Small financial institutions are in the frustrating position of enjoying a period of strong new business flows at a time when they are not able to capitalise on this growth.This week, Teachers Mutual Bank, which has been operating as a bank since Monday, released some details of its unaudited financial report for the six months to December 2011.Teachers made a net profit of A$11.9 million for the half-year, which was below its profit for the previous corresponding period.Teachers Mutual Bank chief executive Steve James said the bank was on track to report a net profit of $24 million for the year to June - down from $29 million in 2010/11.This is despite above-system growth in home loans and a strong pick-up in new member numbers.James said Teachers wrote $750 million of home loans in 2010/11, which was a good result for the bank. It is on track to write $780 to $790 million this financial year.Home loan growth for the six months to December was 6.5 per cent - more than double system growth.Teachers has 155,000 members and $3.8 billion in assets.James said the bank's margin was squeezed when the Reserve Bank cut interest rates in October and November last year. While its home loan rates were coming down, Teachers was maintaining its deposit rates to keep the funds flowing in.James said it was too early to say what impact the brand change from credit union to bank would have. The bank has had some feedback from people who were prepared to place deposits with Teachers for the first time."We have had the deposit guarantee since 2008 but there was still a perception that banks are safer," James said.