Following the lead of major banks on home loan margins in late 2010 and controlling operating costs helped non-bank funder FirstMac post a respectable profit in 2010.The Brisbane-based firm, which has more than two decades' worth of trading in its niche, reported a net profit of A$9.5 million in the year to June 2011, up from $1.5 million in 2010.Assets under management fell slightly to $4.4 billion, though the firm expects the ramp up of its loans.com.au brand (with a discount price point) will help restore volumes over the next year.In commentary in its financial statements, FirstMac said that the net interest margin improved by 34 basis points over the year, equal to $8.9 million in incremental earnings. The firm cited the "industry wide" fattening of home loan margins in November 2010 for this outcome, as well as lower funding costs relative to a benchmark cost of funds.However, fee revenue fell by more than $4 million, in line with industry trends.FirstMac said it had cut operating expenses by $4.3 million, more than 12 per cent. It also cut corporate debt to $27 million from $64 million.The firm negotiated increased wholesale or warehouse lines with Westpac and ANZ during the year, and set up a new warehouse funded by National Australia Bank.FirstMac said it planned to pay a clean up, or call, worth around $250 million on a second bond line during the 2012 financial year, as it did during the 2011 financial year, with a bond originally sold in 2004.The firm said this "was done at an economic cost [and] undertaken to maintain its reputation, standing and ability to access securitisation markets into the future."This year, the firm has also put in place the building blocks of a retail funding strategy, through its High Livez managed investment fund, aimed at retail investors.FirstMac has seeded this fund with $5 million. The fund will aim at a mix of cash and fixed interest investments, with up to half the money being directed towards mortgage-backed securities managed by FirstMac.