Place 1 cake, wide side down, on a serving platter. Stir frosting and banana extract in a large bowl to blend. Stir in yellow food coloring, 1 drop at a time, until desired color is achieved. Transfer 1/2 cup of banana frosting to a medium bowl; stir in mashed banana. Spread mashed banana mixture over top of cake. Cut 1 (2-inch wide) wedge from second cake. Spread 1/4 cup of yellow frosting over cut ends of second cake. Bring cut ends of second cake together, pressing to adhere. Place second cake, wide side down, atop cake on platter. Tear cut cake wedge into cubes. Fill hole in center of cakes with cake cubes. Spread remaining yellow frosting evenly over top and sides of cake to coat completely. Sprinkle cake with coconut, pressing lightly to adhere.
Create an island "volcano" mold by shaping aluminum foil into a volcano shape, measuring 2 to 3 inches in diameter. Dip in melted chocolate and let cool and harden. Place the mold on top of the cake. Fill the center of the mold with green icing and smooth out. Place palm tree decoration inside the mold. Arrange fruit-shaped candy decoratively around the palm tree and base of cake.