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[Ameriana Bancorp. Letterhead]
November 17, 2009
VIA EDGAR AND FACSIMILE
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Mr. Kevin W. Vaughn
Branch Chief
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
RE: Ameriana Bancorp
Form 10-K for the Fiscal Year Ended December 31, 2008
Forms 10-Q for 2009
File No. 0-18392
Dear Mr. Vaughn:
We have received your letter dated November 3, 2009 regarding a comment
on the above filings. We appreciate your review and are providing responses to
your comment. To facilitate your review, we have repeated your comment followed
by our response.
FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2009
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COMMENT NO. 1:
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Considering the apparent significant amount by which your total equity
exceeds your total market capitalization at December 31, 2008 and the decrease
in your market capitalization since that date, coupled with recurring losses,
please address the following regarding your goodwill.
o Tell us and revise future filings to disclose how you considered
goodwill for potential impairment at December 31, 2008 and at
each subsequent balance sheet date.
o Tell us and revise future filings to disclose the specific reason
for the increase in goodwill at June 30, 2009 from March 31,
2009.
o Tell us and disclose the dates of your annual and interim
impairment testing. Discuss the results of that testing.
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Mr. Kevin W. Vaughn
November 17, 2009
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RESPONSE TO COMMENT NO. 1:
Goodwill is the excess of the fair value of liabilities assumed over
the fair value of tangible and identifiable intangible assets acquired in a
business combination. At September 30, 2009, we had goodwill of $649,000, which
consisted of: (1) $457,000 related to the acquisition of a Banking Center in
Morristown, Indiana in February 1998; (2) $85,000 attributable to the purchase
of an insurance business in June 2009; and (3) $107,000 related to an insurance
business acquisitions in 1997 and 1998. The increase in goodwill in 2009 was due
to the acquisition of the insurance business in June 2009.
Under current accounting guidance, goodwill is not amortized but is
tested for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired. Impairment testing
requires that the fair value of each of the Company's reporting units be
compared to the carrying amount of its net assets, including goodwill. The
Company's reporting units relating to the Morristown banking center and the
insurance businesses were identified internally. Determining the fair value of a
reporting unit requires the Company to use a high degree of subjectivity. If the
fair values of the reporting units exceed their book values, no write-down of
recorded goodwill is necessary. If the fair value of a reporting unit is less
than book value, an expense may be required on the Company's books to write down
the related goodwill to the proper carrying value.
The Company tests for impairment of goodwill as of September 30 of each
year and again at any quarter-end if any triggering events occur during a
quarter that may affect goodwill. For the testing of the Morristown Banking
Center, the Company obtained data from two third-party sources and utilized a
market price approach to evaluate the value of the Morristown Banking Center.
That analysis revealed that at each of the last four quarters ended September
30, 2009, the fair value, based on what would be received through the sale of
the Morristown Banking Center to a market participant, was considerably in
excess of the net carrying amount of the Morristown Banking Center's assets,
including goodwill, and liabilities resulting in a determination that no
impairment has occurred. That conclusion was based on comparable branch
transactions in Indiana and the Midwest and the attractive level of low-cost
deposits maintained at the Morristown Banking Center. Goodwill relating to the
insurance business reporting unit has been evaluated for impairment by analyzing
the gross revenue generated from these operations and utilizing a multiple for
arriving at the fair value of this reporting unit. This analysis has resulted in
the determination that the fair value of the insurance reporting unit is greater
than the net carrying amount of that reporting unit's assets, including
goodwill, and liabilities and, thus, no impairment has occurred.
We will include the requested disclosures in our future filings.
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Mr. Kevin W. Vaughn
November 17, 2009
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The Company acknowledges that: (i) it is responsible for the adequacy
and accuracy of the disclosure contained in the above-referenced filing; (ii)
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
above-referenced filing; and (iii) the Company may not assert Staff comments as
a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
If you have any questions about our responses or require any additional
information, please do not hesitate to call me at (765) 521-7505.
Very truly yours,
AMERIANA BANCORP
/s/ John J. Letter
John J. Letter
Chief Financial Officer
cc: Paul Cline, Securities and Exchange Commission
Scott A. Brown, Kilpatrick Stockton LLP