One of Australia's largest customer-owned banks has vowed its head office will remain in regional Queensland after members voted to merge with a South Australia-based financial institution. 

Members of Heritage Bank and People's Choice voted last night in a simultaneous meeting.

Heritage has been headquartered in Toowoomba, Queensland and People's Choice in Adelaide, South Australia — with both offices planning to keep their locations.

The new entity will have its chair come from People's Choice, Michael Cameron, and the chief executive from the Heritage Bank, Peter Lock. 

However, Mr Lock has announced his retirement in 18 months' time, leaving People's Choice chief executive Steve Laidlaw to take over the position.

Heritage Bank's chair Kerry Betros is set to become the new merger's deputy chairman.

The board will be made up of an equal number of directors from People's Choice and Heritage Bank.

After the official merger on  March 21, 2023, the new entity will have 720,000 members, 1,900 employees, and more than $23 billion in assets.

It will make the venture the ninth-largest domestic bank in Australia, according to Peter Lock. 

"Scale is a major component of banking now and into the future, and, unfortunately, that's driven by the demands of compliance and regulation and the costs associated with that," he said.

"The change of banking away from traditional sources, such as branches, to more digital sources and demands that come with that costs a lot of money.

Mr Lock said mutual banks, entities that were owned by their members, had almost halved in the last 20 years.

"It was something like 150 mutual [banks] in the country 20 years ago," he said.

"And that will continue to rapidly change as smaller banks find it more difficult to compete, and we've seen that with the likes of Suncorp."

Head offices stay, name change imminent

Mr Lock said keeping a head office in Toowoomba was stipulated in its new constitution. 

"[The merger] shows that banking doesn't have to be dominated by major capital cities," he said. 

Mr Lock said there were a set number of board meetings in Toowoomba and in South Australia.

"So we've made critical structural steps to ensure that that commitment to our region continues," he said.

It has been announced both banks' brands will likely change to a new entity in the next 12 months.

"We know this is a sensitive issue for our members," Mr Lock said.

"It was a sensitive issue for our members 40 years ago when we changed from Toowoomba Permanent and the Darling Downs.

"We'll work on that through the next year."