Phil, who asked his surname be withheld, said he had stepped out of his car to go into the Commonwealth Bank in Howitt Street to order a new card when the man sprinted out the door in front of him.

"There was another man named Mark who ran out and yelled the bank had been robbed, so we took off after him," Phil said.

"The two of us chased him down to Woolworths and then across to McDonald's but we lost sight of him.

"We were heading back when we saw him run round the back of the optometrists, a few of us cornered him in there and rang the police. I didn't know Mark from a bar of soap before."

Accused man Jason Scott Quinton appeared in the Ballarat Magistrates Court on Tuesday after being charged with robbery and shop theft, and was denied bail.

Police informant Detective Senior Constable Ashley Bell said after Quinton lost $20 on the pokies nearby, he allegedly entered the bank at 9.45am, with 10 people inside including older patrons.

He said the accused was wearing ladies pantyhose on his face that he allegedly stole from a supermarket, and had a paper bag over his hand "to give the appearance of a firearm".

Quinton allegedly told staff to "give him all the money", with tellers "in fear" handing over $500.

When interviewed by police on Tuesday, Quinton "decided to commit the armed robbery to recover some money".

The court heard the man has schizophrenia and paranoia.

Phil, who spoke to The Courier a number of hours after the alleged incident, said he was shaken, but wouldn't hesitate to do the same again.

"I'm 51, but I still play footy, so I'm pretty fit," he said.

"I briefly thought 'what if he has a gun or a weapon?' but we went after him.

"I'm still in shock, but my biggest worry is for the poor people in the bank, I hope they are all ok, it must have been a terrible experience for them."

Gavin Vaneden and his friend Stuart Pritchard were about to leave the Wendouree bank when the man allegedly entered.

Mr Vaneden said he allegedly saw a man enter the building with a nude-coloured stocking on his head and a bag over his hand.

"I thought, 'you've got to be kidding, this can't be happening'," he said.

"I thought, 'don't do anything silly and don't open your mouth, just stand there and just watch what he's doing'."

Mr Vaneden said the entire incident lasted no longer than 10 minutes before the man ran from the building.

The bank, after being declared a crime scene, was cordoned off with police tape.

It was closed for the remainder of the day with officers stationed out the front.

The man has been charged with one count of armed robbery and one charge of theft.

He has been remanded to the Ballarat Magistrates' Court on November 12.

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