They say that in the American South, the past is not only never forgotten, but that it’s never the past. That’s a reference to the Civil War of the 1860s, but change it to the financial meltdown of 2008 and the same could easily be said of Bank of America (NYSE:BAC).

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Bank of America was “stuffed” with some of the worst assets of the crash, buying troubled assets such as Merrill Lynch and Countrywide Financial, eventually taking $20 billion in Troubled Asset Relief Program (TARP) aid and $118 billion in guarantees against losses. The Bank of America acquisitions were among the companies given the greatest amount of blame for bad mortgages and phony mortgage “insurance” that caused the meltdown, and the bank has been in court defending itself ever since.

The good news is that those legal costs, $70 billion since 2008, are finally beginning to abate. They came in at $231 million for the quarter announced Tuesday, down from $6 billion a year earlier. This allowed Bank of America Earnings to come in at 37 cents per share, beating analyst estimates by four cents, and causing the stock to rise two percent in after-hours trading.

If the clouds really are lifting, Bank of America may have room to run. Since late in 2011, the company’s shares have been on a generally upward trajectory, rising from a low of $5.20 to a recent high near $18, while the quarterly dividend has grown to 5 cents per share. Still, its price-to-book value remains near 0.70 -- rival JP Morgan Chase (NYSE:JPM), by contrast, is at around 1.

Source: Bank of America stock price data by amigobulls.com

A Sicker Bank, or More Potential?

In addition to legal expenses, CEO Brian Moynihan – who won a hotly contested battle to keep his title of chairman during the quarter -- is also cutting other jobs, and 200 traders were let go during the quarter. Revenue actually fell 2.4% to $20.4 billion, although that, too, beat analyst estimates, by $200 million.

Cutting trading and other risky endeavors means there is less potential for big profits, but also less potential for losses. JP Morgan, which reported a day before Bank of America, missed analyst estimates, with revenue from its investment bank falling 10%.

Bank of America Stock Price: Fully Valued, or a Bargain?

What seems clearest from BAC’s report is that the bank is trying to be more like Wells Fargo (NYSE:WFC), which has become the leader among big banks since the 2008 crisis by concentrating on basic banking, on taking deposits and making loans that get repaid.

The argument of BAC bulls has always been that Wells Fargo stock is fully valued – its price to book ratio is currently a robust 1.6 - while BAC is undervalued, a bargain.

Is that analysis finally about to play out? Well, consider that over the last three months Wells Fargo stock as well as Bank of America stock have both done equally poorly, each falling about 9% during the correction that started in August. If we really are just in a bear market correction, not on the cusp of a global recession, maybe both stocks are bargains.