A $1.1 billion-asset Michigan bank has its third deal since 1995 to buy a thrift in the booming northwest Indiana market.

Pinnacle Financial Services Inc., St. Joseph, announced Monday that it was going to acquire CB Bancorp. in Michigan City, Ind., in a stock swap valued at $43.5 million, or 2.03 times book value.

Officials of Pinnacle say it is willing to pay so much because the northwestern Indiana marketplace, which has been growing recently as a Chicago bedroom community, is the key to its future.

"We see a whole lot of opportunity in northwestern Indiana," said David Kolhagen, vice president of Pinnacle. He added that gains in CB's earnings and market share justify the steep price.

Daniel Cardenas, a banking analyst for Howe Barnes Investments Inc., agreed that CB is worth the tab.

"The deal makes sense," he said. "It won't hurt book value, it will be accretive in the first full year, and is a good fit geographically."

Besides gaining a presence in two cities where it now has none-Michigan City and LaPorte-Pinnacle would gain CB's lucrative mortgage warehousing program, which helped push the thrift's 1996 return on assets to 1.2% before a one-time deposit insurance charge.

Pinnacle broke into northwestern Indiana in 1995 with the acquisition of Maco Bancorp., Merrillville, and is expanding further through a merger of equals with Indiana Federal Corp., Valparaiso. That deal, which would boost assets to $1.9 billion, is expected to close April 30.

With Indiana Federal and CB Bancorp. under its belt, Pinnacle would have 20% of deposits in a four-county area in northwestern Indiana. It now has an 8% deposit share.

Moreover, the CB Bancorp. acquisition would add 2 cents to the bank's earnings per share in 1997 and as much as 8 cents in 1998, Mr. Kolhagen said. Last year Pinnacle racked up $1.55 a share.

Mr. Kolhagen said integrating Indiana Federal and CB Bancorp. would preclude Pinnacle from acquiring other banks or thrifts this year. But Pinnacle is always looking, and he noted that there are about 20 institutions with $200 million to $500 million of assets in its Indiana turf.

Someday those banks will have to decide "whether they want to join with the First Chicago NBDs of the world" or sell to a community bank like Pinnacle, Mr. Kolhagen said.

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