Chief Strategy Officer / Australia
Three choices about independence, counters and growth
- Total assets
- A$3.6bn
- Kalverrin Mutual Bank, 30 June 2026
- Member-owners
- 81,000
- No external shareholders
- Branches
- 23
- Central and western Queensland, after three urban closures in 2024
Decisions & consequences
01Declining a merger approach and setting a standalone test with a deadline
In March 2023 a customer-owned bank from south-east Queensland, about three times our size, proposed a merger. Its case was sound on paper: A$13 million of annual savings by the third year, mostly in technology and head office, and a modern digital platform that ours could not match. Kalverrin members would have held about 22% of the combined membership. Our cost-to-income ratio was then 78.4%, and our online banking was eleven years old.
The stakes were the bank's independence, roughly seventy roles in Rockhampton and the authority to approve farm lending locally, which the partner planned to centralise in Brisbane. Our chief financial officer and two directors favoured proceeding. They argued that we would struggle to fund a platform replacement alone.
I recommended declining, but not on sentiment. I proposed a standalone test with three thresholds: cost-to-income at or below 72% by June 2027, a total capital ratio above 16% throughout, and a new digital platform live by June 2025 within A$14 million. The paper stated that if we missed the test, the board would actively seek a merger partner. By declining, we gave up the partner's platform, the projected savings and the certainty a merger would have given our staff.
After two board sessions in August 2023, the directors declined the approach and adopted the test. We replaced the digital platform in March 2025 at A$15.2 million, A$1.2 million over budget. Cost-to-income fell to 74.9% in 2025–26, so we are behind the 2027 threshold. The capital ratio has stayed above 17%.
Independence is now a dated performance commitment, reviewed each quarter, rather than an assumption. Two directors who favoured merging say the test made the decision easier to accept.
I would do two things differently. I would set the standalone test before any approach arrived, so it could not look like a defence. I would also have told members sooner; many learnt of the approach from local rumour before we wrote to them.
Closing three urban branches so that four western branches could stay open
In early 2024 our head of retail proposed closing four western branches: Barcaldine, Clermont, Blackall and Springsure. Counter transactions there had fallen 46% in five years, and the closures would have saved A$1.9 million a year. On cost per visit, the case was strong.
My team's analysis showed something the visit counts missed. Those four branches held A$184 million of member deposits and supported A$126 million of farm and small-business lending. In two of the towns we were the only bank with a counter. Members there held more products with us than members anywhere else, and many visits concerned overdraft reviews, estates or scam losses rather than routine withdrawals.
I proposed a different plan. We would close three branches in Rockhampton and Gladstone, each within ten minutes' drive of another Kalverrin branch, and keep the four western branches open four days a week, with lenders travelling between them. We would commit to keeping those four open until at least June 2029. The head of retail disagreed: the plan saved A$500,000 a year less than hers and left us with high-cost counters. Members near the urban branches also objected; a petition from one Rockhampton suburb gathered 1,100 signatures.
The executive committee and board approved my version in May 2024. We gave members four months' notice, offered home visits to those who asked, and moved two urban tellers into a telephone service team.
The urban closures saved A$1.4 million a year. We had assumed 5% of affected members would leave within a year; 3.1% did. In the western towns, deposits held steady and farm lending grew A$38 million over two years. Reduced hours drew few complaints once the timetable settled.
What changed was the basis for footprint decisions: we now weigh what members hold and how far they would travel, not only visit counts. I would consult urban members before the decision, not after it. The petition was a fair response to being told rather than asked.
Entering the broker channel only for properties in our own region
By 2024 our mortgage book was growing at 1.8% a year while the market grew faster. Most new home loans in our region were now arranged through brokers, and members refinancing away from us often did so through a broker who could not offer Kalverrin. We were losing good borrowers to lenders who had never visited Central Queensland.
The chief financial officer and our head of lending wanted to accept broker loans across Queensland. Their model showed A$400 million of extra lending within two years, mostly in the south-east, where volumes are largest. I was concerned about three things: the margin cost of broker commissions, the capital that rapid growth would consume, and borrowers with no other relationship with the bank who would refinance away as soon as a rival offered a lower rate.
I recommended a narrower entry. We would accept broker loans only for properties in Central and western Queensland, cap broker volume at 30% of new mortgage settlements for two years, and offer brokers the same rate as members applying directly. We would accept the cost of commissions in exchange for keeping lending in the communities that hold our deposits. The decision gave up most of the projected statewide volume, and the head of lending felt it handicapped his team.
The board approved the plan in October 2024, and we accredited a small panel of regional brokers through one aggregator. Credit decisions stayed with our own assessors in Rockhampton.
In 2025–26 broker loans reached A$212 million, 27% of new mortgages. Mortgage book growth rose to 6.1%. Net interest margin fell six basis points, mostly because of commissions. Arrears on broker loans are in line with the rest of the book.
The bank now has a clear view of which growth it wants. I would build the onboarding first next time. Only 31% of broker borrowers opened a transaction account within six months, against the 45% we had planned. Without that relationship, they remain borrowers rather than members.