Reporting as a bank for the first time, the former PSIS' net profit for the three months ended December fell to $1.6 million from $2.5 million in the same three months of 2010. Profit for the nine months ended December halved to $3.4 million.

The bank puts the costs of becoming a bank at $0.6 million in the December quarter and $1.4 million in the nine months ended December.

Acting chief executive Gareth Fleming says underlying net profit in the nine months is down about 16%, reflecting squeezed margins as the fledgling bank had to pay more for deposits.

The bank's net interest income fell 2% to $10.4 million in the latest three months and was down 9% to $30.1 million in the nine months ended December.

On the positive side, charges against profit for bad loans fell to just $0.04 million in the December quarter from $0.32 million in the year earlier quarter and to $1.03 million from $1.63 million in the nine months ended December.

Cooperative Bank's mortgage book grew by $14.4 million to $1.09 billion in the three months ended December.

Using Reserve Bank figures on lending by registered banks as a proxy for the market, that meant the bank's market share at December 31 was 0.64%, about the same as it would have been at September 30 had it been a bank then.

Fleming says the mortgage market is "pretty competitive" with banks competing on offering incentives such as free legal fees and other such drawcards to attract customers.

The bank's loan-to-valuation ratios (LVRs) are improving with the percentage of the mortgage book having LVRs above 80% dropping to 7.03% at December 31 from 7.73% at September 30.