Suddenly, Florida is the ripening fruit for many bank buyers, which raises the question, How did that happen?

After all, Florida's toxic real estate market dragged down many banks, and the state is nearly synonymous with the pitfalls of the financial crisis.

Simply put, experts respond, what goes down must come up. Florida was one of the first states to feel the pain of the crisis, and most analysts and private-equity groups see a bottoming out in the real estate and banking markets happening there before it occurs in similarly troubled states such as Arizona, California and Nevada, or in most of the other states in the Southeast.

Improvements in credit quality, the relative affordability of targets and opportunities for eventual regional expansion are some of the other reasons private-equity groups have raised millions of dollars to tap failed or distressed banks there.

"It has to do with the economic cycle and banking credit cycle being more advanced" in Florida, said Gray Medlin, co-founder and managing director of the Raleigh office of the investment banking firm Carson Medlin Co. "It started there sooner, and it will end there sooner."

The firm said in its latest Florida report on bank asset quality that while Florida was one of the hardest hit states in the Southeast region, its nonperforming assets ratio declined slightly in the first quarter, reaching 5.81% as of March 31.

In every other Southeast state except Alabama there were double-digit increases.

Furthermore, the market has reached historically low pricing in the eyes of many investors and observers.

Before the crisis, private-equity groups "would have passed on Florida banks because they were so expensive," said Tony Plath, a finance professor at the University of North Carolina at Charlotte.

Statistics provided by SNL Financial LC for Florida and two other troubled states help make the point.

In 2006 the average price-to-tangible-book value of deals in Florida was 259.8%. It was even higher in Nevada (334.8%) and Arizona (309.4%).

By 2008 deals had slowed to nil or nearly so in all three states.

But deal volume started spiking last year in Florida, which notched 13 regular deals and 14 government-assisted transactions compared with just a handful in Arizona and Nevada.

Meanwhile, price-to-book value had fallen to 96.1% in Florida for unassisted transactions, versus 185.6% in Arizona and 85.4% in Nevada.

Six such deals in Florida this year have gone for 73.1%; in contrast, the other two states haven't had any unassisted transactions to measure.

The private-equity financier Wilbur L. Ross Jr. recently talked about staying away from Florida because competition is raising prices, but Plath said most private-equity groups are not interested in following Ross' "bottom-fishing" strategy.

"The banks that are interesting to private-equity people are going to be the fallen angels that are still salvageable," he said.

And that's another thing providing value in Florida — the bountiful amount of acquisition candidates.

The state leads the nation with 13 bank failures this year. Illinois is a close second with 12, and Georgia has had eight failures, as of June 17.

Florida's existing banks with assets below $100 million also had the second-highest percent of banks with a Texas ratio above 100%, according to a report released on May 10 by FIG Partners LLC.

Florida came in at 27% of its banks above that threshold, falling behind Georgia with 33% of its banks with a Texas ratio that exceeded 100%.

"What makes Florida attractive is there are a lot of problems there," said Chris Marinac, an analyst at FIG Partners.

Private-equity groups are looking for where they can put their money to work and where the perceived timing until local recovery could be much faster than other places, he said.

The population density and wealth accumulation in Florida before the recession made it a very attractive banking market, said Rick Childs, director of financial institutions/transaction services at Crowe Horwath LLP in Indianapolis. And the real estate problems are not as widespread in Florida as they are in Nevada and Arizona, he said.

Florida is also attractive, Plath said, because it is a point of entry to build a financial services franchise that could reach throughout the Southeast.

Private-equity groups want a region, not a state," he said. "You don't get that regionalism out west" because most of the private equity groups being formed are by veteran senior bankers who were displaced by major banks based on the East Coast and that's where the money is.

Only a few groups have so far been successful at acquiring these banks in the Southeast. The groups include Bond Street Holdings LLC, State Bank and Trust Co. and Community Southern Holdings Inc.

Others, like North American Financial Holdings Inc., have filed for bank charter applications with regulators specifically to acquire troubled and failed banks mainly in Florida.

Most of the anticipated deals have not yet closed because private-equity groups and banks are waiting to see if the deterioration in commercial real estate will fall further, analysts said.

"There is a lot of money that has been lined up for as much as a year or more," but no one is sure they've hit bottom, said Rick Levenson, president of West Financial Corp. in San Diego.

The regulatory hurdles for a private-equity group to acquire a failed bank and the difference between what a group thinks a bank is worth versus what the bank's board thinks it is worth have also delayed deals.

But buyers won't want to wait too long, because as the economy gets better and the number of potential targets dwindles, purchase prices will likely rise.

"It will come back," Levenson said. "Of the banks that will survive, I think there's probably a potential for 100, 200 to 300% upside [in pricing] to book."

And at that point, private-equity companies could start to cry, "Westward, ho!"