Crazy Woman Goes Shopping

As far as the financials go, there's nothing crazy about Crazy Woman Creek Bancorp (Nasdaq: CRZY  ) , parent of Buffalo Federal Savings Bank, a three-branch commercial, residential and agricultural savings and loan company based in northeastern Wyoming. This is not a big outfit, but between the completely brilliant name (named for a local geographic feature) and its stand up year in and year out corporate performance, this is a company attracting more attention than its size would suggest.

President Gary Havens runs a tight ship -- cash on the balance sheet approaches 70% of the total market cap. It generates consistently sold returns on assets and has a low level of defaults, suggesting conservative lending practices. In an industry that boasts superstars like North Carolina's Bank of Granite (Nasdaq: GRAN  ) , Virginia's Burke & Herbert (OTC: BHRB.OB) and Utah's Zions Bancorp (Nasdaq: ZION  ) , Crazy Woman Creek holds its own.

But let's not be fooled, northeastern Wyoming isn't a hotbed of growth, so unless Crazy Woman Creek chooses to diversify geographically, its growth prospects are limited. Which is why a recent 20% jump in the stock price came as something of a shock. It might be a wee bit of an overstatement to say that Crazy Woman Creek Bancorp's tender offer to repurchase up to 43% of its stock sent tremors through the financial world, but it sure as heck shook the company's shareholders out of their normal torpor.

As of noon today, 22 times as many shares as normal had changed hands. The tender, which began today and runs for one month, is a Dutch auction -- something anyone who uses eBay (Nasdaq: EBAY  ) will be quite familiar with -- with a range of $16 to $18.25.

Our resident small-cap banking aficionado, Mathew Emmert, has written a great deal about smaller banks and the potential benefit of owning their stocks. They're pretty easy to analyze, they generally pay good dividends (a big plus for Mathew's Motley FoolIncome Investor), and are not generally well covered by Wall Street analysts.

Crazy Woman Creek Bancorp telegraphed that something was on tap when it began ratcheting up its cash accounts in the last six months -- fuel for the fire, so to speak. With a company that trades right at the value of its books, and well below the levels of its peers, such a move is always a distinct possibility. Even at the highest price, the company is not paying much of a premium.

Still, this announcement was a bit of a surprise. Surprise or not, assuming the tender is fully subscribed, the company will be concentrating ownership percentages of existing shareholders substantially.

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