NEW YORK ( TheStreet)--Large cap banks are set to "rebound significantly" in 2012, following a year of "severe political and regulatory uncertainty," according to a report Monday from FBR Capital Markets. Currently, JPMorgan Chase ( JPM), Wells Fargo ( WFC), Bank of America ( BAC)and Citigroup ( C) trade at 6.6 times 2012 earnings estimates and 0.9x tangible book value (TBV). "On an earnings basis, a return to historical valuations would represent 86% upside, and on a TBV basis, the return could be as high as 194%," the report states. "Valuations for large-cap banks are compelling, especially compared with their smaller brethren, who are struggling to stay relevant in a world barreling toward banking consolidation. We expect the tide to turn toward a Republican Congress and Administration and the political/regulatory overhang should be lifted as investors gain the confidence that additional punitive regulation is unlikely. In addition, when the investment community begins to show interest in the space, large-cap names should receive a valuation lift due to their attractive diversified revenue streams," the report states. FBR's top picks among large cap names are Wells Fargo, PNC Financial ( PNC), U.S. Bancorp ( USB) and Fifth Third Bancorp ( FITB). "We believe these companies will outperform given that each has a strong deposit base, has exhibited signs of loan growth, and has strong capital levels," the report states. FBR also believes mortgage banking activity will outperform expectations in 2012, benefitting not just Wells, U.S. Bancorp and PNC Financial, but also JPMorgan Chase and Flagstar ( FBC). FBR has an "outperform" rating on JPMorgan and a "market perform" rating on Flagstar. -- Written by Dan Freed in New York. Follow this writer on Twitter.