CHAMPAIGN — Freestar Bank has agreed to be acquired by Terre Haute, Ind.-based First Financial Corp.

The acquisition would add Freestar's 13 offices to First Financial Bank's 51 offices in East Central Illinois and west central Indiana.

The purchase would push First Financial Corp. to nearly $3 billion in assets — only slightly smaller than First Busey Corp., with $3.5 billion in assets.

The move would give the Indiana-based bank three offices in Champaign, two in Urbana and one in Mahomet, as well as offices in Bloomington, Pontiac, Downs and Gridley.

Dave Kuhl, the chairman, president and CEO of Freestar, said the planned merger stemmed from Freestar's conclusion earlier this year that it needed to partner with a larger organization in order to grow.

Freestar hired an investment banking firm in Chicago, which sent out a feeler to First Financial, Kuhl said.

First Financial responded it would be "very excited" about moving into the Champaign-Urbana market, he said. The bank already has offices in Danville, Westville, Ridge Farm and Charleston.

Kuhl, who informed Freestar employees of the merger agreement this morning, said the merger should have "minimal" impact on staff. He said he plans to remain with First Financial after the merger.

Kuhl said First Financial is a "very strong" bank with one of the oldest charters in the nation.

"It had strong financial results even during the economic downturn," he said.

First Financial will pay Freestar's holding company, PNB Holding Co., $47 million in cash and assume $8.2 million of the holding company's liabilities.

The transaction is expected to close by Dec. 31, subject to approval by regulatory authorities.

Freestar is expected to be merged into First Financial Bank soon after the transaction closes.

First Financial Corp. has assets of about $2.5 billion. Its stock trades on the Nasdaq exchange under the THFF symbol.

Freestar has about $400 million in assets and is not publicly traded. Its holding company has about 100 shareholders, Kuhl said.