Communities Turn to Their CFIs in Times of Critical Need

According to the official world record, the biggest hailstone in history fell in Vivian, South Dakota on July 23, 2010. One of the stones measured eight inches, weighed nearly two pounds, and produced an impact pit on the ground 10 inches wide. Collectively, extreme weather events have been increasing in frequency and intensity, causing widespread damage and loss of life.With their strong focus on community, deep local knowledge and relationships, and ability to respond quickly, community financial institutions (CFIs) can play a crucial role in helping their neighbors recover and rebuild after disasters. Here are just some of the ways in which CFIs can — and often do — come to the rescue in times of need.1. Offering financial relief. There are several ways that CFIs can support their customers in times of distress, such as offering emergency credit, deferring loan payments, modifying loan terms, and waiving banking fees. Their unique knowledge of their customers often gives them more flexibility and faster response times than centralized systems.For example, following the fires that spread through Maui in 2023, $9.6B-asset American Savings Bank  (ASB) rushed to provide financial relief. The CFI extended an emergency line of credit, waived ATM fees, and offered 90-day forbearance and deferment for commercial and consumer loans. Under the mortgage forbearance program, missed payments were added to the end of the loan term, with no extra fees, penalties, or interest beyond the normal amount that would have applied if payments had been made on time.2. Facilitating donations. When recovery funds are needed, donors want to know that their hard-earned cash will be well used to provide help where it can have the greatest impact. As trusted institutions in their communities, CFIs are ideally placed to play a central role in raising and distributing funds.In the wake of the recent floods in Texas, a number of CFIs helped coordinate fundraising efforts. For example, the $2B-asset Security Bank and Trust set up a dedicated bank account inviting donations from the community and matching contributions up to a total of $250K, while guaranteeing that every donation would go to those in need. Many other Texas-based CFIs, large and small, launched similar programs. The Community Foundation of the Texas Hill Country, to which most funds have been directed, has so far raised in excess of $100MM.3. Providing business expertise and support. As individuals and businesses struggle with their finances after a disaster has struck, CFIs can assist by providing advice on budgeting, insurance claims, applying for small business administration disaster loans, pivoting business models, and rebuilding their customers’ finances.One such program was run by Ascendus — a New York-based community development financial institution (CDFI) — during the COVID pandemic. Thanks to a grant from the Wells Fargo Open for Business Fund, Ascendus was able to offer business coaching support alongside access to capital. The program included 275 hours of direct one-on-one education to entrepreneurs of color who were at risk of permanent closure, ensuring that the most vulnerable businesses were able to emerge from the pandemic with more resilience.4. Mobilizing volunteers. In the immediate aftermath of a disaster, CFI staff members can help enormously by participating in and coordinating recovery efforts, such as debris clean-up, distribution of essential supplies, and partnering with local organizations to arrange shelter for those in need.When a tornado hit Mayfield, Kentucky in 2021, $578MM-asset First Kentucky Bank rallied around its community members. Employees of every level went door-to-door helping with basic needs, delivering food, and picking up debris. Likewise, staff members of $1.2B-asset First Southern National Bank volunteered to join the fire brigade and worked at food distribution centers. “We try to be a lantern for the needs that we can meet and [try to] bring a little hope down the road,” said Lanie Gardner, community president.5. Showing empathy. As well as tangible support, sometimes people just need someone to talk to, to share their frustration and to feel that others care about their troubles. Reaching out to both employees and customers can have a positive impact on morale and ensure that everyone is aware of the resources available to them.While fires were still raging in Los Angeles earlier this year, many CFIs created wellness check programs to assist those most affected. Following the CFI’s response to the wildfires, $700MM-asset OneUnited believes its team has been strengthened by the experience. Colleagues from other geographies stepped in to help, and an employee assistance program was established, all contributing to the sense that the bank was there for the community.These are only a few examples of how CFIs have stepped up to help their communities in times of need. There are many such stories. Following natural disasters, CFIs around the country have offered financial assistance, facilitated donations, provided business expertise, mobilized volunteers, and shown real empathy toward the people affected, demonstrating their unwavering commitment to the well-being of their communities.