Mail Stop 4561
								January 25, 2006

By U.S. Mail and facsimile to (423) 636-1563


J. Robert Grubbs
President and Chief Executive Officer
BG Financial Group, Inc.
3095 East Andrew Johnson Highway
Greeneville, TN  37745

Re:	BG Financial Group, Inc.
	Form 10-K for Fiscal Year Ended December 31, 2004
	Forms 10-Q for Fiscal Quarters Ended
	March 31, 2005, June 30, 2005 and September 30, 2005
      File No. 000-50771

Dear Mr. Grubbs:

      We have reviewed the above filings and have the following
comment.  Where indicated, we think you should revise future
filings
of your documents in response to this comment.  If you disagree,
we
will consider your explanation as to why our comment is
inapplicable
or a future revision is unnecessary.  Please be as detailed as
possible in your explanation.  In our comment, we may ask you to
provide us with information so we may better understand your
disclosure.  After reviewing this information, we may raise
additional comments.  We have limited our review of your filings
to
those issues we have addressed in our comment.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.


*    *    *    *    *    *    *

Form 10-Q for the Period Ended June 30, 2005

Management`s Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations, page 11

1. We note your disclosure on page 12 that there was a benefit
from
the estimate for loan losses during the three and six months ended
June 30, 2005 due to a change in the methodology used evaluate
impaired loans to identify specific reserves needed.  Please
provide
us with the financial statement footnote disclosures that you will
include in your December 31, 2005 Form 10-K to more fully explain
your new methodology for determining both the specific and general
components of your allowance for loan losses.  Refer to APB 22
paragraph 12.  Please also provide us with your future MD&A 10-K
disclosures which should compare and contrast your previous
methodology for determining your specific and general loan loss
allowance with your current methodology and disclose how this
change
is expected to impact future periods.


*    *    *    *    *    *    *


       Please respond to this comment within 10 business days or
tell
us when you will provide us with a response.  Please furnish a
cover
letter that keys your response to our comment and provides any
requested information.  Detailed cover letters greatly facilitate
our
review.  Please understand that we may have additional comments
after
reviewing your response to our comment.

	 We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.



In connection with responding to our comments, please provide, in
writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy 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.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

	You may contact Lisa Haynes, Staff Accountant, at (202) 551-
3424
or me at (202) 551-3492 if you have questions.


      Sincerely,



      John P. Nolan
      Accounting Branch Chief




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J. Robert Grubbs
BG Financial Group, Inc.
January 25, 2006
Page 3