Nanocap Bank Earning 12% ROE at 0.85x BV
A $15 million US-based bank
Disclosures: None
This one is small enough that I’m going to limit it to paid subscribers for now. I’ll discuss my thoughts on valuation at the end.
Here’s what I found:
A $200 million assets US bank
As of December 31, 2025, it had tangible shareholders’ equity of $18 million
It earned net income of $1.9 million in FYE 9/30/25 and $1.6 million the prior FY
It earned $634,000 in Q1 2026 (3 months ended 12/31/25)
On average assets and equity it earned 0.99% and 11.4%, respectively
A bank not heavily reliant on fee income (customer service charges were 7% of pre-tax income)
The bank is Crazy Woman Creek Bancorp. I admit to doing a double-take when I first saw the name. Such names aren’t uncommon in the Western US. This bank is named (not surprisingly) after an actual creek. You can read all about it here.
In any event…
I found CRZY searching through a list of OTC banks. The $15 million market cap and regular dividend caught my eye. A little more digging found a few annual reports.
Crazy Woman Creek Bancorp is the name of the holding company. It does business as the Banks of Buffalo, Gillette, and Sheridan. It’s on the FDIC as Buffalo Federal Bank of Buffalo, Wyoming (FDIC Cert. # 29696).
Asset Size
CRZY is very small. As of its latest fiscal year ending September 30, 2025, it had assets of just $205 million. Assets have grown at a CAGR of just over 7% per year over the past 9 years (2016-25).
Profitability Profile
The bank’s recent 1% ROA and 13% ROE caught my eye. I should note here that this is the bank and not the holding company. The holding company has some friction from directors’ fees and some other miscellaneous items, bringing it down about a point or so.
Charge-Offs
One of the first things I look at when assessing a bank is its history of charge-offs. CRZY has a pretty solid record over the past decade.
Digging Deeper
Let’s now take a closer look at the loan book, investment portfolio, and deposit base.
Loans
Of the $145 million loan book as of 12/31/25, 82% was in real estate of some kind. Of that figure, 4% is in construction loans, 10% in farmland, 31% in 1-4 family residential loans, and 36% in non-farm non-residential loans (i.e., commercial loans), of which about half was owner-occupied (percentages taken from the UBPR).
The bank had a further 4% in agricultural loans, 10% in C&I, and 4% loans to individuals.
Of note, Reg O loans averaged between $300,000 to $500,000 in each of the past five years.
Investment Portfolio
As of 12/31/25, the bank had $23.8 million in available-for-sale securities, almost entirely in US Gov’ts / Agencies. Of that amount, $21.7 million had a maturity of 5-15 years. This explains the dip in equity capital in 2022, as the portfolio was hit by changes in value. In fact, there’s still $3.4 million in unrealized losses on the AFS portfolio (the bank has no HTM securities).
Deposits
As of 12/31/25, the bank had $177 million of total deposits, $160 million of which were core deposits. Noninterest bearing deposits were $30 million or 17% of the total.
Management / Ownership
Insiders own about 10% of the bank.
The bank is led by Paul Brunkhorst (President/CEO) and Dean Bjerke (Chairman). Bjerke served as the bank’s President/CEO from 1995 to 2002.
I couldn’t find any information on executive compensation.
A plus for management: In August 2020, the bank issued $2 million in subordinated notes to repurchase 93,000 shares at $14.50/share. As you can see from the chart below, that just about bottom ticked price.
Valuation / Conclusion
Crazy Woman Creek Bancorp seems like an interesting find, but an average bank. And that’s okay! It seems to grow modestly while paying out a small dividend. Aside from the AFS troubles, it appears to be a fairly well-run bank.
I’m drawn to the fact that the bank appears capable of earning 12% on equity and is available at 85% of book value.
If the 12% ROE is sustainable, then it’s worth at least 1.0x book, in my view.
I have a few hesitations:
We don’t have much transparency into the loan book beyond what’s in the annual reports and on the FDIC website. We can only judge prospects by the historical track record, which, to be fair, is pretty good.
Management: I’d like to know more about how management thinks about credit and their strategy going forward. There are no investor calls or publicized annual meetings. There is an “ok” one-page letter to shareholders at the beginning of each annual report. Again, given that many don’t even bother to write one, I give them credit.
Personal opportunity cost. Regular readers know which banks I own. Do I want to add an average bank to the portfolio at a slight discount when I could own more of two very good banks? That answer is no.
I like enough of what I see to add CRZY to the Watchlist. I could see buying it at a steep discount during a general market selloff if other opportunities weren’t better.
What do you think? Hit reply or leave a comment below.
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Adam
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A small enough bank that you might be able to get the CEO directly on the phone. I would be interested to know what they have to say about their business.