches. Its plan counts $1,180.0M of contingent capacity across six sources, and today is the discount window's annual live test, drill DRL-2026-07. Here is the day, screen by screen in the working solution.
The first line reads "Contingent capacity $1.18B, last full test June 2026." The six funding sources run down the left with their capacity and last test: the discount window $486.0M, FHLB advances $412.0M, fed funds lines $85.0M with one line that failed on September 15, brokered deposits $120.0M, the repo line $45.0M and the cash buffer $32.0M. On the right, the drill is a stopwatch list that is waiting for her.
"The test borrowing is waiting for your approval — $5,000,000.00 overnight at the discount window. Dale Pruitt, CFO, checked it at 9:03 a.m."
The Drill agent drafted a $5,000,000.00 overnight primary credit request from CFP §7.2, repayable Wednesday, October 21, at the day's primary credit rate of 4.00%, with $486.0M of lendable collateral pledged, 97 times the amount. The Readiness agent confirmed that Malik Osei is on the authorization list and that his FedLine credential is current to January 14, 2027. Malik prepared it at 8:47, and Dale Pruitt, CFO, checked it at 9:03.
Dale Pruitt's check: "Amount, term and collateral match CFP §7.2."
The approval restates the money step: $5,000,000.00 overnight from the discount window, prepared by Malik Osei, checked by Dale Pruitt. Renata picks the reason code "Annual live test, CFP §7.2" and releases it. Had she prepared the request herself, the screen would not let her approve it.
The Drill agent never sends a request or moves money. It stops for the CFO's check and the Treasurer's approval.
Malik sends the request through Discount Window Direct at 9:14. The Reserve Bank approves the advance at 9:21, the Drill agent sees the funds arrive in the payments hub at 10:02 and the journal posted to the general ledger at 10:04. Request to funds: 48 minutes 13 seconds against a 2-hour target. On Wednesday at 9:36 a.m. it confirms the repayment of $5,000,547.95.
Every step carries its record: the advance, payments hub records PH-26-1020-04418 and PH-26-1021-00932, journal JE-26-10-2207.
The test proves the line answers. The Collateral agent then checks what stands behind it: 1,640 borrower-in-custody loans, 3,260 FHLB-listed loans and 43 securities positions, with haircut table v2026.2, each loan's risk rating, payment status and imaged documents. It finds 9 loans downgraded to special mention at the September 30 review, 5 loans 30 or more days past due and 47 loans missing a recorded mortgage, a note copy, or an assignment or UCC search.
"61 pledged loans would be rejected: $212.0M of lendable value. Discount window capacity falls from $486.0M to $274.0M."
Loan CRE-418281, Bellmont Self Storage LLC, is rated 4, pass/watch, in the loan subledger and current in the core banking system, and its note, assignment, appraisal and first lien check out. Its recorded mortgage is not in document imaging, so its $6,396,000.00 of lendable value should not be counted until it is imaged. The fix is to find or request the document, and a second person checks it.
Recorded mortgage: "Not found — searched by loan number and by parcel 07-114-220."
Bea owns the list: $318.3M of principal, $212.0M of lendable value. She filters by reason, searches by loan number, borrower or town, and requests the 47 missing documents in one action, due November 20. The 14 that cannot be fixed are withdrawn from the listing by November 6, and each withdrawal waits for the Treasurer's approval.
The plan's three 30-day scenarios are counted again. The bank-specific run falls from 2.37x to 1.85x and the market-wide disruption from 4.19x to 3.30x. The combined severe case, a $596.0M need, falls from 1.56x to 1.20x, under the board's 1.25x floor. An interim pledge of $55.1M of lendable securities would bring it back to 1.30x.
"Combined severe falls to 1.20x, under the board's 1.25x floor. The Early warning agent has proposed Stage 1."
Of the eight early warning indicators, two are now amber: combined coverage at 1.20x, and fed funds lines that answered, 2 of 3. The agent proposes Stage 1, Heightened monitoring, with the plan's own actions: the liquidity working group twice a week, a daily report to the CFO and the CEO, the interim pledge prepared, and ALCO told on November 4. Renata approves or declines it with a reason.
The Early warning agent proposes only. It never changes a stage.
The After-action agent drafts five findings with owners and dates and a redline of exactly what changes: discount window capacity from $486.0M to $274.0M, contingent capacity from $1,180.0M to $968.0M ($1,023.1M with the interim pledge), the test log and an action register. Malik prepares the update; Renata approves the $58.0M interim pledge and the update before it goes to ALCO on Wednesday, November 4.
"Malik Osei has prepared the update. It needs your approval before it goes to ALCO, and so does the interim pledge."
The same discount window test, seen by the five people who carry it: what the annual test looked like, and what it looks like now.
Six agents test, count, stress and rewrite the plan; the analyst prepares, the CFO checks, the Treasurer approves every money step, ALCO approves the plan.
Plans each funding source's annual live test from CFP §7.2 and runs it step by step: drafts the borrowing request, watches the payments hub for the funds and the repayment, checks the general ledger posting and timestamps every step with its record.
Keeps the operational details behind every line current: the Reserve Bank authorization list, who can sign in to Discount Window Direct and when each credential expires, counterparty desk contacts and cut-off times.
Recomputes lendable value for every pledged loan and security with each lender's haircut, and checks each loan is pass-rated, current and has its documents imaged, listing every loan that would fail with the reason and the fix.
Reruns the plan's three 30-day scenarios against counted capacity after every change, and measures coverage against the board's floor.
Reads the eight early warning indicators every day against their amber and red thresholds, and proposes a stage change with the actions the plan sets for that stage.
Writes the findings from each test, with owners and dates, into the next CFP version as a redline of the capacity table, the scenario results and the test log, and drafts the ALCO summary.
Prepares · checks · approves money · approves the plan. The agents propose; a named person decides.
The Treasurer, the analyst and ALCO ask in plain words. Every answer cites its record and opens the screen to act on; anything it drafts still goes for approval.
Why would the Reserve Bank reject 61 of our pledged loans?
Each fails one of the borrower-in-custody rules: 47 are missing a document in imaging (22 recorded mortgages, 14 note copies, 11 assignments or UCC searches), $171.4M lendable; 9 were downgraded to special mention at the September 30 review, $28.9M; 5 are 30 or more days past due, $11.7M. Together $212.0M of lendable value. Bea Tran owns the fix list.
Are we covered if uninsured deposits run for 30 days?
In the bank-specific run, 25% of uninsured deposits gone in 30 days, the need is $412.0M and counted capacity $763.0M: 1.85x. The combined severe case is the tight one: 1.20x, under the 1.25x floor, since the collateral check. The $58.0M interim pledge brings it to 1.30x.
What does the 2023 addendum ask us to test?
To "regularly test any contingency borrowing lines" so staff know how to use them and they "function as envisioned"; for the discount window, "small value transactions at regular intervals"; and to plan for "the operational challenges involved in moving and posting collateral". Our plan answers with one live test per source per year, a full test each June and stress every quarter.
Draft the ALCO summary of today's drill
A $5,000,000.00 overnight primary credit advance was requested at 9:14 a.m. and funded at 10:02 a.m., 48 minutes against a 2-hour target, and repaid with $547.95 of interest the next morning. A loan-by-loan collateral check then found $212.0M of pledged commercial real estate loans the Reserve Bank would reject, taking contingent capacity from $1,180.0M to $968.0M and combined coverage to 1.20x. Proposed: a $58.0M interim securities pledge (1.30x), a fix list of 61 loans due November 20, Stage 1 monitoring, and CFP v4.3.
13 screens from the working solution, on its sample data. Pick one to see it large.
Sources, haircuts, scenarios, stages and agent thresholds are settings. The administrator proposes a change; the Treasurer approves it before it applies, and it is on the audit trail.
| Setting | Default | Choose from |
|---|---|---|
| Live test per source | Once a year: discount window $5,000,000, FHLB $10,000,000, fed funds $2,000,000 on each line, brokered $1,000,000, repo $5,000,000 | Frequency and test amount per source; the cash buffer is checked daily |
| Test target | Discount window funds within 2 hours; fed funds within 60 minutes | Per source: same business day for FHLB and repo, within 3 business days for brokered deposits |
| Collateral haircut table | v2026.2, effective July 1, 2026 | v2026.2 (current) · v2026.1, January 1 – June 30, 2026 |
| Eligibility rules | Pass-rated (risk rating 1–4), under 30 days past due, note, recorded mortgage and assignment or UCC search imaged, first lien | Per collateral type and lender |
| Coverage floor | 1.25x amber · 1.10x red | Set by the board; a change goes to the Treasurer for approval |
| Stage 1, Heightened monitoring | Two indicators amber, or one red for a day | Stages 0 to 3 with their actions; Stage 2 needs two red, Stage 3 is declared by ALCO |
| Agent confidence thresholds | Drill 0.95 · Collateral 0.90 · Early warning 0.92 · After-action 0.90 · Readiness 0.95 | Per agent; below it the item goes to a person, and overrides need a reason code |
| Data and privacy | Borrower names masked outside treasury and loan operations; records kept 7 years | Each on or off; never shorter than the 5-year Bank Secrecy Act record rule for customer data |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
Sources: OCC Bulletin 2023-25, Addendum to the Interagency Policy Statement on Funding and Liquidity Risk Management: Importance of Contingency Funding Plans, July 28, 2023 (also published by the Federal Reserve, the FDIC and the NCUA) · Federal Reserve, Community Banking Connections, "Five Steps to Discount Window Borrowing", 2024 (initial borrower-in-custody approval may take up to 30 days) · NCUA, 12 CFR 741.12. "demo" = seen in the working solution, on its sample data · "target" = design goal, measured in the live solution · "typical" = published figures · "estimated" = our arithmetic, kept modest. The bank, its counterparties, borrowers, loans and records and the people named on this page are fictional: characters and sample data in the working solution.
A contingency funding plan for banks (CFP) sets out where a bank would borrow if deposits ran, how much each source would give, how it is tested, and when the bank escalates. Contingency Funding Plan keeps that plan current and tested: agents run each source's live test step by step, count every pledged loan at the value the lender would accept, rerun the stress scenarios and draft the next CFP version. The analyst prepares, the CFO checks every borrowing request, the Treasurer approves every money step, and ALCO approves the plan.
Each source gets one live test a year, set in the plan. The Drill agent drafts the test request from the plan, the Readiness agent checks the authorization list and credentials, and after the CFO's check and the Treasurer's approval a person sends it. The agent then watches the payments hub for the funds, checks the general ledger posting and confirms the repayment, so every step lands with its time and its record.
The Collateral agent reads every pledged loan and security, applies the lender's haircut from the current table, and checks that each loan is pass-rated, current and has its note, recorded mortgage and assignment or UCC search imaged. Loans that would fail are listed with the reason, the fix, an owner and a date, and capacity is shown before and after.
The July 28, 2023 addendum to the interagency policy statement on funding and liquidity risk management says institutions should regularly test their contingency borrowing lines, and that those with the discount window in their plan should consider small value transactions at regular intervals. It also asks them to plan for the work of moving and posting collateral, and to recognize that lines may become unavailable in stress.
The working solution is shown at a community bank. Federally insured credit unions also keep a contingency funding plan under NCUA's rule at 12 CFR 741.12, and the funding sources, test amounts and targets, scenarios and stages are settings, so the same tests, checks and approvals apply.
No. The agents draft, watch, count and propose. They never send a borrowing request, move money, change a pledge or a listing, change a stage or close a finding without its evidence.
Yes. The analyst prepares, the CFO checks every borrowing request, and the Treasurer approves every money step, pledge change, loan withdrawal and stage change with a reason code; ALCO approves each plan version. No one approves an item they prepared, and every decision is on an audit trail that internal audit can export.
The Agentic Solution Engine builds and deploys it from your requirements and documents: your contingency funding plan, pledge listings, haircut tables, scenarios and feeds from your core, payments hub and general ledger. It goes live once every quality gate has passed. We will walk you through it on your own plan and last test first.
Every rate exception answered while the member waits, priced against other funding.
1-min demoRisk & Control Self-Assessment (RCSA)Every risk rating grounded in the incidents, losses and tests behind it, then signed.
1-min demoOperational Risk Loss Data CollectionEvery loss in the ledger captured, and the loss database tied to the GL each month.
1-min demoWe'll run Contingency Funding Plan on your plan, your pledge listings and your last line test, and show you the capacity behind each source.