Every community bank and credit union is built around a place. That's the strength. You know your members, your borrowers, and your local businesses better than any national institution ever will.
It's also the risk. When a disaster hits that place, everything is hit at once: the deposits, the loans, the collateral behind those loans, the employees, and the customers.
And disasters are hitting more often. Swiss Re Institute’s report found that insured losses from natural catastrophes have been growing 5 to 7% a year after inflation. 2025 came in below that trend, but Swiss Re says that was because no major hurricane made landfall in the U.S., and it is not a sign that underlying risk is falling. If losses return to trend, Swiss Re Institute projects US$148 billion in insured losses in 2026.
What matters for a community bank or credit union is the kind of events driving those losses. Wildfires, severe convective storms, and floods made up 92% of insured losses in 2025. The Los Angeles wildfires alone caused $40 billion in insured losses, a record for wildfire. These events hit one region hard, and that's exactly where a community financial institution keeps its whole balance sheet.
Community financial institutions get most of their core deposits locally and lend most of their money to local businesses and members. That's why they know their customers so well. It's also why one bad event can hit deposits, loans, and collateral at the same time. The Independent Community Bankers of America made the same point in a letter to the FDIC: every community bank's portfolio is geographically concentrated, so every community bank carries some concentration risk. The concern is a bad natural disaster, or two bad ones close together, hitting an institution whose whole balance sheet sits in the same spot.
Large banks solved this by growing. Interstate deregulation led to larger, nationally diversified banks, which are less vulnerable to a local shock to their own capital. That's not an option for a community institution, and most of you wouldn't want it. The alternative? Build what I call “geo-resilience” by cooperating with other community banks around the world.
Most of my thinking on this was sparked by a Caribbean Association of Banks forum in Panama where experts walked through what happened when Hurricane Melissa hit Jamaica. This is relevant because a small island bank and a rural community bank have the same risk profile: limited geography, local customers, local loans.
Melissa came ashore on October 28, 2025. It brought 185 mph sustained winds and was the strongest storm on record to strike Jamaica. About 540,000 customers were without power. Cell towers failed and backup generators were depleted within the first two days. That's the problem with a generator. It keeps one building running. It can't restart a cell tower, clear a road, or reconnect an ATM to the core system.
What struck me is that the banks themselves held up. The Bank of Jamaica reported deposit taking institutions stayed well capitalized and liquid. The trouble was getting money to people. Bank of Jamaica data show that immediately after the storm, only 454 of the island's 907 automated banking machines (ABMs) were operating, just over half the network. In St. Elizabeth, one of the hardest hit parishes, only 13% of machines were working. Banks promoted debit card cash back at merchants as a temporary alternative. According to the case study presented at the event, banks also brought in armored cars and set up tents as cash kiosks. Even with a good plan, everyone had to improvise. More than six months later, some of the hardest hit communities still had reduced access to cash.
The scale of the loss is hard to picture. Jamaica's planning institute put total damage, losses, and additional costs at $12.2 billion, equal to 56.7% of GDP and more than four times Hurricane Gilbert. Every bank on the island was exposed to the same storm at the same moment. That's correlated risk, and no amount of local preparation solves it.
So how does a bank prepare for a disaster like that? The fix isn't a better plan for the neighborhood. It's making sure the neighborhood isn't the whole plan.
Resilience means anticipating problems and having a plan so you aren't caught without one. What I'm describing goes further than just having a generator. It means your loans, deposits, and revenue are not all inside the area a single storm, fire, or flood can reach, so the institution survives no matter what.
I’m proposing several ideas to increase geo-resilience for community FIs:
Sister banks. Pair banks and credit unions in areas that are truly uncorrelated. A rural bank in the Midwest and a bank in, say, Central America could trade some loans and give each other a small but real line of credit for a disaster. A line of credit with the bank up the street doesn't help if they're struggling too. And correlation matters. A hurricane can hit Jamaica and turn left into Texas, so the pairing has to be chosen carefully. Beyond the credit, a sister bank is another banker who isn't in your market and isn't a competitor, whom you can call about navigating a natural disaster as well as compliance and lending.
An uncorrelated loan fund. A better version may be one organization buying loans from institutions around the world and packaging them into exchange traded products that aren't correlated with each other. A bank in Panama could sell loans and use some of the proceeds to buy into a fund of home and commercial loans in Minnesota. Now it has a revenue stream that doesn't depend on what happens on its own territory, and it can liquidate that position quickly if it needs cash.
Emergency liquidity. Even a place to sell loans in an emergency would be valuable, and that doesn't exist today. Imagine a large institution like the World Bank buying a portfolio of loans from affected banks after a disaster, holding it for six months, then letting the banks buy it back. The area gets immediate liquidity and time to rebuild, and the loans come back onto the books.
Diaspora deposits. Think about Jamaicans living in Alaska. What if part of their account at their local community bank or CU was held in Jamaica? That's a deposit base that doesn't depend on where the local disaster lands.
Diversified holdings. Insurers don't want 10,000 homes in one state. They want a mix, some in Florida, some in Massachusetts, some in New Mexico. The same logic applies to a bank. If you can show that your assets and revenue are spread across the world, a single hurricane won't wipe you off the map.
To be clear, geo-resilience is an idea in the nascent stages. There are regulatory limits on selling loans, and the rules differ by jurisdiction. But as natural disasters become more frequent and unpredictable, we community bankers need to put our heads together to start thinking creatively about the problem.
A correspondent bank is a natural coordinator. We already have relationships in the U.S., the Caribbean, Southeast Asia, and Europe, so we can help build a portfolio of regions that aren't correlated, within each jurisdiction's limits. Embedded finance helps too, since it lets a community institution reach customers well beyond its home market. The same expansion can build non-interest income that doesn't depend on the local economy.
Look at COVID. It surprised everybody. Servers sat in rooms someone had to physically be in, and remote work was a scramble. The lesson is to anticipate the next five shocks. Instead of practicing for one event a year, practice for two hitting in the same year. Some banks and credit unions will run that exercise and discover there is no survival if two events hit their area within six months. If that's your answer, you have to diversify where deposits come from and where loans sit.
Run the drills for real. If a fire takes out the power plant and the cell towers, how do you reach your employees? Would they know where to go? Do you have satellite phones, or walkie talkies?
Talk to your regulator about it, too. If you approach an embedded finance program only for profit, that's fair, but you can also say you need depositors outside your neighborhood because a tornado could wipe it out. No regulator wants to pay out a failed bank. Buyers care as well. If you plan to sell your institution in five or ten years, the acquirer will ask what happens if disaster hits your area.
Thinking about this isn't hard. Making it part of how the institution operates, and practicing it, is the harder part. But it gets easier when bankers and credit union leaders talk to each other across borders and hear what worked, what didn't, and what changed after the drill.
Making geo-resilience accessible is where we’re headed, and I'd welcome your thoughts on ways to build the framework.
Acceleron is a modern correspondent banking platform that empowers community banks and credit unions to automate international wire transfers, capture non-interest income, and compete more effectively with big banks. With a foreign exchange (FX) marketplace and currency conversion engine, Acceleron’s API-first infrastructure helps institutions turn cross-border payment flows into efficient, revenue-generating opportunities. Serving over 200 financial institutions and facilitating more than $1 billion in international payments annually, our correspondent banking services and international payment automation solutions are pre-integrated seamlessly with Fiserv Payments Exchange, Aptys, and other leading payments platforms.
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