U.S. banks enjoyed more exposure to municipal bonds at the end of 2012, fueled by increased profitability and revenues looking for a home in the face of declining commercial-loan generation and proposed federal regulations, according to muni experts.

In their ongoing quest to find suitable investments for their available revenues, banks increased their holdings by 22.3% on a cost basis and 23.5% on a fair-value basis in the fourth quarter of 2012, compared to the end of 2011, according to new quarterly data from Thomson Reuters Bank Insight.

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