Banks in two of South Florida's toniest towns are merging.

This week $510 million-asset 1st United Bancorp, Boca Raton, said it has agreed to buy $130 million-asset Island National Bank and Trust Co., Palm Beach, in a $17.8 million stock deal. Island National shareholders would receive about $28 worth of 1st United common stock for each share they own, and Island National would be merged into the buyer's 1st United Bank.

Warren S. Orlando, chief executive of 1st United, said attractions of the deal include Island National's trust division and brokerage subsidiary, Island Investment Services.

Kathryn H. Bissette, an analyst at Sterne, Agee & Leach in Atlanta, said that at 1.63 times book value the deal price is lower than in many such transactions. It is a good move for 1st United, she said, because Island National gives it more assets and deposits in the affluent Palm Beach area.

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