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CORRESP
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      Response to SEC Comments

    [Letterhead
      of Appalachian Bancshares, Inc.]

    July
      1,
      2005

    VIA
      EDGAR AND US MAIL

    Ms.
      Joyce
      Sweeney

    Accounting
      Branch Chief

    Securities
      and Exchange Commission

    Division
      of Corporation Finance

    450
      Fifth
      Street, N.W.

    Washington,
      D.C. 20549-0408

              Re:

              Appalachian
                Bancshares, Inc.

              Form
                10-K for the fiscal year ended December 31,
                2004

              Filed:
                March 29, 2005

              Form
                10-Q for the quarter ended March 31, 2005

              File
                No. 001-15571

    Dear
      Ms.
      Sweeney:

    This
      letter is being submitted in response to the comments given by the staff of
      the
      Securities and Exchange Commission (the “Commission”) set forth in your letter
      dated June 17, 2005 to Darren Cantlay, Chief Financial Officer of Appalachian
      Bancshares, Inc. (the “Company”), with respect to the above-referenced Form
      10-K.

    For
      your
      convenience, we have set forth each comment from your comment letter in bold
      typeface, in each case followed by the Company’s response. All page references
      are to pages of the Form 10-K.

          Joyce
            Sweeney, Accounting Branch Chief

          Securities
            and Exchange Commission

          July
            1,
            2005

          Page
            2

      Form
        10-K for the fiscal year ended December 31, 2004

      Consolidated
        Financial Statements

      Note
        1 - Summary of Significant Accounting Policies --- Loans, page
        41

            1.

              We
                note that you report mortgage origination fees as non-interest income
                on
                your statements of income. Please tell us and in future filings disclose
                the nature of these fees, how you account for them, and your basis
                for
                reporting them as non-interest
                income.

    The
      mortgage origination fees that are reported as non-interest income are fees
      paid
      to Appalachian Community Bank, the Company’s commercial bank subsidiary (the
“Bank”),
      for
      mortgage loans that the Bank originates and processes for outside underwriters.
      The origination fees that the Bank receives for processing these loans are
      recorded as non-interest income. The basis for reporting these mortgage
      origination fees as non-interest income is that the mortgage loans are sold
      and
      not retained by the Bank.

    The
      loan
      origination and commitment fees as noted in Note 1 - Summary of Significant
      Accounting Policies - Loans, page 41, are fees that are charged to the Bank’s
      customers for loans that are also retained by the Bank. These fees are recorded
      as stated in Note 1.

    Note
      16 - Commitments and Contingencies, page 59

            2.

              We
                note your disclosure that you record the contract amount of letters
                of
                credit as an asset and a corresponding liability in the same amount
                until
                the letters of credit are exercised. Please tell us the consideration
                you
                typically receive for providing standby letters of credit and why
                you
                record your liability and offsetting asset using the contract amount.
                Explain how you determine that the contract value represents fair
                value of
                your obligation at inception. Refer to paragraphs 8 - 11 of FIN
                45.

    The
      consideration that the Bank receives for providing standby letters of credit
      is
      a loan fee, which is calculated in the same manner as any loan made by the
      Bank.
      The contract amounts referred to on page 59, Note 16, are not recorded as an
      asset or a corresponding liability. The Company will clarify its disclosure
      in
      future filings by disclosing that the Company, in accordance with paragraphs
      8-11 of FIN 45, records a liability for the estimated fair value of standby
      letters of credit based on the fees charged for these arrangements.

          Joyce
            Sweeney, Accounting Branch Chief

          Securities
            and Exchange Commission

          July
            1,
            2005

          Page
            3

      In
        connection with responding to the Commission’s comments noted above, the Company
        hereby acknowledges that:

              ·

                the
                  Company is responsible for the adequacy of the disclosure in the
                  filing;

              ·

                staff
                  comments or changes to disclosure in response to staff comments
                  do not
                  foreclose the Commission from taking any action with respect to
                  the
                  filing; 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.

    Thank
      you
      for your consideration. If you have any further questions or comments regarding
      this letter, please do not hesitate to contact me at (706)
      276-8130.

              Sincerely,

              /s/
                Darren M. Cantlay

Darren
                M. Cantlay

              Chief
                Financial Officer

              Appalachian
                Bancshares, Inc.