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      SEC Response Letter

    July
      29,
      2005

    VIA
      EDGAR, US MAIL AND FACSIMILE

    Ms.
      Joyce
      Sweeney

    Accounting
      Branch Chief

    Securities
      and Exchange Commission

    Division
      of Corporation Finance

    MailStop
      4561

    100
      F Street, N.E.

    Washington,
      D.C. 20549

            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 additional comments given by the
      staff of the Securities and Exchange Commission (the “Commission”) set forth in
      your letter dated July 18, 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
            29,
            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 your supplemental response to our prior comment 1. Please tell
                us why
                you do not include origination fees as part of the recorded investment
                in
                loans held for sale consistent with the FDIC Call report instruction
                Item
                1(a) of Schedule RI.

    The
      loans
      associated with the mortgage origination fees that are reported as non-interest
      income are not reportable in Schedule RC-C. These loans are never recorded
      on
      our general ledger as all loans are closed in the name of the funding
      institution. We do not have any loans held for sale.

            2.

              Please
                tell us and in future filings disclose your policy for deferring
                and
                recognizing origination fees and costs related to your loans held
                for
                sale. Tell us the amount of direct loan origination costs related
                to loans
                held for sale recognized during each period presented and how these
                were
                reported in your statements of income. Refer to paragraph 27(c) of
                SFAS
                91.

    See
      response to Item 1 above, we do not have any loans held for sale.

            3.

              Tell
                us the gross amount of held for sale loans originated and sold for
                each
                period presented and the related net gains/losses. In future filings
                disclose your accounting policies related to loans held for
                sale.

    See
      response to Item 1 above, we do not have any loans held for sale.

            4.

              We
                note your disclosure on page 2 that a source of the Bank’s funds and
                income are the fees paid by other lenders or institutions for servicing
                loans sold by the Bank. Please tell us and in future filings disclose
                the
                following:

            ·

              Your
                accounting policy for recognizing, measuring, and amortizing servicing
                assets or liabilities;

            ·

              The
                gross and net amount of servicing assets/liabilities as of each period
                end;

            ·

              The
                amount of amortization and impairment expense related to servicing
                assets/liabilities for each period
                presented;

            ·

              The
                amount of servicing income recognized during each period presented;
                and

            ·

              The
                total amount of loans serviced for others as of each period end
                presented

          Joyce
            Sweeney, Accounting Branch Chief

          Securities
            and Exchange Commission

          July
            29,
            2005

          Page
            3

    Refer
      to paragraphs 13 and 17(e) of SFAS 140.

    We
      do not
      service loans for other institutions and do not have any loans held for sale.
      We
      act as a facilitator and are paid a commission for bringing the loan to the
      funding institution. There is not any servicing on our part. The Company that
      pays us our commission approves the credit, and provides the funding at the
      time
      the loan is closed. We act in a broker’s capacity. We have no intention of
      holding loans for sale or servicing loans for other institutions.

    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