NSW-based Teachers Mutual Bank is on track to maintain double-digit growth in deposits and mortgage lending in the current year after posting a record improvement across its core retail markets in 2017.However, cost management remains a challenge for the bank after it continued to invest heavily in new technology programs to deepen its digital payments footprint.Integration expenses relating to recent mergers with UniBank and Firefighters Mutual also undermined the full year result.The bank posted a net profit of A$27.9 million in the 12 months to the end of June - a 7.5 per cent decline on 2016.Chief executive Steve James said he was confident the bank would deliver expense reductions in the current year because most of the merger costs would not be repeated."All telephone centres are now shared between the three businesses and the branches are becoming multi-branded," he said.James expects the cost to income ratio - now standing at around 74 per cent - to fall in the current year.Teachers Mutual is one of the fastest growing banks in the country, with its deposits base expanding by more than $1 billion or 20.6 per cent to $6.7 billion last year.While acknowledging that the merger with Firefighters Mutual had magnified deposits growth by about $200 million, James said most of the growth was organic."I can definitely say that we are continuing to track well in deposits, although growth has been a bit slower in home lending in the first quarter," he said."Our growth target for lending is 14 per cent."Although merger activity is contributing to balance sheet growth, Teachers Mutual is also benefitting from its relatively recent entry to the mortgage broking market and the rollout of proprietary national channels.Mortgages marketed under the bank's three core brands are now sold through 3,500 brokers.The third party networks helped to drive 20 per cent growth in the mortgage book, which exceeded $5 billion for the first time.According to APRA data, the overall mortgage market grew by around six per cent last year.WA-based UniBank has increased the size of its loan book by 150 per cent to $500 million since its merger with Teachers Mutual two years ago.James said he was open to additional mergers but insisted that he wasn't talking to anyone at the moment.Firefighters Mutual has embarked on a national expansion of its brand, including the Victorian and South Australian markets where credit unions with occupational bonds to the fire-fighting industry already exist."Obviously if opportunities came up with firefighter credit unions we'd be interested," James said.James conceded that the prospect of a transformational merger "in the long term" also was a potential factor in his strategic thinking."In Victoria we still have some opportunities in the long term," he said.Victoria Teachers Mutual Bank has a balance sheet half the size of its NSW-based counterpart.VTMB posted a net profit of $12 million in the 12 months to the end of June - down $3 million on the 2016 result.