SecProbe.io

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                                                                  CORRESP.

                             [LCG letterhead]

May 13, 2005

Via EDGAR

Joyce Sweeney
Senior Accountant
Division of Corporation Finance
U.S. Securities and Exchange Commission
Washington, D.C.  20549

     Re:    Laurel Capital Group
            Form 10-K filed September 28, 2004
            Form 10-Q filed November 15, 2004
            Form 10-Q filed February 14, 2005
            File No. 000-23010

Dear Ms. Sweeney,

   By letter dated March 29, 2005 (the "Staff letter"), the Staff of the
Securities and Exchange Commission (the "Commission") submitted a series of
comments with respect to certain disclosures contained in the Annual Report on
Form 10-K for the year ended June 30, 2004 (the "Form 10-K") and the Forms 10-
Q for the quarters ended September 30, 2004 and December 31, 2004 ("Forms 10-
Q") of Laurel Capital Group, Inc. (the "Company").  For the reasons set forth
below, the Company does not believe the disclosure in the Form 10-K or the
Forms 10-Q needs to be revised or amended in response to the Staff's comments.
However, the Company notes those comments (comments No. 1, 4 and 5) which will
be applicable for future filings and which will be complied with commencing
with the Form 10-Q for the quarter ended March 31, 2005.  For ease of
reference, the Staff's comments from the Comment Letter are reproduced below
in bold-face type and the responses thereto follow.

Form 10-K, June 30, 2004:
-------------------------

Consolidated Statement of Cash Flows - page 10
----------------------------------------------

1. In future filings, beginning with your March 31, 2005 Form 10-Q, please
   separately quantify purchases of mortgage loans. Refer to paragraph 21 of
   SFAS 104.

Joyce Sweeney
May 13, 2005
Page 2 of 5

   Please be advised that commencing with the Company's Form 10-Q for the
   quarter ended March 31, 2005, the Company will comply with the Staff's
   comment and separately quantity purchases of mortgage loans in its
   statement of cash flows.

Note 2 - Investment Securities - pages 15 - 17
----------------------------------------------

2. Please supplementally tell us how you determined that your available-for-
   sale equity securities were not other-than-temporarily impaired.  Refer to
   SAB Topic 59 and provide us with your comprehensive analysis as of June 30,
   2004 and December 31, 2004.  We may have further comment.

   The Company has three equity securities classified as available-for-sale
   with unrealized losses in excess of 12 months.  In determining whether
   declines in the market value of the Company's available-for-sale equity
   securities are other-than-temporary, management considers various factors
   on a monthly basis.  Factors considered include known market or economic
   reasons for the decline, credit quality of the investment, historical trends
   in the market value of the investments involved, the Company's intent with
   respect to the investment (i.e., does it intend and does it have the
   capacity to hold the investment indefinitely), the amount of the unrealized
   loss in relation to the amount of the investment and the ability to hold the
   investment for a length of time necessary for the anticipated recovery of
   the market value.

   The largest investment of the three consists of shares in the Shay
   Financial Adjustable Rate Mortgage Fund that had a book value of $23.3
   million at June 30, 2004 and $23.6 million at December 31, 2004.  The
   market value at June 30, 2004 and December 31, 2004 was $23.0 million and
   $23.3, respectively, resulting in unrealized losses of approximately
   $290,000 or 1.24% of book value and approximately $313,000 or 1.33% of
   book value at June 30, 2004 and December 31, 2004, respectively.  The
   Company began investing in this fund in 1993 and made its last direct
   purchase in March 1998.  Approximately $4.4 million of additional
   investment in the fund resulted from the Company's acquisition of SFSB
   Holding Company ("SFSB") on March 28, 2003.  The underlying assets in the
   fund are adjustable-rate mortgages and mortgage securities.  The fund is
   rated four stars by Morningstar and AAAf by Standard & Poor's.  The
   Company utilizes the fund as part of its asset/liability management due
   to its adjustable-rate feature and higher yields compared to alternative
   short-term liquid investments.  The Company has always reinvested the
   monthly dividends earned on the fund and has never liquidated any of its
   shares.  The net asset value of the fund is directly affected by
   fluctuations in mortgage interest rates and historically has decreased as
   interest rates fall and increased as interest rates rise.  Historically,
   the net asset value has recovered and either reached or exceeded the
   Company's book value.  Given the historic net asset value trends, the
   credit rating of the fund, the Company's purpose for investing in the
   fund and its ability to hold the fund during changing interest rate
   cycles, the Company believes the decline in the funds market value to be
   temporary. To assist the Staff's review of this matter, attached as
   Exhibit A hereto is a table setting forth the net asset values and yields
   earned on the fund as of specified dates and comparing such values to the
   Federal Funds Rate for the same dates.  Please note that the net asset
   values and

Joyce Sweeney
May 13, 2005
Page 3 of 5

   yields have tended to track the movements in the Federal Funds Rate and
   thus, as market rates of interest increase, the Company expects and
   believes that the net asset value and yield on the fund will also increase.

   The second largest investment is a $1.0 million investment in the
   CRAFund's Community Reinvestment Act ("CRA")  Qualified Investment Fund
   whose underlying investments are high credit quality bonds and other debt
   securities that meet federal regulators' guidelines as "qualified" CRA
   investments under the Community Reinvestment Act.  The market value of
   this fund at June 30, 2004 and December 31, 2004 was $964,000 and
   $982,000, respectively, resulting in unrealized losses of $36,000 or 3.6%
   of book value and $18,000 or 1.8% of book value at June 30, 2004 and
   December 31, 2004, respectively.  The Company has been invested in this
   fund since December 2002 and uses the fund as part of its CRA investment
   requirement.  The market value of this fund is also affected by changes
   in interest rates and, depending on the composition of the fund at any
   given time, can fluctuate from month to month.  Given the Company's
   purpose for investing in the fund and its ability to hold the fund during
   changing interest rate cycles, the Company believes the decline in this
   fund's market value to be temporary.

   The third investment is a $220,000 investment in Scudder Kemper's U.S.
   Government Securities Fund that was acquired in the Company's acquisition
   of SFSB.  The market value of this fund at June 30, 2004 and December 31,
   2004 was $212,000 and $216,000, respectively, resulting in unrealized
   losses of $8,000 or 3.6% of book value and $4,000 or 1.8% of book value
   at June 30, 2004 and December 31, 2004, respectively.  Given the
   Company's ability to hold the fund during changing interest rate cycles,
   the Company believes the decline in this fund's market value to be
   temporary.

Note 18 - Acquisition - pages 31 & 32
-------------------------------------

3. Please supplementally provide us with a brief analysis explaining why the
   pro forma net income for fiscal year 2003 is significantly less than the
   respective reported amount.  Describe the items that had a continuing impact
   on the consolidated results of operations for fiscal year 2004.  For items
   that did not have a continuing impact, please describe the nature of the
   items and explain why there was no continuing impact.

   As noted, the Company prepared and set forth pro forma income statement
   data with respect to the acquisition of SFSB Holding Company ("SFSB") in
   Note 18 to its audited consolidated financial statements set forth in the
   Company's Annual Report to Stockholders for the fiscal year ended June 30,
   2004 (the "Annual Report") attached as an exhibit to the Form 10-K.  In
   accordance with Article 11 of Regulation S-X, the pro forma information
   presented assumed the acquisition of SFSB had occurred at the beginning of
   the relevant periods presented.  However, as the Staff is aware from the
   information set forth in Note 18, the acquisition of SFSB occurred on March
   28, 2003 and thus the Company's actual results of operation for the fiscal
   year ended June 30, 2003 only included slightly more than three (3) months
   of combined results, not the 12 months assumed in the

Joyce Sweeney
May 13, 2005
Page 4 of 5

   pro forma presentation.  Since under generally accepted accounting principles
   the Company can only include SFSB's operations in the Company's results for
   periods subsequent to the completion of the acquisition, the Company's
   actual net income for fiscal 2003 was substantially more than the pro forma
   presentation set forth in Note 18.

   The acquisition of SFSB was accounted for in accordance with Statement of
   Financial Accounting Standards ("SFAS") No. 141.  As a result, the Company
   recorded goodwill of $2.2 million and an identifiable intangible (core
   deposit premium) of $2.0 million.  The core deposit premium is being
   amortized over a period of 10 years using the accelerated method.  The
   amortization schedule related to the core deposit intangible is set forth
   in Note 19 to the Company's consolidated financial statements set forth in
   the Annual Report.

   The only two items which had a material impact on the Company's results
   of operation for the fiscal year ended June 30, 2004 were the amortization
   of the core deposit intangible (which is a non-cash item) and the payment
   of consulting fees for the two former officers of SFSB who agreed to
   provide consulting services to the Company and its wholly owned subsidiary
   for a period of 12 months subsequent to completion of the acquisition.  The
   consulting contracts expired in March 2004 and all payments due thereunder
   were completed in such month.  The $2.2 million of goodwill is recorded as
   an asset and unless it is deemed impaired as a result of its annual
   impairment test under SFSB No. 141, it will have no income statement impact.
   Goodwill was not deemed impaired upon review and testing in fiscal 2004.

Management's Discussion & Analysis
----------------------------------

General
-------

4. In future filings, beginning with your March 31, 2005 Form 10-Q, please
   discuss your critical accounting policies and estimates, the judgments and
   uncertainties affecting the application of those policies and estimates, and
   the likelihood that materially different amounts would be reported under
   different conditions or using different assumptions.  Consider discussing
   your policies and estimates as it relates to your allowance for loan losses
   and determining whether investment securities have other than temporary
   impairments.  Refer to Section V of SEC Release No. 33-8350.

   Please be advised that commencing with the Company's Form 10-Q for the
   quarter ended March 31, 2005, the Company will set forth in a separately
   captioned subsection of "Management's Discussion and Analysis" a discussion
   of the Company's critical accounting policies.  The provisions of Section
   V of the Commission's Release No. 33-8850 are noted.

Provision for Loan Losses - page 43
-----------------------------------

5.   In future filings, beginning with your March 31, 2005 Form 10-Q,
     please describe the underlying reasons for the changes in asset quality
     and other factors

Joyce Sweeney
May 13, 2005
Page 5 of 5

     that impacted your provision and allowance for loan losses for each
     period presented.  For example, explain why non-accrual loans increased
     significantly as of June 30, 2004 and how that impacted the determination
     of your provision and allowance for loan losses.

     The Company will comply with the Staff's comment commencing with its
     Form 10-Q for the quarter ended March 31, 2005 and provide additional
     detail regarding its provision and allowance for loan losses.

                                  *  *  *

In connection with this response to the Staff's comments as set forth in the
Comment Letter, the Company acknowledges that:

     *    the Company is responsible for the adequacy and accuracy of the
          disclosure in its Form 10-K and Forms 10-Q;

     *    staff comments or changes to disclosure made in response to staff
          comments do not foreclose the Commission from taking any action
          with respect to the Form 10-K and the Forms 10-Q; and

     *    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.

     We trust that the foregoing responds sufficiently to the Staff's
comments as set forth in the Comment Letter. Please do not hesitate to contact
John A. Howard, Chief Financial Officer, or me at (412) 487-7404 if you have
additional questions concerning this matter.

                              Sincerely,

                              /s/Edwin R. Maus

                              Edwin R. Maus
                              President and Chief Executive Officer

cc:  Ben Phippin, Staff Accountant
     Philip R. Bevan, Esq.

            SHAY ARM FUND PERFORMANCE

             NET ASSET     FUND     FED FUNDS
    DATE       VALUE       YIELD      RATE
    ----     ---------     -----    ---------

 12/31/1992    9.95        4.52%      3.00%
 3/31/1993     9.99        4.35%      3.00%
 6/30/1993    10.02        4.43%      3.00%
 9/30/1993    10.03        4.23%      3.00%
 12/31/1993    9.99        4.23%      3.00%
 3/31/1994     9.93        4.12%      3.50%
 6/30/1994     9.83        4.62%      4.25%
 9/30/1994     9.80        5.21%      4.75%
 12/31/1994    9.72        5.82%      5.50%
 3/31/1995     9.86        6.30%      6.00%
 6/30/1995     9.94        6.34%      6.00%
 9/30/1995     9.93        6.45%      5.75%
 12/31/1995    9.97        6.23%      5.50%
 3/31/1996     9.94        5.96%      5.25%
 6/30/1996     9.92        6.05%      5.25%
 9/30/1996     9.93        6.05%      5.25%
 12/31/1996    9.95        6.38%      5.25%
 3/31/1997     9.95        6.22%      5.50%
 6/30/1997     9.98        6.13%      5.50%
 9/30/1997    10.00        6.12%      5.50%
 12/31/1997    9.98        6.03%      5.50%
 3/31/1998     9.97        5.87%      5.50%
 6/30/1998     9.94        5.81%      5.50%
 9/30/1998     9.95        5.64%      5.25%
 12/31/1998    9.92        5.68%      4.75%
 3/31/1999     9.92        5.36%      4.75%
 6/30/1999     9.89        5.39%      5.00%
 9/30/1999     9.85        5.55%      5.25%
 12/31/1999    9.84        5.92%      5.50%
 3/31/2000     9.84        6.13%      6.00%
 6/30/2000     9.82        6.59%      6.50%
 9/30/2000     9.84        6.74%      6.50%
 12/31/2000    9.89        6.78%      6.50%
 3/31/2001     9.94        6.14%      5.00%
 6/30/2001     9.93        5.41%      3.75%
 9/30/2001     9.95        4.58%      3.00%
 12/31/2001    9.95        3.59%      1.75%
 3/31/2002     9.93        3.23%      1.75%
 6/30/2002     9.95        3.39%      1.75%
 9/30/2002     9.96        3.18%      1.75%
 12/31/2002    9.96        2.60%      1.25%
 3/31/2003     9.95        2.41%      1.25%
 6/30/2003     9.94        2.26%      1.00%
 9/30/2003     9.89        2.24%      1.00%
 12/31/20