"We believe the recovery is still some way off and the coming year will be just as challenging as the past year.
"But a positive for SBS Bank has been that our transition to banking status has further enhanced our position in the marketplace."
SBS was in negotiations to merge with Hawkes Bay-based HBS, a mutually owned and like-minded building society, he said.
Following an affirmative vote by HBS members on August 31, SBS believed HSB would provide an "excellent entry" into the Hawkes Bay and lower North Island markets.
"There are some exciting opportunities on the horizon and SBS Bank is well positioned to take advantage of these opportunities."
New Zealand technically emerged from the recession during the past 12 months but the economy remained challenging for the financial sector, with further cracks appearing and several financial institutions failing, Mr Smith said.
The year marked SBS Bank's first full year trading as a registered bank.
In normal circumstances, that would have been challenging enough without a worldwide recession.
"The great news is that we have survived both very well and emerged a stronger bank for the experience."
The past three years had been among the most difficult experienced in the past 100 years, he said.
The cost of credit soared, many banks collapsed, New Zealand had been littered with finance company failures and the United States and the United Kingdom continued to prop up their economies.
There had been a collapse and partial recovery of stock markets, house and commodity prices, a slowing in consumer demand and a rise in unemployment.
SBS' prudent management of risk over the past 141 years and the disciplines of the bank regulatory regime had positioned the bank well for the future.
While all of that change came at a cost, and sometimes tested the capacity of the bank's resources, it was a tribute to the quality of the team that SBS had not just survived but thrived, Mr Smith said.
SBS had earlier reported an operating profit before tax of $19.4 million, nearly $1 million more than in the previous corresponding period.
Members' equity grew to $172 million in the period.
