Twenty years ago I engineered the sale of Security Pacific Bank, at the time the nation's fifth largest bank, to Bank of America. On August 12, 1991, the day the deal was announced BofA's stock closed at $10.00. Today it closed at $7.65 a decline of 23% over the past two decades.

By the time the deal closed, in April 1992, B of A stock had risen to $11.75. At that time SecPac was suffering from troubled loans and regulatory pressures while B of A had maintained a strong capital and asset quality position. This deal moved B of A up the size ladder and made them the dominant banking force in California.

Culturally I only lasted a week as president and chief operating officer of the combined banks and fortunately sold all my stock holdings the following year.

Many long-term investors, retirees and former employees, however, held on to their B of A stock, which has recently plummeted in value. Many lives and retirements were built around the expected strength and stability of the bank.

In 1998 B of A continued its growth merging with Nations Bank, moved to Charlotte and continued with acquisitions of Fleet Boston ('04), MBNA ('05), LaSalle ('07) and in 2008 stretched their ambition by acquiring Countrywide Financial and Merrill Lynch. They are now the nation's largest bank with assets of $2.1 trillion but are facing serious uncertainties impacting their company's value. Their stock is currently selling at 34% of tangible book value.

What has gone wrong over the past two decades? First, B of A, as did many others, operated under the idea that bigger was always better. That is, there is relevance in being the largest over insuring the best value for the shareholders.

This size ambition was obvious to me in 1991 and has continued through several management changes but became most evidence of their blind ambition by acquiring Countrywide as sub-prime loans were collapsing. It was later amplified when B of A took over Merrill Lynch at the height 2008 financial and liquidity crisis. Both steps can best be described as foolhardy and reckless placing their investors at unnecessary risk.

I have no intimate knowledge of what Moynihan and the management team are contemplating or planning to deal with the current situation, but I do have a few suggestions that could help restore B of A to its once respected position as one of the best but not biggest banks. I learned these the hard way through difficult times at SecPac in 1991.

First stop trying to be the biggest. Bigger is not better and you are sufficiently large that you have no excuse for not maximizing returns. Your market dominance in most all banking areas gives you every advantage possible. SecPac's growth ambitions quadrupled its size during the decade of the 80's and not adding sufficient capital became a near disaster.

Sell or spin off Merrill Lynch reducing your size, lowering your risk and improving your capital. The securities business is different and takes years to fully understand. Your bank management team is most likely unable to fully understand or control the risks. SecPac seriously ventured into the U.K. securities business and it turned into a black-hole for our shareholders.

Sell your investment in the China Construction Bank. The multi billion dollar investment makes no sense given your other needs. This was a wonderful 50 year idea but it is definitely out of place today and any value will not be quickly recognized. SecPac had to unload numerous long term investments when the need for capital and a short term focus became essential.

Shutdown and dump Countrywide into bankruptcy take a write-off and let those attempting to attack your corporate assets be confronted with piercing your corporate veil of protection. Such a drastic step is not a reputation builder but right now it's more important to get rid of this cancer. At SecPac we came to realize that such steps don't make a lot of friends but clearing the decks of bad deals is quickly accepted by shareholders as the right decision.

Eliminate all of the corporate goodies, airplanes, limos and executive bonuses until the entire situation is resolved. Every effort should be made to return shareholder value and until that happens; you must live with coach class, cabs and three year old suits. This was not a financially meaningful step at Security Pacific but it set the tone for our regulatory and shareholder relationships.

Raise enough new capital to remove any doubt of your survival. The cost to shareholders today will be easily rewarded by stronger market capital based on the assurance that Bank of America has less risk and can maintain a strong performing bank. At Security Pacific we gave up control and raised our new capital by selling our company to Bank of America.

Robert H. Smith, the former chairman and chief executive of Security Pacific Corp., is a founder and director of Commerce National Bank in Newport Beach, Calif.