TSB Bank, a bank once wholly funded from deposits, made its first foray into the wholesale market during the last quarter by borrowing of NZ$40 million via wholesale term deposits.The quarter saw the bank's deposits grow strongly, by five per cent to $4.3 billion, mainly from retail term deposits.The bank's net interest income in the nine-month period to December 2010 was little changed from the year before, though a fall in derivative income was largely responsible for a 28 per cent drop in net profit to NZ$29.6 million.In its annual report for the year ended March 2010, TSB Bank had warned that derivatives generating income were set to mature in the coming months and future gains from that source would be limited.TSB's loan book saw a small increase to $2.58 billion, from $2.55 billion in September, shared between residential mortgages and commercial loans. Asset quality improved during the quarter, with past due loans down to $9.6 million from $10.2 million, and impaired assets dropping to $1.1 million from $2.1 million.