Senior management at the Bank of Queensland formed a view in the early 2000s that the bank could succeed in establishing branch operations in New South Wales and Victoria by offering service levels that were superior to those offered by the major banks.Garry Allsopp, a Bank of Queensland executive who was New South Wales regional manager when the bank moved into the state, in 2004, said in a court hearing yesterday that the business model for inter-state expansion was based "on the view of senior management."BOQ's planning and discussions with applicants for NSW branch franchises were the subject of evidence in the Supreme Court of New South Wales yesterday. Bank of Queensland entered the NSW market in 2004 using a branch franchising business model. A group of former owner-managers have brought a claim against the bank, saying that its expansion plan was based on superficial business analysis, overly optimistic projections that were never properly tested and a failure to acknowledge the bank's competitive disadvantages.A central issue in the case is the extent to which the owner-managers relied on representations from bank executives and how much they made decisions based on their own business skills and planning.BOQ estimated that if a branch wrote A$4 million of loans a month and banked $2 million of deposits it could be cashflow positive within a year.Allsopp told the court that when he explained the bank's modelling to applicants he stressed that the final outcome would depend on the level of expenses for each branch and that the owner-managers had to do their own business plans.BOQ required that owner-managers be incorporated entities and that an experienced banker had to be a shareholder, as well as be involved in the operation of the branch.Allsopp used a checklist in his discussions with applicants. He was cross-examined about inconsistencies between the information in the checklist and reports of what he said in meetings with applicants. The checklist included information about monthly loan and deposit targets, commission structures, expected asset and liability run-off, marketing arrangements and fit-out costs.There was uncertainty about whether the bank would cover some of the owner-managers' marketing costs. Allsopp said he told at least one owner-manager that they had to bear all the marketing costs but the bank might contribute if they made a case.He accepted that he emphasised the target of $4 million of loans a month but did not dwell on the $2 million of deposits.Allsopp said that when he assessed the likely ability of applicants to use business contacts to establish a network of loan and deposit referrers, he formed a view about their suitability "from talking to them" as well as from the business plan they submitted.