Why Your Community Bank Needs a Disaster Recovery Plan

It’s not news that the number and severity of natural disasters in the U.S. has been increasing significantly in recent years. These events can be personally and economically devastating to local communities, and it’s important that community banks are prepared to help both themselves and the people they serve.

Disaster preparedness has rightly become a focus for community bank operational planning. According to the National Oceanic and Atmospheric Administration (NOAA), the number of inflation-adjusted billion-dollar natural disasters has grown from an average of 3.2 per year from 1980 to 1984 to an average of 22.4 per year from 2020 to 2024. 

And while major storms like hurricanes, which often hit the southeastern U.S., get the most media attention, natural disasters are not limited to specific regions. Community banks in every corner of the U.S. can face disasters including floods, tornadoes, blizzards and wildfires.

We asked community banks how they put together plans to maintain operations during and after natural disasters—and support their communities while they’re at it.

What’s the plan?

The most critical step for any community bank in disaster preparedness is to have a business continuity and recovery plan. 

“We created our plan over 20 years ago, and annually, it’s evaluated and updated,” says Jim S. Gowen Jr., president and CEO of $320 million‑asset Merchant and Planters Bank in Newport, Ark. “We created it so we would be better prepared [to serve] our communities in the event of a disaster.” 

The plan is broken down by topic, including identification of crisis management teams; notification of local first responders and vital vendors; identification of business recovery units; recovery tasks; and workspace and equipment needs. Every year, the community bank tests the plan to keep it up to date.

Similarly, $746 million-asset FinWise Bank in Murray, Utah, has a standard operating procedure for use in the case of a disaster. “We have a complete business continuity plan that includes disaster recovery,” says Tasha Clayton, FinWise’s chief operating officer. “Key components of the plan are documenting the critical business functions and the systems used to accomplish them, a robust data resiliency structure where we have backup locations in multiple geographic areas, and a clear communication plan with the disaster recovery team members, employees and customers.

“Clear expectations allow each person to understand their role, which enables us to act quickly and appropriately and get back on our feet in such an instance,” Clayton adds. “We have been fortunate that our communities haven’t required significant need from us in terms of disaster recovery. However, we certainly would help if needed, while being mindful to not intervene with any disaster rescue efforts by appropriate parties.”

Securing data and tech

A critical part of disaster planning for community banks is protecting both internal and customer data through appropriate data safety and security procedures. 

Cal Roberson, vice president of the financial institution division for IT management and cybersecurity company Integris, notes that community banks range in scale and scope significantly, so what works for one may not work for another. “The overall guidelines I would recommend is that when implementing safety and security processes, make sure they give the bank the best optionality for the types of scenarios they will encounter,” he says.

Take a VPN service for a multi-location bank, for example. The best services ensure that it functions properly for the users and all device types; has multiple internet connections into the bank, so if one provider is down they have alternate paths; and includes a backup option at an alternate site in the event that entire location is offline from a storm or local disaster.

“Spending the time to find the tools and processes that can be done multiple ways in as many scenarios as possible is the first step to keep operations running smoothly,” says Roberson. “I will add: The more options you have, the harder it is to maintain good security. As with anything security related, it is a balance of operations and security for your bank’s risk level.”

Of course, providing documentation on how to access the data is crucial. This could range from an encryption key protecting the backups to a break-glass account for access. 

For Chris Brewer, network administrator for technology services and IT support CoNetrix LLC, patience is key. “While it is important to work quickly and efficiently,” he says, “one of the biggest pain points will always be the amount of time it takes to return to production.” 

Communication and teamwork are critical

Hurricane Helene, which devastated southeastern areas of the U.S. in September 2024, caused $700 million‑asset Countybank in Greenwood, S.C, to spring into action, with the aid of its coordinated staff. 

“Countybank was proud to be one of the few banks in the upstate that opened its doors on Saturday, Sep. 28, the day after Helene hit,” says Laura Beth Brooks, the bank’s vice president and communications director. 

Brooks notes that the community bank was open for transactions despite ATMs, phone lines and power lines being down. “One of our locations in Greenwood regularly opens for Saturday hours, and our associates went above and beyond to open that Saturday,” she says. “Even while dealing with their own storm damage and challenges at home, retail staff manually processed transactions for customers while the power was out. A crew in our operations center communicated with our frontline staff [via a secure online messaging platform] to manually post customer transactions relayed by frontline staff.” 

Roberson notes that communication is critical during disaster. “For a recovery to go smoothly, the bank will need an effective organizer who has quick access to decision-making authority and who can connect with all the relevant people quickly and effectively,” he says.

A smooth and effective recovery from a disaster requires substantial coordination between bank departments, providers and partners. The success of the recovery will depend on those lines of communication being effective. Having a capable and engaged leader in place—as well as another for backup—is normally the best indicator of success. 

“Recovering from a disaster is never a simple and straightforward task and can easily be a painful and stressful time,” says Brewer. “Relying on an established business continuity plan, as well as using the available documentation, will be key to restoring service efficiently.” 

Cleaning up beyond the bank

Disaster planning is about more than operational matters, and community banks are all in on supporting both the community and bank employees. 

Following a huge flood in Rock Valley, Iowa, in June 2024, $650 million-asset Premier Bank hit the ground running. “Our five locations—three in Iowa and two in South Dakota—had no water damage, so we didn’t need to recover from the flood,” says CEO Wade Gort. “Our efforts have been focused on assisting employees and customers who were affected by the flood. We had many employees assisting other employees and customers in the cleanup process from the flood waters.” 

Premier Bank paid all staff members their regular wages for several weeks while they worked on their homes or assisted others in their clean-up process. 

Many customers also lost their vehicles in the flood. “As a result, we decided to offer vehicle loans at 4.99% interest,” Gort says. “We also offered real estate loans to fix up homes or build new ones at 4.99%.” He adds that the community bank gave 90 days for forbearance on many residential loans.

The local nonprofit Friends of Rock Valley Foundation, which the community founded after a previous flood event, also supported recovery efforts with the $5 million in donations it had collected. Gort, a member of the fundraising committee, conducted outreach to encourage donations while Premier Bank made its own contribution to the foundation. 

Additionally, both Premier Bank and nearby Peoples Bank assisted with donation collection at branch locations. The nonprofit also contributed $250 gift cards to anyone affected by the flood, and 500 families were then able to spend money at a Rock Valley business.

The next round of gifts from the foundation went to local landlords and businesses. “This group of folks were not able to receive any assistance from FEMA [Federal Emergency Management Agency],” says Gort. “FEMA only assists homeowners [and renters] with their losses. For this group, approximately $1 million has been disbursed to assist in the recovery process.”

Finally, the foundation plans to support homeowners who were dealing with damage to their homes and were not on the list for a FEMA buyout at the time. 

“The city [submitted] to FEMA [in December 2024] for 142 homes to be in the buyout program with FEMA,” says Gort. “The buyout is based on appraisal preflood. All of these homes will be torn down and become green space forever and owned by this city.”

As of February 2025, the applications for this third round of gifts are currently being submitted. A separate committee will review these applications to determine recipients of the remaining $4 million that the foundation is disbursing. 

“I also want to add that we worked hand in hand with Peoples Bank in Rock Valley [on] the programs and amounts that both banks have contributed to this effort,” says Gort.

While natural disasters are a “when, not if,” for many community banks, thoughtful and robust preparation can lessen the impact—and quick thinking can ease the pain for employees and communities.