10-K

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008,
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                    to

Commission File No. 0-12870

FIRST CHESTER COUNTY CORPORATION
(Exact name of Registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction of
incorporation or organization) 23-2288763
(I.R.S. Employer
Identification No.)

9 North High Street, West Chester, Pennsylvania    19380
(Address of principal executive offices)

(484) 881-4000
Registrant's telephone number, including area code

          Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
None	None

          Securities registered pursuant to Section 12(g) of the Act:

(Title of Class)

Common Stock, par value $1.00 per share

          Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

          Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

          Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

          Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

          The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant's most recently completed second fiscal quarter: $70,066,785.

          The number of shares outstanding of Common Stock of the Registrant as of March 16, 2009, was 6,241,934.

DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the Registrant's definitive Proxy Statement for its 2009 Annual Meeting of Shareholders, which definitive Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the Registrant's year end at December 31, 2008, are incorporated by reference into Part III of this Form 10-K.

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

			PAGE
PART I:	Item 1	Business	1-8
	Item 1A	Risk Factors	8-14
	Item 1B	Unresolved Staff Comments	14
	Item 2	Properties	15-16
	Item 3	Legal Proceedings	16
	Item 4	Submission of Matters to a Vote of Security Holders	16
PART II:	Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17-18
	Item 6	Selected Financial Data	19
	Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	20-39
	Item 7A	Quantitative and Qualitative Disclosures about Market Risk	39-42
	Item 8	Financial Statements and Supplementary Data	43-82
	Item 9	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	83
	Item 9A	Controls and Procedures	83-86
	Item 9B	Other Information	87
PART III:	Item 10	Directors, Executive Officers and Corporate Governance	88
	Item 11	Executive Compensation	88
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	88
	Item 13	Certain Relationships and Related Transactions and Director Independence	88
	Item 14	Principal Accountant Fees and Services	88
PART IV:	Item 15	Exhibits, Financial Statements and Schedules	89-93
SIGNATURES			94-95

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PART I

Item 1.    Business.

        First Chester County Corporation (the "Corporation") may, from time to time, make written or oral "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements contained in the Corporation's filings with the Securities and Exchange Commission (including this Report on Form 10-K), its reports to shareholders and in other communications by the Corporation. These statements can often be identified by the use of forward-looking terminology such as "believes", "expects", "intends", "may", "will", "should" or "anticipates" or similar terminology. These statements involve risks and uncertainties and are based on various assumptions. Although the Corporation believes that its expectations are based on reasonable assumptions, investors and prospective investors are cautioned that such statements are only projections. Also, future results may differ materially from the Corporation's historic results. The risks and uncertainties described in this Report, among others, could cause the Corporation's actual future results to differ materially from those described in forward-looking statements made in this Report, or presented elsewhere by Management from time to time, or from the Corporation's historic results. The most significant of these risks and uncertainties are discussed in Item 1A, "Risk Factors." Additional discussion may be included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Report. Statements made in this Report are made as of the date of this Report, unless stated to be as of an earlier date, and we are not obligated to update our forward-looking statements, even though our situation may change in the future.

GENERAL

        The Corporation is a Pennsylvania corporation and a bank holding company registered under the Federal Bank Holding Company Act of 1956, as amended (the "BHC Act"). As a bank holding company, the Corporation's operations are confined to the ownership and operation of banks and activities deemed by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") to be so closely related to banking to be a proper incident thereto. The Corporation was incorporated on March 9, 1984, for the purpose of becoming a registered bank holding company pursuant to the BHC Act and acquiring First National Bank of Chester County, formerly known as The First National Bank of West Chester (the "Bank"), thereby enabling the Bank to operate within a bank holding company structure. On September 13, 1984, the Corporation acquired all of the issued and outstanding shares of common stock of the Bank. The principal activities of the Corporation are the owning and supervising of the Bank, which engages in a general banking business based in Chester County, Pennsylvania. On December 31, 2008, the Corporation completed its acquisition of American Home Bank, National Association ("AHB"), which merged with and into the Bank. AHB was established in 2001 and has been engaged in full service community banking, with a primary focus on mortgage-banking activities. Prior to the acquisition of AHB, the Bank had operated branches predominantly in Chester County, Pennsylvania, as well as in Delaware and Montgomery Counties, Pennsylvania. With the acquisition of AHB, the Bank also has a branch in Lancaster County and a branch in Cumberland County, Pennsylvania. The mortgage-banking activities previously conducted by AHB are now operated by a division of the Bank. The Corporation directs the policies and coordinates the financial resources of the Bank. On August 5, 2001, the Corporation became a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

        The Corporation's filings with the SEC, including its annual report on Form 10-K, quarterly reports on Form 10-Q, periodic reports on Form 8-K, and amendments to these reports, as well as its proxy statements and additional solicitation materials, are accessible free of charge at our website at http://www.1nbank.com as soon as reasonably practicable after filing with the SEC. By making this reference to our website, we do not intend to incorporate into this report any information contained in the website. The website should not be considered part of this Report. In addition, the SEC maintains a website at http:///www.sec.gov that contains reports, proxy and information statements, and other

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information free of charge regarding issuers, including the Corporation, that file electronically with the SEC.

BUSINESS OF THE BANK

        The Bank is engaged in the business of commercial and retail banking and was organized under the banking laws of the United States in December 1863. The Bank currently conducts its business through twenty five primary banking offices located in Chester, Montgomery, Delaware, Lancaster and Cumberland Counties, Pennsylvania, including its main office. In addition, the Bank operates 29 ATM facilities. The Bank is a member of the Federal Reserve System. At December 31, 2008, the Bank had total assets of $1.3 billion, total loans of $940.1 million, total deposits of $1.02 billion and employed 565 persons, of which 520 were full-time and 45 were part-time.

        The Bank is a full service commercial bank offering a broad range of retail banking, commercial banking, internet banking, trust and investment management and insurance services to individuals, businesses, governmental entities, nonprofit organizations, and community service groups. Through the Bank's community banking segment, the Bank offers retail services, including checking accounts, savings programs, money-market accounts, certificates of deposit, safe deposit facilities, consumer loan programs, overdraft checking, automated tellers and extended banking hours, and commercial services, including revolving lines of credit, commercial mortgages, equipment leasing and letter of credit services. These retail and commercial banking activities are provided primarily to consumers and small to mid-sized companies within the Bank's market area. Lending services are focused on commercial, consumer, and real estate lending to local borrowers. The Bank attempts to establish a total borrowing relationship with its customers that may typically include commercial loans, a mortgage loan for the borrower's residence, a consumer loan or a revolving personal credit line.

        The Bank's Wealth Management Division operates as part of the community banking segment and provides a broad range of trust and investment management services. It administers and provides services for estates, trusts, agency accounts, and individual and employer sponsored retirement plans. At December 31, 2008, the Bank's Wealth Management Division administered or provided investment management services to accounts that held assets with an aggregate market value of approximately $484.6 million. For the year ended December 31, 2008, income from the Bank's Wealth Management Division and related activities was approximately $3.4 million. In addition to retail and commercial banking and wealth management services, the Bank offers an array of investment opportunities including mutual funds, annuities, retirement planning, education planning and insurance through FNB Insurance Services, LLC, doing business as First National Financial Advisory Services, a wholly-owned subsidiary of the Bank. Information regarding the revenues, net income and total assets of the community banking segment can be found in Item 8, Financial Statements and Supplemental Data.

        The Bank's retail mortgage-banking business segment, which consists primarily of the operations formerly conducted by AHB, provides mortgages and associated products to customers and sells most of those mortgages into the secondary market on a servicing released basis. AHB retains the servicing on a portion of the loans that it sells. The sourcing of mortgage loans is conducted through a direct, retail delivery channel comprised of retail loan offices, affiliated business arrangements with builders and realtors, and a wholesale lending operation. The wholesale operation sources loans through relationships with unrelated mortgage brokers. The mortgage banking segment uses a variety of trademark names in its business activities. The Bank has taken action to protect such trademark names through registration of same where it deems appropriate. The mortgage banking segment is subject to changes in demand due to a variety of factors, including interest rates, home prices, general economic conditions and seasonal changes in purchases of new homes. At December 31, 2008, the total assets of the mortgage banking segment were $247.8 million, gross loans and leases were $110.9 million, and deposits were $36.6 million. The results of operations presented in the Corporation's consolidated income statement do not include any revenue or expenses of the mortgage banking segment as this segment was created through the Corporation's

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acquisition of AHB on December 31, 2008. The acquisition of AHB was intended to help the Bank to further diversify the Bank's products, services, and sources of income as well as expand the Bank's geographic footprint.

COMPETITION

        The Bank's core service area consists primarily of greater Chester County, as well as the fringe of Delaware County, Pennsylvania. The core of the Bank's service area is located within a fifteen-mile radius of the Bank's main office in West Chester, Pennsylvania. As a result of the acquisition of AHB on December 31, 2008, the Bank's service area has been expanded into Lancaster and Cumberland Counties, Pennsylvania. In addition, the mortgage-banking activities of the Bank compete to originate residential mortgages nationally. The Bank encounters vigorous competition from bank holding companies, other community banks, thrift institutions, credit unions, Internet banks and other non-bank financial organizations such as mutual fund companies, brokerage firms, mortgage bankers and the financing arms of corporate conglomerates. The Bank also competes with banking and financial institutions, some from out-of-state that have opened branches in the Bank's market, which are substantially larger and have greater financial resources than the Bank.

        The Bank's Wealth Management Division competes with a variety of companies including private trust companies, banks with trust departments, private money managers, brokerage firms, mutual fund companies, attorneys, accountants and insurance companies.

        Management believes that the Bank is able to effectively compete with its competitors because of its ability to provide responsive personalized services and competitive rates. This ability is a direct result of Management's knowledge of the Bank's market area and customer base. Management believes the needs of the small to mid-sized commercial business and retail customers are not adequately met by larger financial institutions, therefore creating a marketing opportunity for the Bank.

SUPERVISION AND REGULATION

General

        The Corporation is a bank holding company and financial holding company subject to supervision and regulation by the Federal Reserve Board. In addition, the Bank is subject to supervision, regulation and examination by the Office of the Comptroller of the Currency (the "OCC") and secondary regulation by the Federal Deposit Insurance Corporation (the "FDIC"). The OCC must approve bank mergers, if the surviving bank would be a national bank, as well as the establishment of new branches and new operating subsidiaries. Federal and state laws impose a number of requirements and restrictions on the operations of the Bank, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be made and the types of services which may be offered, and restrictions on the ability to acquire deposits under certain circumstances. The Bank must also comply with various consumer laws and regulations. Certain aspects of the Bank's operation are also subject to state laws. The following sections discuss more fully some of the principal elements of the regulatory framework applicable to the Corporation and the Bank. This discussion is not intended to be an exhaustive description of the statutes and regulations applicable to the Corporation and the Bank and is subject to and qualified by reference to the statutory and regulatory provisions. A change in these statutes, regulations or regulatory policies, or the adoption of new statutes, regulations or regulatory policies, may have a material effect on the Corporation's business.

Bank Holding Company Act

        The Corporation is required to file with the Federal Reserve Board an annual report, other periodic reports, and such additional information as the Federal Reserve Board may require pursuant to the BHC Act. The Federal Reserve Board also makes examinations of bank holding companies and their

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subsidiaries. The BHC Act requires each bank holding company to obtain the prior approval of the Federal Reserve Board before it may acquire substantially all of the assets of any bank, or if it would acquire or control more than 5% of the voting shares of such a bank. The Federal Reserve Board considers numerous factors, including its capital adequacy guidelines, before approving such acquisitions. For a description of certain applicable guidelines, see this Item "Capital," Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Capital Adequacy," and Part II, Item 8, "Note K—Regulatory Matters" in the consolidated financial statements.

The Community Reinvestment Act

        The Community Reinvestment Act of 1977, as amended (the "CRA"), and the regulations promulgated to implement the CRA are designed to create a system for bank regulatory agencies to evaluate a depository institution's record in meeting the credit needs of its community. The CRA regulations were completely revised in 1995 to establish performance-based standards for use in examining a depository institution's compliance with the CRA (the "revised CRA regulations"). The revised CRA regulations establish new tests for evaluating both small and large depository institutions' investment in the community. For the purposes of the revised CRA regulations, the Bank is deemed to be a large retail institution, based upon financial information as of December 31, 2008. In connection with its assessment of CRA performance, the FDIC assigns a rating of "outstanding," "satisfactory," "needs to improve," or "substantial compliance." The Bank has opted to be examined under a three-part test evaluating the Bank's lending service and investment performance. The Bank received an satisfactory rating in its last regulatory examination in March 2008.

Dividend Restrictions

        The Corporation is a legal entity separate and distinct from the Bank. Virtually all of the revenue of the Corporation available for payment of dividends on its Common Stock will result from amounts paid to the Corporation from dividends received from the Bank. All such dividends are subject to limitations imposed by federal and state laws and by regulations and policies adopted by federal and state regulatory agencies.

        The Bank, as a national bank, is required by federal law to obtain the approval of the OCC for the payment of dividends if the total of all dividends declared by the Board of Directors of the Bank in any calendar year will exceed the total of the Bank's net income for that year and the retained net income for the preceding two years, less any required transfers to surplus or a fund for the retirement of any preferred stock. Under this formula, in 2009, the Bank, without affirmative governmental approvals, could declare aggregate dividends of approximately $8.3 million, plus an amount approximately equal to the net income, if any, earned by the Bank for the period from January 1, 2009, through the date of declaration of such dividend less dividends previously paid, subject to the further limitations that a national bank can pay dividends only to the extent that the Bank would not become "undercapitalized" (as defined under federal law). Dividends declared and paid in 2008 were $2.9 million.

        If, in the opinion of the applicable regulatory authority, a bank or bank holding company under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which, depending on the financial condition of the bank or bank holding company, could include the payment of dividends), such regulatory authority may require such bank or bank holding company to cease and desist from such practice, or to limit dividends in the future. Finally, the several regulatory authorities described herein may, from time to time, establish guidelines, issue policy statements and adopt regulations with respect to the maintenance of appropriate levels of capital by a bank or bank holding company under their jurisdiction. Compliance with the standards set forth in such policy statements, guidelines and regulations could limit the amount of dividends which the Corporation and the Bank may pay.

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Capital

        The Corporation and the Bank are both subject to minimum capital requirements and guidelines. The Federal Reserve Board measures capital adequacy for bank holding companies on the basis of a risk-based capital framework and a leverage ratio. The Federal Reserve Board has established minimum leverage ratio guidelines for bank holding companies. These guidelines currently provide for a minimum leverage ratio of Tier I Capital to average total assets of 3% for bank holding companies that meet certain criteria, including that they maintain the highest regulatory rating. All other bank holding companies are required to maintain a leverage ratio of 3% plus an additional cushion of at least 100 to 200 basis points. The Federal Reserve Board has not advised the Corporation of any specific minimum leverage ratio under these guidelines which would be applicable to the Corporation. Failure to satisfy regulators that a bank holding company will comply fully with capital adequacy guidelines upon consummation of an acquisition may impede the ability of a bank holding company to consummate such acquisition, particularly if the acquisition involves payment of consideration other than common stock. In many cases, the regulatory agencies will not approve acquisitions by bank holding companies and banks unless their capital ratios are well above regulatory minimums.

        The Bank is subject to capital requirements which generally are similar to those affecting the Corporation. The minimum ratio of total Risk-Based Capital to Risk-Weighted assets (including certain off-balance sheet items, such as standby letters of credit) is 8%. Capital may consist of equity and qualifying perpetual preferred stock, less goodwill ("Tier I Capital"), and certain convertible debt securities, qualifying subordinated debt, other preferred stock and a portion of the reserve for possible credit losses ("Tier II Capital"). Trust preferred securities may be included in Tier I Capital, subject to certain quantitative limits. The aggregate amount of trust preferred securities and certain other capital elements is limited to 25% of Tier I Capital elements, net of goodwill. The amount of trust preferred securities and certain other elements in excess of the limit could be included in Tier II Capital, subject to certain other restrictions. As described elsewhere in this report, the Corporation has $15.5 million in outstanding trust preferred securities which is includable in Tier I Capital.

        A depository institution's capital classification depends upon its capital levels in relation to various relevant capital measures, which include a Risk-Based Capital measure and a leverage ratio capital measure. A depository institution is considered "well capitalized" if it significantly exceeds the minimum level required by regulation for each relevant capital measure, "adequately capitalized" if it meets each such measure, "undercapitalized" if it fails to meet any such measure, "significantly undercapitalized" if it is significantly below any such measure and "critically undercapitalized" if it fails to meet any critical capital level set forth in the regulations. An institution may be placed in a lower capitalization category if it receives an unsatisfactory examination rating, is deemed to be in an unsafe or unsound condition, or engages in unsafe or unsound practices. Under applicable regulations, for an institution to be well capitalized it must have a Total Risk-Based Capital ratio of at least 10%, a Tier I Capital ratio of at least 6% and a Leverage ratio of at least 5% and not be subject to any specific capital order or directive. As of December 31, 2008 and 2007, the Corporation and the Bank had capital in excess of all regulatory minimums and the Bank was "well capitalized."

Deposit Insurance Assessments

        The Bank is subject to deposit insurance assessments by the FDIC. The FDIC has developed a risk-based assessment system, under which the assessment rate for an insured depository institution varies according to its level of risk.

        In 2006, the Federal Deposit Insurance Reform Act of 2005 increased FDIC premiums for all commercial banks. This legislation provided a one-time assessment credit for each insured bank. The Bank's assessment credit offset $416 thousand of the insurance premium expense in 2007 and

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$66 thousand in 2008, and was fully utilized in the first quarter of 2008. The increased premium did not indicate any change in the FDIC risk assessment for the Bank.

        In 2008 and 2009, the FDIC adopted rules that will increase FDIC premiums significantly for assessment periods beginning in the first quarter of 2009. This will cause our 2009 FDIC premiums and assessment expense to increase significantly over 2008. Management currently estimates that this expense will increase by 240%.

        FDIC insurance expense was $490 thousand, $87 thousand and $88 thousand for the years 2008, 2007 and 2006.

Financial Services Modernization Act of 1999

        On November 12, 1999, the President signed into law the Gramm-Leach-Bliley Act (the "Act") which became effective in 2000. Among the Act's various provisions are some changes governing the operations of companies doing business in the financial services industry. The Act eliminates many of the restrictions previously placed on the activities of banks and bank holding companies, and through the creation of two new designations, financial holding companies and financial subsidiaries, bank holding companies and national banks may participate in a wider array of financial services and products (referred to as "financial activities" in the Act), including services and products that had been reserved only for insurance companies and securities firms. In addition, a bank holding company can now affiliate with an insurance company and a securities firm.

        A "financial activity" is an activity that does not pose a safety and soundness risk and is financial in nature, incidental to an activity that is financial in nature, or complementary to a financial activity. Some examples of "financial activities" which are permitted under the Act are:

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Lending, investing or safeguarding money or securities;

•

Underwriting insurance or annuities, or acting as an insurance or annuity principal, agent or broker;

•

Providing financial or investment advice;

•

Underwriting, dealing in or making markets in securities; and

•

Insurance company portfolio investments.

        The Corporation elected to become a financial holding company on August 5, 2001, and currently meets the qualifications set forth under the Act to be a financial holding company. The Bank, as a national bank, is authorized by the Act to use "financial subsidiaries" to engage in financial activities, subject to the limitations imposed by the Act. During 2000, First National Financial Advisory Services was formed as a wholly-owned subsidiary of the Bank for the purpose of offering insurance, full service brokerage, financial planning and mutual fund services. First National Financial Advisory Services has elected to become a financial subsidiary under the Act.

Control Acquisitions

        The Change in Bank Control Act prohibits a person or group of persons from acquiring "control" of a bank holding company, unless the Federal Reserve Board has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve Board, the acquisition of ten percent or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Corporation, would, under the circumstances set forth in the presumption, constitute acquisition of control of the bank holding company.

        In addition, as described above, under the BHC Act, the Federal Reserve Board must give its prior approval of any transaction pursuant to which any person or persons may acquire 25 percent (5 percent in the case of an acquirer that is a bank holding company) or more of any class of outstanding common stock

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of a bank holding company, such as the Corporation, or otherwise obtaining control or a "controlling influence" over that bank holding company.

The USA Patriot Act

        The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism of 2002 (the "USA Patriot Act") gives the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. Through amendments to the Bank Secrecy Act, the USA Patriot Act takes measures intended to encourage information sharing among bank regulatory agencies and law enforcement agencies. Among other requirements, the USA Patriot Act requires banks to establish anti-money laundering policies, to adopt procedures and controls to detect and report money laundering, and to comply with certain enhanced recordkeeping obligations and due diligence standards with respect to correspondent accounts of foreign banks. Compliance with these requirements has not had a material effect on the Corporation's operations.

Emergency Economic Stabilization Act

        Beginning in the fourth quarter of 2008, in response to the ongoing crisis in financial markets and worsening economic situation, the U.S. government enacted new legislation and established a number of new programs and initiatives designed to stabilize and provide liquidity to financial markets, ensure that banking institutions are adequately capitalized, and restore confidence in the financial system. In October 2008, the Emergency Economic Stabilization Act of 2008 ("EESA") was enacted. Pursuant to EESA, the U.S. Treasury created the Troubled Asset Relief Program ("TARP") pursuant to which the Treasury will, among other things, invest in qualified, eligible financial institutions through capital infusions and asset purchases, up to an aggregate amount of $700 billion. In connection with TARP, the U.S. Treasury established a voluntary Capital Purchase Program (the "Program") to encourage United States financial institutions to raise additional capital to increase the flow of financing to United States businesses and consumers and to support the United States economy in general. Under this Program, the Treasury announced that it will purchase up to $250 billion of senior preferred shares in qualifying U.S. financial institutions, as determined by the Treasury. The Treasury intends the Program to attract broad participation by healthy institutions, and already the Treasury has purchased preferred stock under this program from numerous large and small banks in the approximate aggregate amount of $195 billion.

        The Corporation is an eligible institution under the Program. The Corporation filed an application to participate in the Program, and received preliminary approval from the Treasury to participate in the amount of $25 million (or approximately 2.3% of the Corporation's risk-weighted assets as of December 31, 2008). Although the Corporation was preliminarily approved for participation in the Program, the Corporation has elected not to participate.

Other Matters

        Federal and state law also contains a variety of other provisions that affect the operations of the Corporation and the Bank including certain reporting requirements, regulatory standards and guidelines for real estate lending, "truth in savings" provisions, the requirement that a depository institution give 90 days prior notice to customers and regulatory authorities before closing any branch, certain restrictions on investments and activities of nationally-chartered insured banks and their subsidiaries, limitations on credit exposure between banks, restrictions on loans to a bank's insiders, guidelines governing regulatory examinations, and a prohibition on the acceptance or renewal of brokered deposits by depository institutions that are not well capitalized or are adequately capitalized and have not received a waiver from the FDIC.

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EFFECT OF GOVERNMENTAL POLICIES

        The earnings of the Bank and, therefore, of the Corporation are affected not only by domestic and foreign economic conditions, but also by the monetary and fiscal policies of the United States and its agencies (particularly the Federal Reserve Board), foreign governments and other official agencies. The Federal Reserve Board can and does implement national monetary policy, such as the curbing of inflation and combating of recession, by its open market operations in United States government securities, control of the discount rate applicable to borrowings from the Federal Reserve and the establishment of reserve requirements against deposits and certain liabilities of depository institutions. The actions of the Federal Reserve Board influence the level of loans, investments and deposits and also affect interest rates charged on loans or paid on deposits. The nature and impact of future changes in monetary and fiscal policies are not predictable.

        From time to time, various proposals are made in the United States Congress and the Pennsylvania legislature and before various regulatory authorities, who would alter the powers of different types of banking organizations, remove restrictions on such organizations and change the existing regulatory framework for banks, bank holding companies and other financial institutions. Recently, there have been numerous regulatory initiatives by the U.S. Treasury, FDIC, and the Federal Reserve Board to stabilize the financial markets. Congress and the U.S. government continue to evaluate and develop programs designed, among other things, to stimulate the economy, restore confidence, and reverse or forestall declines in the housing markets. It is impossible to predict what the final form of any of such proposals will be and the impact, if any, of such adoption on the business of the Corporation.

Item 1A.    Risk Factors

        The following are some of the factors that could materially and adversely affect our future performance or could cause actual results to differ materially from those expressed or implied in our forward-looking statements. The risks and uncertainties described below are not the only ones facing us and we cannot predict every event and circumstance that may adversely affect our business. However, these risks and uncertainties are the most significant factors that we have identified at this time. If one or more of these risks actually occurs, our business, results of operations, and financial condition could likely suffer, and the price of our stock would be negatively affected. Unless the context requires otherwise, references to "we," "us," or "our," in this "Risk Factors" section are intended to mean First Chester County Corporation, First National Bank of Chester County and its subsidiaries, collectively.

The current turmoil in the financial markets may lead to an increased levels of regulation, loan delinquencies, and problem loans, and a reduction of business activity generally.

        We are presently operating in a period of unprecedented economic change and uncertainty. During the second half of 2008 and continuing through the present, the United States has been in a recession with falling home prices and increasing unemployment and underemployment. The U.S. government has acted to stabilize the financial markets and to stimulate the economy by enacting legislation of unprecedented proportions. Congress and the U.S. Government continue to evaluate and develop programs designed, among other things, to reverse the economic downturn, restore confidence, reverse or forestall declines in the housing markets. It is impossible to predict what the final form of any of such proposals will be and the impact of the adoption of new regulation will be on the business of the Corporation. There can be no assurance as to the impact that any such initiatives or governmental programs will have on the financial markets. In addition, compliance with additional regulation may increase our costs of doing business or impede the efficiency of our internal business processes. The resulting turmoil, uncertainty, regulation and lack of consumer confidence may adversely affect our business, financial condition, results of operations and trading price of our common stock.

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Adverse changes in the economic conditions in our market area could materially and negatively affect our business.

        Substantially all of our business is with consumers and small to mid-sized companies located within Chester and Delaware Counties, Pennsylvania, although our mortgage-banking operations involve originations of mortgages nationwide. Our business is directly affected by factors such as economic, political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government monetary and fiscal policies and inflation, all of which are beyond our control. A deterioration in economic conditions, whether caused by national, regional or local concerns, including an economic slowdown in southeastern Pennsylvania, could result in the following consequences, any of which could materially harm our business and operating results:

•

customer's credit quality may deteriorate;

•

loan delinquencies and losses may increase;

•

problem assets and foreclosures may increase;

•

fluctuations in the value of, or impairment losses with respect to, investment securities;

•

need to increase our allowance for loan and lease losses, thus reducing net income;

•

more non-accrual loans may reduce net income;

•

demand for our products and services may decrease;

•

competition for low cost or non-interest bearing deposits may increase; and

•

collateral securing loans may decline in value.

Competitive pressures from banks, financial services companies and other companies offering banking services could negatively impact our business.

        We conduct banking operations primarily in southeastern Pennsylvania. Increased competition in our market area may result in reduced loans and deposits, a decline in loan growth and/or loan margins, high customer turnover, and lower interest rate margins. We may not be able to compete successfully against current and future competitors. Many competitors in our market area, including national banks, regional banks and other community banks, offer the same banking services as we offer. We also face competition from many other types of financial institutions, including without limitation, savings and loan institutions, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. These competitors often have greater resources than we do, affording them competitive advantages, including the ability to maintain numerous banking locations and ATMs and conduct extensive promotional and advertising campaigns.

Changes in interest rates could reduce our net interest margin and net interest income.

        Our income and cash flows and the value of our assets and liabilities depend to a great extent on the difference between the interest rates earned on interest-earning assets such as loans and investment securities, and the interest rates paid on interest-bearing liabilities such as deposits and borrowings. These interest rates are highly sensitive to many factors which are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies, in particular, the Federal Reserve and the Office of Comptroller of Currency. Changes in monetary policy, including changes in interest rates, will influence the origination and market value of loans and investment securities and the amounts paid on deposits. If we are unable to timely adjust our interest rates on our loans and deposits in response to any such changes in monetary policy, our earnings could be adversely affected. If

9

the rate of interest we pay on our deposits, borrowings, and other interest-bearing liabilities increases faster than the rate of interest we earn on our loans, investments and other interest-earning assets, our net interest income, and therefore our earnings will decrease. Conversely, our earnings could also be adversely affected if the interest rates on our loans or other investments decline more quickly than those on our deposits and other borrowings.

Significant increases in interest rates may affect customer loan demand and payment habits.

        Significant increases in market interest rates, or the perception that an increase may occur, could adversely impact our ability to generate new variable interest rate loans. An increase in market interest rates may also adversely affect the ability of adjustable rate borrowers to meet repayment obligations, thereby causing non-performing loans and loan charge-offs to increase.

We may experience lower net interest income if our loan growth exceeds that of deposit growth requiring us to obtain other sources of funds at higher costs.

        Our growth strategy depends upon generating an increasing level of loans while maintaining a low level of loan losses. As our loans grow, it is necessary for the deposits to grow at a comparable pace in order to avoid the need for us to obtain other sources of loan funds at higher costs. If our loan growth exceeds the deposit growth, we may have to obtain other sources of funds at higher costs, thus reducing our net interest income.

If our allowance for loan and lease losses is not adequate to cover actual or estimated future loan and lease losses, our earnings may decline.

        We maintain an allowance for loan and lease losses to provide for loan defaults and non-performance by borrowers of their obligations. Our allowance for loan and lease losses may not be adequate to cover actual or estimated future loan and lease losses and future provisions for loan and lease losses could materially and adversely affect our operating results. Our allowance for loan and lease losses is based on prior experience, as well as an evaluation of risks in the current portfolio. However, losses may exceed our current estimates. The amount of future losses is susceptible to changes in economic, operating and other conditions that may be beyond our control, including changes in interest rates, changes in borrowers' creditworthiness and the value of collateral securing loans and leases. Additionally, as our loan and lease portfolios grow, we may need to take additional provision expense to ensure that the allowance remains at levels deemed appropriate by Management for the size and quality of portfolio. Federal regulatory agencies review our loans and allowance for loan and lease losses and may require us to increase our allowance. While we believe that our allowance for loan and lease losses is adequate to cover our anticipated losses, we cannot assure that will be the case or that we will not further increase the allowance for loan and lease losses or that regulators will not require us to increase the allowance. Either of these occurrences could materially affect our earnings.

Disruptions in the secondary market for residential mortgage loans adversely affected AHB's operations prior to the merger and may adversely affect the AHB division of the Bank.

        Significant ongoing disruptions in the secondary market for residential mortgage loans have limited the market for and liquidity of many mortgage loans. The effects of ongoing mortgage market challenges, combined with the ongoing correction in residential real estate market prices and reduced levels of home sales, could result in further price reductions in single family home values, adversely affecting the value of collateral securing mortgage loans held by the Bank, mortgage loan originations and profits on sale of mortgage loans, or adversely affecting customers' ability to repay their loans. Declining real estate prices and higher interest rates have caused higher delinquencies and losses on certain mortgage loans. These trends could continue. Continued declines in real estate values, home sales volumes and financial stress on

10

borrowers as a result of job losses, interest rate resets on adjustable rate mortgage loans or other factors could have further adverse effects on borrowers that result in higher delinquencies, greater charge-offs, and increased demands for repurchases, indemnification claims or litigation in future periods, which could adversely affect the Bank's financial condition or results of operations.

The Bank could be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm liquidity, results of operations and financial condition.

        When we sell mortgage loans, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to the purchasers about the mortgage loans and the manner in which they were originated. Our whole loan sale agreements require us to repurchase or substitute mortgage loans in the event we breach any of these representations or warranties. In addition, we may be required to repurchase mortgage loans as a result of borrower fraud or in the event of early payment default of the borrower on a mortgage loan. Likewise, we are required to repurchase or substitute mortgage loans if we breach a representation or warranty in connection with a securitization. The remedies available to us against the originating broker or correspondent may not be as broad as the remedies available to a purchaser of mortgage loans against us, and we face the further risk that the originating broker or correspondent may not have the financial capacity to perform remedies that otherwise may be available to us. Therefore, if a purchaser enforces its remedies, we may not be able to recover its losses from the originating broker or correspondent. If repurchase and indemnity demands increase, our liquidity, results of operations and financial condition will be adversely affected.

The AHB Division's dependence on certain relationships, such as with Freddie Mac, could adversely affect the mortgage-banking business.

        The secondary mortgage markets are currently experiencing unprecedented disruptions resulting from reduced investor demand for mortgage loans and mortgage-backed securities and increased investor yield requirements for those loans and securities. In addition, we have a substantial relationship with Freddie Mac, including loan sales that are material to our mortgage-banking business. A significant portion of the conventional loans that we originate or purchase qualify for inclusion in guaranteed mortgage securities backed by Freddie Mac. A substantial reduction in the volume of loans that Freddie Mac agrees to purchase or the loss of other material financial benefits we receive from Freddie Mac could have a material adverse effect on our results of operation and financial condition. As a government-sponsored enterprise, Freddie Mac is subject to extensive regulation and oversight by governmental agencies. On September 7, 2008, Freddie Mac was placed under the conservatorship of the Federal Housing Finance Agency, Freddie Mac's principal regulator. Substantial changes in Freddie Mac's business and operations are anticipated to occur as a result of such event. This event, together with changes in regulations or the occurrence of other events that adversely impact the business, operations or prospects of Freddie Mac could have a material adverse effect on our mortgage-banking business, operations or prospects.

The scope of our residential mortgage loan production exposes us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the federal, state and local levels in the United States.

        Because we are authorized to originate, purchase and service mortgage loans in all 50 states, we must comply with the laws and regulations, as well as judicial and administrative decisions, for all of these jurisdictions, in addition to an extensive body of federal law and regulations. The volume of new or modified laws and regulations has increased in recent years, and individual cities and counties in the United States have begun to enact laws that restrict certain loan origination, acquisition and servicing activities in those cities and counties. The laws and regulations are different, complex and, in some cases,

11

in direct conflict with each other or contain vague standards or requirements, which make compliance efforts challenging.

        Our failure to comply with these laws can lead to:

•

civil and criminal liability:

•

loss of licenses and approvals;

•

damage to its reputation in the industry;

•

inability to sell or securitize its loans, or otherwise raise capital;

•

demands for indemnification or loan repurchases from purchasers of its loans;

•

fines and penalties and litigation, including class action lawsuits;

•

administrative enforcement actions;

•

additional regulatory burdens, restrictions, or other changes to our business model;

•

claims that an allegedly non-compliant loan is rescindable or unenforceable; and

•

damage to the reputation of the American Home Bank division of First National Bank, any of which could have a material adverse effect on American Home Bank's business, operations or prospects.

Our mortgage-banking operations rely on other companies to provide key components of its business infrastructure.

        Third parties provide key components of our mortgage-banking business infrastructure, such as banking services, processing, and Internet connections and network access. Any disruption in such services provided by these third parties or any failure of these third parties to handle current or higher volumes of use could adversely affect our ability to deliver products and services to clients and otherwise to conduct business. Technological or financial difficulties of a third party service provider could adversely affect our business to the extent those difficulties result in the interruption or discontinuation of services provided by that party. We may not be insured against all types of losses as a result of third party failures, and our insurance coverage may be inadequate to cover all losses resulting from system failures or other disruptions. Failures in our mortgage-banking infrastructure could interrupt the operations or increase the costs of doing business.

Significant legal actions could subject us to substantial liabilities or litigation costs.

        The Bank, through the American Home Bank division, is currently involved in various claims and legal actions related to its operations. In general, such matters are believed to be ordinary routine litigation incidental to the conduct of business. Nonetheless, the costs to pursue and defend these legal matters may be significant, and if the claims were determined against the Bank, could adversely affect the results of operations, financial condition, reputation and prospects of the Bank.

The use of correspondents, brokers and other third parties to originate loans outside of its market area subjects our mortgage-banking operations to certain risks.

        We utilize mortgage correspondents and brokers to originate mortgage loans, including construction/permanent loans, beyond its local market area. This use of correspondents and brokers may increase the risk of fraudulent representations of a borrower's creditworthiness. We also utilize independent licensed

12

appraisers and inspectors to appraise and inspect properties and work progress on construction/permanent loans, but our employees may not be present in many of these markets. Thus, we rely on the professional opinions and photographic evidence provided by appraisers and inspectors to authorize periodic advances in accordance with applicable loan documents. This reliance may increase the risk of errors or fraud regarding the approval of loans and the making of loan advances.

Our mortgage-banking operations face prepayment risk from loans sold for which servicing is retained.

        Mortgage loans sold, for which servicing is retained, are subject to prepayment risk. Statement of Financial Accounting Standards ("SFAS") No. 156 requires capitalization of the fair value of originated mortgage servicing rights. If mortgages are repaid faster than the estimated rate used in capitalizing the mortgage servicing rights, the fair value of the mortgage servicing rights would decrease and be reflected as a charge against earnings. Our focus on residential mortgage lending could cause the risk of loss from mortgage prepayments to be material.

Adverse changes in the market value of securities and investments that we manage for others may negatively impact the growth level of our non-interest income.

        We provide a broad range of trust and investment management services for estates, trusts, agency accounts, and individual and employer sponsored retirement plans. Fees for such services are typically based upon a percentage of the market value of such funds under management. The market value of such securities and investments may decline for a variety of factors, many of which are outside our control. Any such adverse changes in the market value of the securities and investments could negatively impact our non-interest income generated from providing these services.

Expansion of our branch network may increase our expenses without proportionate increases in income.

        We continue to look for appropriate locations to open new branches. Such opportunities are attractive as a means to obtain additional core deposits and increase our customer base for new loans and services. However, the costs of opening a new branch may reduce our earnings before the benefits of the new branch are realized. Our decisions to open new branches are based upon demographic information and assumptions regarding the suitability of a particular location. There can be no assurance that such assumptions will be accurate and fully achievable.

Our branch locations may be negatively affected by changes in regional and local demographics.

        We have strategically selected locations for our branches based upon regional and local demographics. Any unanticipated changes in such demographics may impact our ability to reach or maintain profitability at our branch locations. Changes in regional and local demographics may also affect the relative benefits of certain branch locations and Management may be required to reduce the number and/or locations of our branches, which may result in unanticipated expenses.

Changes in the regulatory environment may adversely affect our business or the ability of the Bank to pay dividends to the Corporation.

        The banking industry is highly regulated and we are subject to extensive state and federal regulation, supervision, and legislation. We are subject to regulation and supervision by the Board of Governors of the Federal Reserve System, the Offices of the Comptroller of the Currency, and the Securities and Exchange Commission and the FDIC. Laws restricting our activities include, but are not limited to, the Gramm-Leach-Blilely Act, the Bank Secrecy Act, the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Bank Holding Company Act, the Community Reinvestment Act, the USA Patriot Act and the Real Estate Settlement Procedures Act. These laws may change from time to time, and new

13

laws may be enacted, any of which may limit our ability to offer new products and services, obtain financing, attract deposits, and originate loans. Any changes to these laws may adversely affect loan demand, credit quality, consumer spending and saving habits, interest rate margins, FDIC assessments, and operating expenses, thus negatively affecting our results of operations and financial condition. In addition, if the Bank is restricted in its ability to pay dividends to the Corporation, the Corporation's ability to pay dividends to its shareholders or to meet its financial obligations may be impaired.

Technology costs, new product development, and marketing costs may exceed our expectations and negatively impact our profitability.

        The financial services industry is constantly undergoing technological changes in the types of products and services provided to customers to enhance customer convenience. Our future success will depend upon our ability to address the changing technological needs of our customers. We have invested a substantial amount of resources to update our technology. Our investment in such technology seeks to increase overall efficiency and improve accessibility to customers. We are also investing in the expansion of bank branches, improvement of operating systems, and the development of new marketing initiatives. The benefits of such investments may not be achieved as quickly as anticipated, or at all. The costs of implementing technological changes, new product development, and marketing costs may exceed our expectations and negatively impact our results of operations and profitability.

Changes to financial accounting standards may affect our reported results of operations.

        We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"). GAAP is subject to the rules and interpretations of the Securities and Exchange Commission and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may even affect our reporting of transactions completed before a change is announced. Accounting rules affecting many aspects of our business, including rules relating to accounting for business combinations, asset impairment, revenue recognition, restructuring or disposal of long-lived assets and stock option grants have recently been revised or are currently under review. Changes to those rules or current interpretation of those rules may have a material adverse effect on our reported financial results or on the way we conduct our business.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

        If we fail to maintain an effective system of internal controls, fail to correct any issues in the design or operating effectiveness of internal controls over financial reporting, or fail to prevent fraud, our shareholders could lose confidence in our financial reporting, which could harm our business and the trading price of our Common Stock.

Our common stock is thinly traded.

        Our common stock is traded on the Over-the-Counter Bulletin Board under the symbol FCEC. Our common stock is thinly traded compared to larger, more widely known companies in the banking industry. There can be no assurance that a more active trading market for our common stock will develop. As a result, our shareholders may be unable to sell large blocks of our common stock in short time periods or the market price per share may be reduced.

Item 1B.    Unresolved Staff Comments.

        None.

14

Item 2.    Properties.

        The Bank owns eight properties that are not subject to any mortgages. In addition, the Corporation leases the Westtown-Thornbury, Exton, Frazer, Kendal at Longwood, Crosslands, Lima Estates, Granite Farms Estates, Hershey's Mill, Bradford Plaza, Freedom Village, Oxford, Phoenixville, Royersford, Longwood (land lease), Downingtown, Mountville, Carlisle, Operations Center and other properties that the bank utilizes for loan processing operations. Management of the Corporation believes the Corporation's and the Bank's facilities are suitable and adequate for their respective present needs. Set forth below is a listing of the primary banking offices presently operated by the Bank. Management routinely evaluates all of its properties for ongoing use.

Current Banking Offices/Use	Address	Date Acquired or Opened
Main Office/Branch and Corporate Headquarters*	9 North High Street West Chester, Pennsylvania	December 1863
Goshen/Branch*	311 North Five Points Road West Goshen, Pennsylvania	September 1956
Kennett Square/Branch*	126 West Cypress Street Kennett Square, Pennsylvania	February 1987
Westtown-Thornbury/Branch	Route 202 and Route 926 Westtown, Pennsylvania	May 1994
Exton/Branch	Route 100 and Boot Road West Chester, Pennsylvania	August 1995
Frazer/Branch	309 Lancaster Avenue Frazer, Pennsylvania	August 1999
Kendal at Longwood/Branch	1109 E. Baltimore Pike Kennett Square, Pennsylvania	December 1999
Crosslands/Branch	1660 E. Street Road Kennett Square, Pennsylvania	December 1999
Lima Estates/Branch	411 North Middletown Road Media, Pennsylvania	December 1999
Granite Farms Estates/Branch	1343 West Baltimore Pike Wawa, Pennsylvania	December 1999
Lionville/Branch*	Route 113 & Sheree Boulevard Uwchlan Township, Pennsylvania	December 2000
New Garden/Branch*	741 West Cypress Street Kennett Square, Pennsylvania	August 2001
Hershey's Mill/Branch	1371 Boot Road West Chester, Pennsylvania	December 2001
Bradford Plaza/Branch	700 Downingtown Pike West Chester, Pennsylvania	September 2003
Freedom Village/Branch	15 Freedom Village Blvd. West Brandywine, Pennsylvania	July 2004
Oxford/Branch	275 Limestone Road Oxford, Pennsylvania	December 2004
Phoenixville/Branch	700 Nutt Rd Phoenixville, Pennsylvania	November 2006
Royersford/Branch	967 Township Line Rd Royersford, Pennsylvania	December 2006
Downingtown/Branch	99 Manor Ave Downingtown, Pennsylvania	January 2008
Longwood/Branch (A)	100 Old Forge Ln Kennett Square, Pennsylvania	February 2008
Mountville/Branch and retail mortgage division headquarters	3840 Hempland Rd Mountville, Pennsylvania	December 2008
Carlisle/Branch	417 Village Dr Carlisle, PA	December 2008

15

Other Properties/Use	Address	Date Acquired or Opened
Market Street/Office Space and parking*	17 East Market Street West Chester, Pennsylvania	February 1978
Operations Center/Operations	202 Carter Drive West Chester, Pennsylvania	July 1988
Matlack Street/Operations*	887 South Matlack Street West Chester, Pennsylvania	September 1999
1N High Street/Office Space *	1 North High Street West Chester, Pennsylvania	April 2007 (B)

*

Indicates properties owned by the Bank

(A)

The Longwood Branch land is leased. The Building is owned by the Bank.

(B)

As of 12/31/08, this building is being renovated and is not in use yet. The Bank put this building into service in February 2009.

Item 3.   Legal Proceedings.

        There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Corporation, or any of its subsidiaries, is a party or of which any of their respective property is the subject. The Corporation and the Bank are not parties to any legal proceedings under federal and state environmental laws.

Item 4.    Submission of Matters to a Vote of Security Holders.

        None.

16

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

        The Corporation's Common Stock is publicly traded over the counter under the symbol "FCEC". As of February 28, 2009, there were 1,034 shareholders of record of the Corporation's Common Stock. The average bid/ask price as of February 28, 2009 was $6.70.

        The authorized capital stock of the Corporation consists of 25,000,000 shares of Common Stock, par value $1.00 per share, of which 6,239,044 and 5,160,750 shares were outstanding (net of shares held in Treasury) at the end of 2008 and 2007, respectively. Trading is sporadic. The following table, based upon prices reported by the Philadelphia brokerage firm of Janney Montgomery Scott, LLC, one of the Corporation' market makers shows the range of high and low bid prices for the Common Stock based upon transactions reported for each quarter for the last two fiscal years, respectively:

	Bid Prices
	2008				2007
Quarter Ended	High		Low		High		Low
First	$	18.00	$	16.91	$	21.35	$	20.01
Second	$	17.25	$	14.60	$	21.25	$	19.75
Third	$	15.75	$	13.50	$	20.25	$	17.35
Fourth	$	15.62	$	9.30	$	18.75	$	17.10

        The Corporation has prepared a graph comparing the cumulative shareholder return on the Corporation's Common Stock as compared to several market indices for the last five years. This graph is included in the Corporation's 2008 Annual Report to Shareholders and can be found immediately following the signature pages of the Form 10-K included in that Annual Report.

        The Corporation declared cash dividends per share on its Common Stock during each quarter of the fiscal years ended December 31, 2008 and 2007, as set forth in the following table:

		Dividends Amount Per Share
		2008		2007
First Quarter		$	0.140	$	0.135
Second Quarter			0.140		0.135
Third Quarter			0.140		0.135
Fourth Quarter			0.140		0.140
	Total	$	0.560	$	0.545

        The holders of the Corporation's Common Stock are entitled to receive such dividends as may be legally declared by the Corporation's Board of Directors. See Item 1 of this Report, "Supervision and Regulation" for further discussion of the applicable laws regarding the payment of dividends. The amount, time, and payment of future dividends, however, will depend on the earnings and financial condition of the Corporation, government policies and other factors.

17

        The following chart shows the purchases of the Corporation's Common Stock during the fourth quarter of 2008:

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
October 1 to October 31, 2008		—		—		—	$	10,000,000
November 1 to November 30, 2008		—		—		—	$	10,000,000
December 1 to December 31, 2008		—		—		—	$	10,000,000

        Note: The Corporation announced on November 16, 2007 a program to repurchase up to $10.0 million of the Corporation's Common Stock. This program replaced a previous program that expired in October 2007.

        The information required by Item 201(d) is included in this Report under Item 12.

18

Item 6.    Selected Financial Data

(Dollars in thousands, except per share data)

STATEMENTS OF CONDITION

	December 31
	2008		2007		2006		2005		2004
Assets	$	1,300,178	$	914,781	$	872,094	$	845,534	$	805,872
Gross loans and leases		940,083		742,775		694,343		664,276		618,005
Investment securities		114,584		97,977		88,714		97,088		140,029
Deposits		1,015,192		704,898		724,668		696,097		663,018
Borrowings		186,635		130,849		77,061		84,365		81,929
Stockholders' equity		83,832		67,979		63,262		58,677		55,402
Allowance for loan and lease losses		10,335		7,817		8,186		8,123		6,816
Wealth Management assets(1)		484,607		591,297		562,952		561,030		555,644

STATEMENTS OF INCOME

		Year Ended December 31
		2008			2007			2006			2005			2004
Interest income		$	55,308		$	56,436		$	52,202		$	44,604		$	37,518
Interest expense			22,426			24,973			20,037			13,579			7,863
Net interest income			32,882			31,463			32,165			31,025			29,655
Provision for loan and lease losses			1,632			80			3			1,382			1,164
	Net interest income after provision for loan and lease losses		31,250			31,383			32,162			29,643			28,491
	Non-interest income		9,530			11,787			9,212			9,325			9,313
Non-interest expense			33,576			32,570			31,153			30,557			29,213
	Income before income taxes		7,204			10,600			10,221			8,411			8,591
Income taxes			1,747			2,931			2,886			1,900			2,430
Net income		$	5,457		$	7,669		$	7,335		$	6,511		$	6,161
PER SHARE DATA(2)
Net income per share (Basic)		$	1.05		$	1.49		$	1.42		$	1.28		$	1.24
Net income per share (Diluted)		$	1.05		$	1.47		$	1.40		$	1.24		$	1.19
Cash dividends declared		$	0.560		$	0.545		$	0.540		$	0.525		$	0.505
Book value		$	13.44		$	13.17		$	12.28		$	11.45		$	11.04
Weighted average shares Outstanding (basic)			5,188,171			5,160,607			5,160,340			5,104,745			4,980,584
Weighted average shares Outstanding (diluted)			5,200,323			5,219,940			5,249,200			5,240,497			5,174,926
PERFORMANCE RATIOS
Return on Average Assets			0.55	%		0.86	%		0.86	%		0.79	%		0.81	%
Return on Average Equity			7.92	%		11.84	%		11.85	%		11.48	%		11.59	%
Average Equity to Average Assets			6.97	%		7.22	%		7.22	%		6.86	%		7.00	%
Dividend Payout Ratio			53.23	%		36.62	%		37.98	%		40.93	%		41.05	%

Notes:

(1)

These assets are managed by the Wealth Management Division of the Bank and are not assets of the Bank or the Corporation.

(2)

All per share data has been retroactively adjusted for stock dividends.

19

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

DISCLOSURE ABOUT FORWARD LOOKING STATEMENTS

        The Corporation may, from time to time, make written or oral "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements contained in the Corporation's filings with the Securities and Exchange Commission (including this Report on Form 10-K), its reports to shareholders and in other communications by the Corporation. These statements can often be identified by the use of forward-looking terminology such as "believes", "expects", "intends", "may", "will", "should" or "anticipates" or similar terminology. These statements involve risks and uncertainties and are based on various assumptions. Although the Corporation believes that its expectations are based on reasonable assumptions, investors and prospective investors are cautioned that such statements are only projections. Also, future results may differ materially from the Corporation's historic results.

        These risks and uncertainties are discussed in Item 1A, "Risk Factors", in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Report. These risks, among others, could cause our actual future results to differ materially from those described in our forward-looking statements or from our prior results. We are not obligated to update our forward-looking statements, even though our situation may change in the future.

OVERVIEW

        Effective December 31, 2008, the Corporation completed its acquisition of American Home Bank, National Association ("AHB"). The primary focus of AHB from its inception in 2001 has been mortgage-banking activities. The mortgage banking business of AHB is now operating as a division of the Bank under the trade name, "American Home Bank, a Division of First National Bank of Chester County." AHB's mortgage-banking activities include providing mortgages and associated products to customers and selling most of those mortgages into the secondary market on a servicing released basis. AHB retains the servicing on a portion of the loans that it sells. The sourcing of mortgage loans is conducted through a direct, retail delivery channel comprised of retail loan offices, affiliated business arrangements with builders and realtors, and a wholesale lending operation. The wholesale operation sources loans through relationships with unrelated mortgage brokers. The acquisition of AHB was intended to help the Bank to further diversify the Bank's products, services, and sources of income as well as expand the Bank's geographic footprint.

        The results of operations presented in the consolidated income statement do not include the results of operations from AHB. The Corporation completed its acquisition of American Home Bank on December 31, 2008, and, accordingly, the consolidated balance sheet reflects the addition of assets acquired in this acquisition. The results of operations of the Corporation going forward may be materially different based upon a number of factors including the addition of AHB's operations.

        Net income for the year ended December 31, 2008 was $5.5 million, a decrease of $2.2 million or 28.8% from $7.7 million in 2007. Basic and diluted net income per share in 2008 were each $1.05, as compared to $1.49 and $1.47, respectively in 2007. Return on average equity in 2008 was 7.92%, as compared to 11.84% in 2007. Return on average assets in 2008 was 0.55%, as compared to 0.86% in 2007.

        The decrease in net income for the year ended December 31, 2008 when compared to 2007 was primarily the result of a decrease in non-interest income, an increase in the provision for loan and lease losses and an increase in non-interest expense, partially offset by an increase in net interest income.

        Included in these results for the year ended December 31, 2008 was a $1.4 million pretax loss from the write-down of assets, including an $850 thousand non-cash, pretax other than temporary impairment loss on a $1.0 million Lehman Brothers Note held in the Bank's investment portfolio, a $417 thousand pretax loss on a $13.8 million investment in the Reserve Primary Fund, a short term overnight money market

20

fund, and a $169 thousand non-cash, pretax write-down of property held as OREO. The aggregate after tax impact of these losses is $948 thousand.

        When comparing results of 2008 to 2007 it is important to note certain events that impacted 2007 net income. The results for the year ended December 31, 2007 included a $1.4 million pretax gain on the sale of facilities in the third quarter of 2007 and $507 thousand of pretax gains and interest income recorded in the second quarter of 2007 from the sale of a $5.9 million loan that had been on non-accrual status. The after tax impact of these 2007 events was a $1.2 million gain.

        The decrease in net interest income was primarily driven by a decrease in interest expense, partially offset by a decrease in interest income. Although interest income benefited from growth in interest-earning asset balances, the rate earned on these balances decreased, primarily from decreases in market interest rates. Interest expense decreased mainly due to decreases in the rates paid on interest-bearing liabilities. These decreases were driven mainly by decisions to decrease rates paid on deposits. These decisions reflected Federal Reserve rate reductions and market interest rate decreases. These decreases were partially offset by increases in deposit balances and Federal Home Loan Bank ("FHLB") borrowings.

        The decrease in non-interest income was primarily due to the $1.4 million write-down of assets recorded in 2008 and the $1.4 million gain on the sale of facilities recorded in 2007 that are discussed above. Excluding the 2008 asset write-downs and the 2007 gain on the sale of facilities, non-interest income increased $574 thousand. This increase was primarily due to the net gains recorded on the sales of investment securities during 2008 and income from the Bank's Bank-Owned Life Insurance Policies, partially offset by decreases in net gains on the sales of loans during 2008 as compared to 2007.

        The increase in non-interest expense was primarily due to higher occupancy expense and an increase in FDIC insurance premiums in 2008 as compared to 2007. The higher occupancy expense was mainly due to the addition of the Longwood and Downingtown branches while the increase in the FDIC expense reflects the impact of 2006 legislation that increased FDIC premiums for all commercial banks. The increased premium does not indicate any change in the FDIC risk assessment for the Bank. Non-interest expense for the year ended December 31, 2008 includes a $417 thousand non-cash reduction of salary and benefits expense associated with loan origination costs not previously deferred in prior periods.

        During 2008, total assets increased $385.4 million or 42.1% to $1.30 billion at December 31, 2008. Loans and leases grew $197.3 million or 26.5% to $940.1 million and deposits increased $310.3 million or 44.0% to $1.02 billion. FHLB advances and other borrowings increased $55.8 million or 48.3% to $171.2 million at December 31, 2008.

        Total assets acquired at December 31, 2008 through the AHB acquisition were $247.8 million. This included $17.4 million of investments, $89.5 million of loans held for sale, and $110.9 million of gross loans and leases. Total liabilities acquired through the AHB acquisition were $233.8 million. This included $194.2 million of deposits and $36.6 million of FHLB advances and other borrowings.

21

CONSOLIDATED AVERAGE BALANCE SHEET AND TAXABLE EQUIVALENT
INCOME/EXPENSES AND RATES FOR THE YEAR ENDED DECEMBER 31,

				2008								2007								2006
(Dollars in thousands)				Daily Average Balance			Interest		Rate %			Daily Average Balance			Interest		Rate %			Daily Average Balance			Interest		Rate %
ASSETS
Federal funds sold and interest bearing deposits in banks				$	38,988		$	1,117		2.86	%	$	46,098		$	2,413		5.23	%	$	40,535		$	2,061		5.08	%
Investment securities:
			Taxable		94,845			4,615		4.87	%		80,129			3,852		4.81	%		81,608			3,955		4.85	%
			Tax-exempt(1)		12,472			586		4.70	%		12,004			542		4.51	%		14,256			576		4.04	%
	Total investment securities				107,317			5,201		4.85	%		92,133			4,394		4.77	%		95,864			4,531		4.73	%
	Loans and leases:(2)
			Taxable		766,427			48,206		6.29	%		698,676			49,063		7.02	%		666,239			45,169		6.78	%
			Tax-exempt(1)		19,434			1,415		7.28	%		15,413			1,058		6.87	%		14,235			895		6.29	%
			Total loans and leases		785,861			49,621		6.31	%		714,089			50,121		7.02	%		680,474			46,064		6.77	%
	Total interest-earning assets				932,166			55,939		6.00	%		852,320			56,928		6.68	%		816,873			52,656		6.45	%
Non-interest-earning assets Allowance for possible loan and lease losses					(8,267	)							(8,058	)							(8,388	)
	Cash and due from banks				23,304								24,381								24,791
	Other assets				40,060								27,979								23,937
			Total assets	$	987,263							$	896,622							$	857,213
LIABILITIES AND STOCKHOLDERS' EQUITY
Savings, NOW, and money market deposits				$	388,922		$	6,795		1.75	%	$	366,567		$	9,061		2.47	%	$	368,754		$	7,389		2.00	%
Certificates of deposit and other time					237,472			8,975		3.78	%		244,578			11,468		4.69	%		214,425			8,848		4.13	%
		Total interest-bearing deposits			626,394			15,770		2.52	%		611,145			20,529		3.36	%		583,179			16,237		2.78	%
Subordinated debt					15,465			896		5.79	%		15,606			1,460		9.35	%		15,465			1,304		8.43	%
Federal Home Loan Bank and other borrowings					146,131			5,760		3.94	%		75,701			2,984		3.94	%		64,347			2,496		3.88	%
		Total interest-bearing liabilities			787,990			22,426		2.85	%		702,452			24,973		3.56	%		662,991			20,037		3.02	%
	Non-interest-bearing liabilities:
Non-interest-bearing demand deposits					120,941								121,000								126,461
	Other liabilities				9,467								8,398								5,857
		Total liabilities			918,398								831,850								795,309
	Minority interest				4								—								—
	Stockholders' equity				68,861								64,772								61,904
		Total liabilities and stockholders' Equity		$	987,263							$	896,622							$	857,213
		Net interest income					$	33,513							$	31,955							$	32,619
		Net yield on interest-earning assets								3.60	%							3.75	%							3.99	%

(1)

The indicated income and annual rate are presented on a tax equivalent basis using the federal marginal rate of 34%, adjusted for the TEFRA 20% penalty for 2008, 2007, and 2006.

(2)

Non-accruing loans are included in the average balance.

22

RATE VOLUME ANALYSIS

				Increase (decrease) in net interest income due to:
				Volume(1)			Rate(1)			Total			Volume(1)			Rate(1)			Total
(Dollars in thousands)				2008 Compared to 2007									2007 Compared to 2006
INTEREST INCOME
	Federal funds sold and interest bearing deposits in banks			$	(373	)	$	(923	)	$	(1,296	)	$	283		$	69		$	352
Investment securities
		Taxable			706			57			763			(72	)		(31	)		(103	)
		Tax-exempt(2)			21			23			44			(91	)		57			(34	)
			Total investment securities		727			80			807			(163	)		26			(137	)
Loans and leases(3)
		Taxable			4,739			(5,596	)		(857	)		2,199			1,694			3,893
		Tax-exempt(2)			276			81			357			74			90			164
			Total loans and leases		5,015			(5,515	)		(500	)		2,273			1,784			4,057
Total interest income					5,369			(6,358	)		(989	)		2,393			1,879			4,272
INTEREST EXPENSE
Savings, NOW and money market deposits					534			(2,800	)		(2,266	)		(44	)		1,716			1,672
Certificates of deposits and other time					(332	)		(2,161	)		(2,493	)		1,245			1,375			2,620
		Total interest bearing deposits			202			(4,961	)		(4,759	)		1,201			3,091			4,292
Subordinated debt					(13	)		(551	)		(564	)		12			145			157
Federal Home Loan Bank and other borrowings					2,776			—			2,776			441			46			487
Total Interest expense					2,965			(5,512	)		(2,547	)		1,654			3,282			4,936
Net Interest income				$	2,404		$	(846	)	$	1,558		$	739		$	(1,403	)	$	(664	)

NOTES:

(1)

The changes in interest due to both rate and volume have been allocated to both rate and volume, respectively, in proportion to the relationship of the absolute dollar amounts of the change in each.

(2)

The indicated changes are presented on a tax equivalent basis.

(3)

Non-accruing loans have been used in the daily average balances to determine changes in interest due to volume. Loan fees included in the interest income computation are not material.

NET INTEREST INCOME

        Net interest income is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Net interest income, on a tax equivalent basis, increased 4.9% or $1.6 million from $32.0 million in 2007 to $33.5 million in 2008, compared to a 2.0% decrease or $664 thousand from 2006 to 2007.

        The increase in tax equivalent net interest income for 2008 was primarily due to a larger decrease in the average rate paid on interest-bearing liabilities, which decreased 71 basis points, compared to the average yield earned on interest-earning assets, which decreased by 68 basis points. The tax equivalent net interest income for 2008 was also impacted by an increase in interest-bearing liabilities that was higher than the increase in interest-earning assets. Average interest-bearing liabilities grew $85.5 million while

23

average interest-earning assets increased by $79.8 million. Accordingly, net yields on interest-earning assets, on a tax equivalent basis, were 3.60% and 3.75% for 2008 and 2007, respectively.

        The decrease in tax equivalent net interest income for 2007 was primarily due to a larger increase in the average rate paid on interest-bearing liabilities, which increased 54 basis points, compared to the average yield earned on interest-earning assets, which increased by 23 basis points. The decrease in tax equivalent net interest income for 2007 was also due to an increase in interest-bearing liabilities that was higher than the increase in interest-earning assets. Average interest-bearing liabilities grew $39.5 million while average interest-earning assets increased by $35.4 million. Accordingly, net yields on interest-earning assets, on a tax equivalent basis, were 3.75% and 3.99% for 2007 and 2006, respectively.

        Average interest-earning assets in 2008 was $932.2 million, an increase of $79.8 million or 9.4% from $852.3 million in 2007. The increase in average interest-earning assets for 2008 was primarily due to a $71.8 million or 10.1% increase in average loans and leases combined with a $15.2 million or 16.5% increase in investment securities. These increases were partially offset by a $7.1 million or 15.4% decrease in federal funds sold and deposits in banks. In 2007, average interest-earning assets was $852.3 million, an increase of $35.4 million or 4.3% from $816.9 million in 2006. The increase in average interest-earning assets for 2007 was primarily due to a $33.6 million or 4.9% increase in average loans and leases combined with a $5.6 million or 13.7% increase in federal funds sold and deposits in banks. These increases were partially offset by a $3.7 million or 3.9% decrease in investment securities.

        Average interest-bearing liabilities in 2008 was $788.0 million, an increase of $85.5 million or 12.2% from $702.5 million in 2007. The increase in 2008 was primarily due to a $70.4 million or 93% increase in FHLB and other borrowings combined with a $15.2 million or 2.5% increase in average interest-bearing deposits. In 2007, average interest-bearing liabilities was $702.5 million, an increase of $39.5 million or 6.0% from $663.0 million in 2006. The increase in 2007 was primarily due to a $28.0 million or 4.8% increase in average interest-bearing deposits combined with an $11.4 million or 17.6% increase in FHLB and other borrowings.

INTEREST INCOME ON FEDERAL FUNDS SOLD AND DEPOSITS IN BANKS

        Interest income on federal funds sold and interest bearing deposits in banks decreased $1.3 million or 53.7% in 2008 to $1.1 million from $2.4 million in 2007. This follows an increase of $352 thousand or 17.1% from 2006 to 2007. The decrease in interest income on these balances in 2008 was mainly due to market rate decreases in the rates earned on these funds. The yield earned on federal funds sold and interest bearing deposits in banks in 2008 was 2.86%, compared to 5.23% in 2007. The decrease in interest income on these balances in 2008 was also due to a decrease in the average balance of federal funds sold and interest bearing deposits in banks. In 2008, these balances decreased $7.1 million or 15.4% from $46.1 million to $39.0 million. The increase in interest income on these balances in 2007 from 2006 was partially due to increases in the average federal funds sold and interest bearing deposits in banks balances. In 2007, these balances increased $5.6 million or 13.7% from $40.5 million to $46.1 million. The increases in interest on federal funds sold and interest bearing deposits in banks for 2007 was also the result of market increases in the rates earned on these funds. The yield earned on federal funds sold and interest bearing deposits in banks in 2007 was 5.23%, compared to 5.08% in 2006.

INTEREST INCOME ON INVESTMENT SECURITIES

        On a tax equivalent basis, interest income on investment securities increased $807 thousand or 18.4% from $4.4 million in 2007 to $5.2 million in 2008, compared to a $137 thousand or 3.0% decrease from 2006 to 2007. The increase in interest income in 2008 was primarily due to a $15.2 million increase in the average balance of investment securities from 2008 to 2007. The increase in interest income in 2008 was also due to an 8 basis point increase in the rate earned on these assets. The decrease in investment interest

24

income in 2007 was primarily due to a $3.7 million or 3.9% decrease in average investment securities, partially offset by a 4 basis point increase in the yield on these assets from 4.73% in 2006 to 4.77% in 2007.

INVESTMENT SECURITIES AT DECEMBER 31,

		2008				2007				2006
(Dollars in thousands)		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Held-to-Maturity
	State and municipal	$	—	$	—	$	—	$	—	$	5	$	5
Available-for-Sale
	U.S. Treasury		—		—		—		—		1,000		998
	U.S. Government agency		12,182		12,319		3,082		3,100		3,371		3,354
	Mortgage-backed securities		52,151		53,030		56,925		56,654		56,439		55,052
	State and municipal		10,327		10,401		13,686		13,650		9,906		9,602
	Corporate securities		31,089		26,017		15,121		14,486		11,461		10,874
	Other equity securities		13,659		12,817		10,993		10,087		8,764		8,829
Total Investment securities		$	119,408	$	114,584	$	99,807	$	97,977	$	90,946	$	88,714

INVESTMENT SECURITIES YIELD BY MATURITY AT DECEMBER 31, 2008

(Dollars in thousands)		Due within 1 year			Due year 2 through year 5			Due year 6 through year 10			Due Over 10 years			Total
Available-for-Sale
	U.S. Government agency	$	—		$	—		$	2,000		$	10,182		$	12,182
	Mortgage-backed securities(1)		—			1,843			15,964			34,344			52,151
	State and municipal		1,732			8,095			500			—			10,327
	Corporate securities		1,166			23,320			3,779			2,824			31,089
	Other equity securities(2)		—			—			—			13,659			13,659
Total Investment securities		$	2,898		$	33,258		$	22,243		$	61,009		$	119,408
Weighted average yield			3.76	%		4.52	%		4.53	%		4.52	%		4.50	%

NOTES:

(1)

Mortgage-backed and Other asset-backed securities are included in the above table based on their contractual maturity.

(2)

Other equity securities having no stated maturity have been included in "Due over 10 years".

25

INTEREST INCOME ON LOANS AND LEASES

        During 2008, interest income on loans and leases, on a tax equivalent basis, decreased by $500 thousand or 1.0% from 2007. This decrease was primarily due to a 71 basis point decrease in the tax adjusted yield earned on loans and leases during 2008, from 7.02% in 2007 to 6.31% in 2008. The decrease in interest income on loans and leases was partially offset by a $71.8 million or 10.1% increase in average loan and lease balances from $714.1 million in 2007 to $785.9 million in 2008. The yield decrease in 2008 was a direct result of market rate decreases caused by decreases in the Federal Funds target rates over the course of 2007 and 2008. There were seven Federal Reserve actions to lower interest rates throughout 2008 and three in the latter part of 2007.

        During 2007, interest income on loans and leases, on a tax equivalent basis, increased by $4.1 million or 8.8% from 2006. This increase was partially due to a $33.6 million or 4.9% increase in average loan and lease balances from $680.5 million in 2006 to $714.1 million in 2007. The increase in interest income on loans and leases was also due to a 25 basis point increase in the tax adjusted yield earned on loans and leases during 2007, from 6.77% in 2006 to 7.02% in 2007.

LOAN PORTFOLIO BY TYPE AT DECEMBER 31,

(Dollars in thousands)		2008			2007			2006			2005			2004
Commercial loans		$	327,472		$	277,715		$	243,651		$	218,365		$	187,903
Real estate—commercial			280,549			235,880			222,300			199,191			186,949
Real estate—commercial construction			69,057			55,414			41,287			49,095			59,093
Real Estate—residential			87,413			59,508			65,698			66,647			56,541
Real Estate—residential construction			45,466			—			—			229			—
Consumer loans(3)			125,318			106,574			108,700			112,993			101,157
Lease financing receivables(2)			4,808			8,349			12,707			17,756			26,362
	Total gross loans and leases		940,083			743,440			694,343			664,276			618,005
Allowance for loans and lease losses			(10,335	)		(7,817	)		(8,186	)		(8,123	)		(6,816	)
Total net loans and leases(1)		$	929,748		$	735,623		$	686,157		$	656,153		$	611,189

NOTES:

(1)

There were no concentrations of loans exceeding 10% of total gross loans and leases which is not otherwise disclosed as a category of loans in the above table.

(2)

As of December 31, 2008, we are no longer funding leases. Instead, we are acting as an agent for a third party that funds the lease, and we collect an upfront fee.

(3)

Consumer loans consist of consumer installment loans, home equity loans, lines of credit, and loans to small businesses.

26

MATURITIES AND RATE SENSITIVITY OF LOANS DUE TO CHANGES IN
INTEREST RATES AT DECEMBER 31, 2008(1)

(Dollars in thousands)			Maturing Within 1 Year(2)		Maturing After 1 Year And Within 5 Years		Maturing After 5 Years		Total
Commercial loans			$	40,445	$	78,727	$	208,300	$	327,472
Real Estate—commercial construction				26,872		13,493		28,692		69,057
		Total	$	67,317	$	92,220	$	236,992	$	396,529
Loans maturing after 1 year with:
Fixed interest rates
	Commercial Loans				$	40,197	$	34,762
	Real Estate—commercial construction					—		—
Variable interest rates
	Commercial Loans					38,530		173,538
	Real Estate—commercial construction					13,493		28,692
		Total			$	92,220	$	236,992

NOTES:

(1)

Determination of maturities included in the loan maturity table are based upon contract terms. This policy is used primarily in evaluating ongoing customer's use of their lines of credit with the Bank that are at floating interest rates.

(2)

Demand loans and overdrafts are reported maturing "Within 1 Year". Most construction real estate loans are reported maturing "Within 1 Year" because of their short term maturity or because they are indexed to the Bank's prime rate. An immaterial amount of loans has no stated schedule of repayments.

INTEREST EXPENSE

        Interest expense on deposit accounts decreased $4.8 million or 23.2% from $20.5 million in 2007 to $15.8 million in 2008. Decreases in the average interest rate paid on deposits was the primary driver of the lower interest expense on deposit accounts. The average rate paid on interest-bearing deposits decreased 84 basis points from 3.36% in 2007 to 2.52% in 2008. Partially offsetting the impact from the lower rate paid on these deposit balances was an increase in the average interest-bearing deposit balances. Average interest-bearing deposit balances increased $15.2 million or 2.5% from $611.1 million in 2007 to $626.4 million in 2008. The decrease in the average rate paid on deposit balances in 2008 was primarily driven by market interest rate movements. Throughout 2008, the Bank decreased rates paid on most deposit products in response to decreases in Federal Reserve rates. The Bank may continue to respond with necessary deposit product rate changes in 2009 as Federal Reserve actions, market competition and consumer demand warrant. The decrease in the average rate paid on deposit balances was also due to a significant reduction in higher cost brokered CDs. The brokered CDs were generally replaced with lower cost FHLB borrowings. The average brokered CD balance was $14.4 million in 2008 as compared to $57.7 million in 2007.

        Interest expense on deposit accounts increased $4.3 million or 26.4% in 2007 from $16.2 million in 2006 to $20.5 million in 2007. Increases in both the interest-bearing balances and the average rate paid on these balances contributed to the increase in interest expense. Average interest-bearing balances increased $28.0 million or 4.8% from $583.2 million in 2006 to $611.1 million in 2007. The average rate paid on these deposits increased 58 basis points from 2.78% in 2006 to 3.36% in 2007.

27

        Interest expense on subordinated debt decreased $564 thousand or 38.6% in 2008 as compared to the same period in 2007. This decrease is primarily due to a reduction in market LIBOR rates through 2007 and 2008. The decrease was also due to the lower contractual average spread over LIBOR paid in 2008 as compared to 2007. This was due to the redemption of the higher cost $5.2 million Trust I issuance in July 2007 and the replacement with the lower cost $5.2 million Trust III issuance in June 2007. The new issuance bears an interest rate of 3 month LIBOR plus 140 basis points while the redeemed issuance had an interest rate of 3 month LIBOR plus 365 basis points. The decrease was also due to a $161 thousand charge recorded in 2007 for accelerated amortization of issuance costs related to the early redemption of Trust I in 2007.

        Interest expense on FHLB and other borrowings increased $2.8 million or 93.0% from $3.0 million in 2007 to $5.8 million in 2008. This increase was due to a $70.4 million or 93.0% increase in the average FHLB and other borrowings from $75.7 million in 2007 to $146.1 million in 2008. During 2008 the company replaced many higher cost brokered CDs with lower cost FHLB borrowings. The Company uses FHLB advances and other borrowings as a major source of funding.

DEPOSIT ANALYSIS

	2008					2007					2006
(Dollars in thousands)	Average Balance		Average Rate			Average Balance		Average Rate			Average Balance		Average Rate
NOW	$	179,512		1.64	%	$	159,572		2.30	%	$	134,076		1.76	%
Money Market		117,393		2.46	%		97,726		4.19	%		80,009		3.84	%
Statement Savings		40,300		0.70	%		43,270		0.79	%		49,699		0.80	%
Other Savings		2,802		1.50	%		1,514		1.52	%		636		0.56	%
Tiered Savings		48,915		1.30	%		64,485		1.45	%		104,334		1.49	%
Total NOW, Savings, and money market		388,922		1.75	%		366,567		2.47	%		368,754		2.00	%
CD's Less than $100,000(1)		162,650		3.73	%		192,236		4.72	%		169,630		4.16	%
CD's Greater than $100,000		74,822		3.90	%		52,342		4.58	%		44,795		3.99	%
Total CDs		237,472		3.78	%		244,578		4.69	%		214,425		4.13	%
Total interest-bearing deposits		626,394					611,145					583,179
Non-Interest-Bearing Demand Deposits		120,941		—			121,000		—			126,461		—
Total Deposits	$	747,335				$	732,145				$	709,640

(1)

Includes average brokered CDs of $14,434, $57,710 and $51,892 for 2008, 2007 and 2006, respectively

MATURITIES OF CERTIFICATES OF DEPOSIT, $100,000 OR MORE
AT DECEMBER 31, 2008

(Dollars in thousands)	Due Within 3 Months		Over 3 Months Through 6 Months		Over 6 Months Through 12 Months		Due Over 12 Months		Total
Certificates of Deposit $100,000 or more	$	35,676	$	16,046	$	41,653	$	6,643	$	100,018

ASSET QUALITY AND ALLOWANCE FOR LOAN AND LEASE LOSSES

        During 2008, the Corporation recorded a $1.6 million provision for loan and lease losses, compared to $80 thousand in 2007 and $3 thousand in 2006. Net charge-offs in 2008 were $464 thousand, compared to $442 thousand of net charge-offs in 2007 and $186 thousand of net recoveries in 2006. The increase in the provision for the year ended December 31, 2008 over the same period in 2007 was determined in accordance with the Bank's allowance for loan and lease loss policy and was driven mainly by increased

28

non-accrual loan and lease balances combined with loan growth and the effects of a recessionary economy. Non-accrual loans as a percentage of gross loans and leases was 1.12% at December 31, 2008, compared to .16% and 1.05% at December 31, 2007 and 2006, respectively. The allowance for loan and lease losses as a percentage of loans and leases at December 31, 2008 was 1.10% compared to 1.05% and 1.18% at December 31, 2007 and 2006, respectively.

        The allowance for loan and lease losses is an amount that Management believes will be adequate to absorb loan and lease losses on existing loans and leases that may become uncollectible based on Management's evaluations of the collectability of loans and leases. These evaluations take into consideration such factors as changes in the nature and volume of the loan and lease portfolio, overall portfolio quality, adequacy of collateral, review of specific problem loans and leases, and current economic conditions that may affect the borrower's ability to pay.

        Management evaluates the adequacy of the allowance on a quarterly basis to ensure the provision for loan and lease losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is appropriate based on Management's assessment of probable estimated losses. The Bank's methodology for assessing the appropriateness of the allowance for loan and lease losses consists of several key elements. These elements include a specific allowance for loan and lease classified list loans and an allowance based on historical trends. The Corporation consistently applies the following comprehensive methodology.

        The allowance for loan and lease losses addresses those loans and leases maintained on the Bank's loan and lease classified list, which are assigned a rating of substandard, doubtful, or loss. Substandard loans and leases are those with a well-defined weakness, which jeopardizes the repayment of the debt. A loan or lease may be classified as substandard as a result of impairment of the borrower's financial condition and repayment capacity. Loans and leases for which repayment plans have not been met or collateral equity margins do not protect the Bank may also be classified as substandard. Doubtful loans and leases have the characteristics of substandard loans and leases with the added characteristic that collection or liquidation in full, on the basis of presently existing facts and conditions, is highly improbable. Although the possibility of loss is extremely high for doubtful loans and leases, the classification of loss is deferred until pending factors, which might improve the loan or lease, have been determined. Loans and leases rated as doubtful in whole or in part are placed on non-accrual status. Loans and leases, which are classified as loss, are considered uncollectible and are charged to the allowance for loan and lease losses.

        Loans and leases on the loan and lease classified list may also be impaired loans, which are defined as non-accrual loans and leases or troubled debt restructurings, which are not in compliance with the restructured terms. Each of the classified loans and leases on the watch list is individually analyzed to determine the level of the potential loss under the current circumstances. The specific reserve established for these criticized by management and impaired loans and leases is based on careful analysis of the loan's and lease's performance, the related collateral value, cash flow considerations and the financial capability of any guarantor. The allowance for classified list loans and leases is equal to the total amount of potential unconfirmed losses for the individual classified loans and leases on the classified list. Classified loans and leases are managed and monitored by management.

        The allowance is based on historical trends and uses charge-off experience of the Bank to estimate potential unconfirmed losses in the balances of the loan and lease portfolios. The historical loss experience percentage is based on the charge-off history. Historical loss experience percentages are applied to all non-impaired loans and leases to obtain the portion of the allowance for loan and lease losses, which is based on historical trends. Before applying the historical loss experience percentages, loan and lease balances are reduced by amounts of government agency guarantees. Installment loan balances are also adjusted for unearned discounts. Management believes that the allowance for loan and lease losses is adequate based on its current assessment of probable estimated losses, however, it is not possible to

29

predict the effect that future economic trends may have on the level of the provisions for possible loan losses in future periods.

        Since all identified losses are immediately charged off, no portion of the allowance for loan and lease losses is restricted to any individual loan or groups of loans, or lease or groups of leases, and the entire allowance is available to absorb any and all loan and lease losses.

        The following tables present information regarding the Bank's total allowance for loan and lease losses as well as the allocation of such amounts to the various categories of loans at the dates indicated:

ALLOWANCE FOR LOAN AND LEASE LOSSES

	December 31,
(Dollars in thousands)	2008		2007		2006		2005		2004
Commercial loans and leases	$	7,718	$	6,197	$	6,505	$	5,992	$	4,320
Residential real estate		1,027		294		355		361		276
Consumer loans		1,491		1,326		1,148		1,758		1,502
Unallocated		99		—		178		12		718
Total allowance for loan and lease losses	$	10,335	$	7,817	$	8,186	$	8,123	$	6,816

PERCENTAGE OF ALLOWANCE IN EACH CATEGORY TO TOTAL ALLOWANCE

	December 31,
	2008			2007			2006			2005			2004
Commercial loans and leases		75	%		79	%		80	%		74	%		63	%
Residential real estate		10	%		4	%		4	%		4	%		4	%
Consumer loans		14	%		17	%		14	%		22	%		22	%
Unallocated		1	%		—			2	%		—			11	%
Total allowance for loan and lease losses		100	%		100	%		100	%		100	%		100	%

30

ANALYSIS OF CHANGES IN THE ALLOWANCE FOR LOAN AND LEASE LOSSES

		December 31,
(Dollars in thousands)		2008			2007			2006			2005			2004
Balance at beginning of year		$	7,817		$	8,186		$	8,123		$	6,816		$	5,541
Provision charged to operating expense			1,632			80			3			1,382			1,164
Recoveries of loans and leases previously charged off
	Commercial loans		87			94			291			178			955
	Real estate—mortgages		50			—			6			196			31
	Consumer loans		88			32			13			12			28
	Lease financing receivables		57			14			49			51			81
	Total recoveries		282			140			359			437			1,095
Loan charge-offs
	Commercial loans		(156	)		(173	)		(32	)		(59	)		(261	)
	Real estate—mortgages		(173	)		(48	)		(51	)		(245	)		(294	)
	Consumer loans		(417	)		(278	)		(72	)		(82	)		(121	)
	Lease financing receivables		—			(83	)		(18	)		(97	)		(234	)
	Total charge-offs		(746	)		(582	)		(173	)		(483	)		(910	)
Net loan (charge-offs) recoveries			(464	)		(442	)		186			(46	)		185
Allowance other adjustment(1)			114			(7	)		(126	)		(29	)		(74	)
Addition of American Home Bank Allowance			1,236			—			—			—			—
Balance at end of year		$	10,335		$	7,817		$	8,186		$	8,123		$	6,816
Year-end loans and leases outstanding		$	940,083		$	743,440		$	694,343		$	664,276		$	618,005
Average loans and leases outstanding		$	785,861		$	714,089		$	680,474		$	650,938		$	567,755
Allowance for loan and lease losses as a percentage of year-end loans and leases Outstanding			1.10	%		1.05	%		1.18	%		1.22	%		1.10	%
Ratio of net (charge-offs) recoveries to average Loans and leases outstanding			(0.06	)%		(0.06	)%		0.03	%		(0.01	)%		0.03	%

(1)

"Allowance other adjustment" represents the reclassification of an allowance for possible losses on unfunded loans and unused lines of credit and is recorded in the other liabilities section of the balance sheet. These loans and lines of credit, although unfunded, have been committed to by the Bank.

        Non-performing loans and leases include those on non-accrual status and loans past due 90 days or more and still accruing. The Corporation's policy is to write down all non-performing loans to net realizable value based on updated appraisals. Non-performing loans are generally collateralized and are in the process of collection. Non-accrual loans reduce the Corporation's earnings because interest income is not earned on such assets. The non-accrual loan and lease balances at December 31, 2008 was $10.5 million as compared to $1.2 million at December 31, 2007. The non-accrual loan and lease balances at December 31, 2008 include $4.0 million of non-accrual loan and lease balances associated with the AHB acquisition. The increase in the non-accrual loan and lease balances from December 31, 2007 is also due to

31

the effects of a recessionary economy. The following chart represents detailed information regarding non-performing loans:

NON-PERFORMING LOANS AND ASSETS

	December 31,
(Dollars in thousands)	2008			2007			2006			2005			2004
Past due over 90 days and still accruing	$	870		$	142		$	793		$	—		$	—
Non-accrual loans and leases(1)		10,515			1,194			7,289			8,358			7,877
Total non-performing loans and leases		11,385			1,336			8,082			8,358			7,877
Other real estate owned		1,872			—			—			—			757
Total non-performing assets	$	13,257		$	1,336		$	8,082		$	8,358		$	8,634
Interest income which would have been recorded	$	180		$	321		$	682		$	638		$	209
Interest income that was received from customer		—			—			—			—			(27	)
Total contractual interest for non-accruing loans and leases not collected	$	180		$	321		$	682		$	638		$	182
Non-performing loans as a percentage of total loans and leases		1.21	%		0.18	%		1.16	%		1.26	%		1.27	%
Allowance for loan and lease losses as a percentage of non-performing loans and leases		90.78	%		585.10	%		101.29	%		97.19	%		86.53	%
Non-performing assets as a percentage of total loans and leases and other real estate owned		1.41	%		0.18	%		1.16	%		1.26	%		1.40	%
Allowance for loan and lease losses as a percentage of non-performing assets		77.96	%		585.10	%		101.29	%		97.19	%		78.94	%

(1)

Generally the Bank places a loan in non-accrual status when principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection.

        OREO represents real estate owned by the Bank following default by the borrowers. OREO is recorded at the lower of the loan carrying value or fair market value. Fair market value is based primarily upon independent market prices or professional appraisals. In the third quarter of 2008, the Bank wrote the value of the property held in OREO to market value based upon such factors. This resulted in $169 thousand charge to the "Gains (losses) on fixed assets and OREO" line of the income statement. OREO reduces the Corporation's earnings because interest income is not earned on such assets. At December 31, 2008, there were nine properties held by the Corporation as OREO, compared to zero properties at December 31, 2007. The balance of OREO at December 31, 2008 includes eight properties or $1.5 million of OREO balances acquired through the AHB acquisition. The increase in the OREO balances from December 31, 2007 is also due to increased foreclosure activity due to the effects of a recessionary economy.

NON-INTEREST INCOME

        Total non-interest income decreased $2.3 million or 19.1%, to $9.5 million in 2008, compared to an increase of $2.6 million or 28.0% from 2006 to 2007. The various components of non-interest income are discussed below.

        The largest component of non-interest income is Wealth Management and Financial Advisory Services revenue which decreased $128 thousand or 3.1% to $4.0 million in 2008. This compares to an increase of $292 thousand or 7.7% to $4.1 million in 2007. The primary reason for the decreases in Wealth Management revenue for 2008 and 2007 is a decrease in the market value of Wealth Management assets

32

under management. These balances decreased 18.0% in 2008 from $591.3 million at December 31, 2007 to $484.6 million at December 31, 2008. These balances decreased primarily due to decreases in the market values of the underlying securities within the assets under management. Wealth Management assets under management grew 5.0% or $28.3 million in 2007 from $563.0 million at December 31, 2006.

        Service charges on deposit accounts increased $180 thousand or 7.6% to $2.5 million in 2008 compared to an increase of $355 thousand or 17.7% in 2007 from 2006. Service charges on deposit accounts consists mainly of overdraft and insufficient funds charges, combined with periodic and transaction-based service charges. The increases for 2008 and 2007 were primarily due to increases in charges for insufficient funds and overdraft charges.

        Gains on the sales of investment securities were $312 thousand in 2008 as compared to $2 thousand of gains in 2007 and $79 thousand of losses in 2006. The sales of investment securities throughout 2008, 2007 and 2006 were the results of normal portfolio management.

        During 2008, 2007 and 2006, the Corporation had operating lease agreements with several customers. The income on these agreements increased $12 thousand or .9% from $1.3 million in 2007 to $1.3 million in 2008 and increased $120 thousand or 10.4% in 2007 from 2006. The increases in 2008 and 2007 are due to an increased volume in operating leases with one customer. As of December 31, 2008, the Bank is no longer funding operating leases. Instead, the Bank acts as an agent for a third party that does fund the lease and we collect an upfront fee. See the discussion of related depreciation expense in the "Non-Interest Expense" section.

        Gains and losses on the sale of fixed assets and OREO in 2008 was a $13 thousand gain as compared to a $1.4 million gain in 2007 and a $19 thousand gain in 2006. The $13 thousand gain in 2008 includes a $169 thousand charge for the write-down of property held as OREO to fair market value. This 2008 charge was offset by $182 thousand of gains recorded in 2008 from the amortization of deferred gains attributable to the sale-leaseback of facilities in 2007 as discussed in the paragraph below. The $1.4 million gain recorded in 2007 was primarily related to the sales of facilities as discussed in the paragraph below.

        During 2007, the Bank entered into a sale-leaseback agreement on an administrative office facility known as the "Swope Building." The Bank leased back the Swope Building for a period of one year following the September sale date. The Bank recognized a $1.39 million pre-tax gain in connection with this transaction in 2007. The after-tax impact to net income from this gain was $915 thousand in 2007. Also in 2007, the Bank entered into a sale-leaseback agreement on an administrative office facility known as the "Operations Center." As disclosed in the Corporation's Form 8-K dated September 28, 2007, the lease agreement for the Operations Center was for fifteen years with two optional five year renewal periods. The resulting $2.7 million gain was deferred and is being amortized into non-interest income over the fifteen year lease term. Amortization of rent expense on the lease is being recorded in the non-interest expense section of the income statement.

        Gains and fee income generated from the sales of loans during 2008 decreased by $356 thousand or 56.7% from $628 thousand in 2007 to $272 thousand in 2008. This compares with an increase of $241 thousand or 62.3% from $387 thousand in 2006. Included in the $628 thousand gain in 2007 is a $225 thousand gain recorded related to the sale of a $5.9 million loan that had been on non-accrual status. Excluding this event, gains and fees on the sale of loans decreased $131 thousand or 32.5% from $403 thousand to $272 thousand for 2008 compared to the same period in 2007. This decrease from 2007 to 2008 was mainly driven by a decrease in volume. During 2008, the volume of refinancing and originations of saleable loans had substantially decreased from 2007, resulting in a lower amount of gains and fees being collected when compared to 2007. When a mortgage is sold, all unamortized fees collected are recognized as income for that period and any gain or loss based on the current market value is recorded at the time of the sale. The Corporation retains the servicing on a portion of the loans sold and earns a servicing fee.

33

        Bank-owned life insurance ("BOLI") income relates to a $10 million policy purchased in February 2008. BOLI involves the purchase of a life insurance policy on a group of employees. The Bank is the owner and beneficiary of the policy. The BOLI investment is carried on the balance sheet at the cash surrender value of the underlying policies. Income or loss resulting from increases or decreases in the cash surrender value of the properties is recorded on the income statement. BOLI gains for 2008 were $165 thousand, as compared to $0 in 2007. In December 2008, the Bank cancelled its BOLI policy due to unforeseen market conditions that significantly lowered the current and forecasted yield on the BOLI investment. This made alternative investments financially more attractive. Under the terms of the BOLI agreements, payment of the cash surrender value will be made within one year of the termination date. The Bank expects to receive the full surrender value of the policy in 2009. The Bank acquired $1.4 million of BOLI through the AHB acquisition. These policies continue to be outstanding.

        Asset impairment in 2008 was a $1.3 million loss compared to $0 in 2007 and 2006. In the third quarter of 2008, the Corporation recorded an $850 thousand non-cash pretax other than temporary impairment loss on a $1 million Lehman Brothers Note held in the Bank's investment portfolio combined with a $417 thousand pretax loss on a $13.9 million investment in the Reserve Primary Fund. The Reserve Primary Fund is a short term overnight money market fund designed to maintain a constant $1.00 per share value. The Bank typically uses this type of fund to invest excess overnight cash and categorize this on the balance sheet as Federal funds sold and other overnight investments. During the third quarter of 2008, the fund's value fell below $1.00 per share due to underlying Lehman Brothers commercial paper in the fund. Currently, the fund is in process of liquidation. The Bank wrote its $13.9 million investment down to $13.5 million in the third quarter of 2008. In the fourth quarter of 2008, the Bank collected all but $2.5 million of this investment. The Bank expects to fully recover the remaining $2.5 million.

        Other non-interest income increased $239 thousand or 11.9% from $2.0 million in 2007 to $2.2 million in 2008. This compares with an increase of $80 thousand or 4.1% from 2006. The primary components of other non-interest income over the past three years are as follows:

(Dollars in thousands)	2008		2007		2006
Electronic Banking	$	1,116	$	1,015	$	994
Loan Fee Income		403		323		276
Other(A)		729		671		659
	$	2,248	$	2,009	$	1,929

(A)

Other includes rental income, safe deposit box fees, merchant services income, and other commission and fee income.

NON-INTEREST EXPENSE

        Total non-interest expense increased $1.0 million or 3.1% from $32.6 million in 2007 to $33.6 million in 2008, compared to an increase of $1.4 million or 4.5% from 2006 to 2007. The various components of non-interest expense are discussed below.

        Salaries and employee benefits decreased $653 thousand or 3.4% from $19.0 million in 2007 to $18.4 million in 2008, compared to an increase of $1.6 million or 9.1% from $17.4 million in 2006. Salaries and employee benefits expense for 2008 includes a $417 thousand reduction of salary and benefits expense associated with loan origination costs not previously deferred in prior periods. Excluding this item, salaries and employee benefits decreased $236 thousand or 1.2% compared to the same period in 2007. This decrease during 2008 as compared to 2007 was primarily due to an $835 thousand decrease in bonus expense during 2008, partially offset by a general increase in base salaries and an increase in average employee headcount. The increase during 2007 as compared to 2006 was primarily due to a higher average employee headcount; specifically, staffing for new branches as well as new key employees in the Wealth

34

Management Division and the Commercial Lending and Leasing areas. The increase was also due to higher employee medical insurance expense premiums.

        Net occupancy, equipment and data processing expense increased $635 thousand or 12.3% from $5.2 million in 2007 to $5.8 million in 2008, compared to a decrease of $207 thousand or 3.9% from $5.4 million in 2006. The increase in 2008 as compared to 2007 was mainly due to the addition of the Longwood and Downingtown branches in the first quarter of 2008. The lower expense in 2007 as compared to 2006 is primarily due to core systems and equipment that became fully depreciated in 2006 as well as lower building depreciation expense from the sale of facilities during 2007.

        Depreciation on operating leases remained constant at $1.1 million in 2008 and 2007. This compares to an increase of $69 thousand or 6.9% from $987 thousand in 2006. This depreciation expense is associated with the operating lease agreements the Bank had with several customers. The income associated with these operating leases is classified as Operating Lease Rental Income.

        Bank Shares Tax was $785 thousand, $705 thousand, and $726 thousand for the years 2008, 2007, and 2006, respectively. Bank Shares Tax represented 1.14%, 1.08%, and 1.17% of average stockholders' equity for 2008, 2007, and 2006, respectively. The Pennsylvania Bank Shares Tax is based primarily on a six year average of the Bank's stockholders' equity, and is paid on an annual basis.

        Professional services expense decreased $67 thousand or 3.3% to $2.0 million in 2008 compared to an increase of $183 thousand or 9.9% to $2.0 million in 2007 from $1.8 million in 2006. The higher professional services expense in 2008 as compared with 2007 is primarily due to higher loan related legal fee expense combined with higher employee recruiting fees in 2008. The higher professional services expense in 2007 as compared to 2006 was primarily the result of higher legal and consulting fees in 2007.

        Total other non-interest expense increased $931 thousand or 25.2% from $3.7 million to $4.6 million in 2008 compared with a decrease of $173 thousand or 4.5% from $3.9 million in 2006. The primary components of other non-interest expense over the past three years are as follows:

(Dollars in thousands)	2008		2007		2006
Communication, Postage, and Supplies	$	1,223	$	1,125	$	1,190
Loan and Deposit Supplies		619		548		504
FDIC Premiums and Assessment		490		87		88
Other		2,298		1,939		2,090
	$	4,630	$	3,699	$	3,872

        Other includes director fees, travel and mileage, Wealth Management processing fees, dues and subscriptions, and other general expenses. The increase in 2008 as compared to 2007 is primarily due to an increase in correspondent bank charges combined with a reduction in Wealth Management processing expense from a $125 thousand reimbursement for prior period overbilling by our third party Wealth Management processor recorded in 2007. The increase in other is also due to a $109 thousand charge taken in the first quarter of 2008 from the write-off of miscellaneous other assets.

        The increased FDIC premiums and assessment expense in 2008 reflects the impact of 2006 legislation that increased FDIC premiums for all commercial banks. This legislation provided an assessment credit for each insured bank. The Bank's assessment credit offset $416 thousand of the insurance premium expense in 2007 and $66 thousand in 2008, and was fully utilized in the first quarter of 2008. The increased premium does not indicate any change in the FDIC risk assessment for the Bank. In 2008 and 2009, the FDIC adopted rules that will increase FDIC premiums significantly for assessment periods beginning in the first quarter of 2009. This will cause the Bank's 2009 FDIC premiums and assessment expense to increase significantly over 2008. Management currently estimates that this expense will increase by

35

approximately 240%. FDIC insurance expense was $490 thousand, $87 thousand and $88 thousand for the years 2008, 2007 and 2006.

        In February 2009, the Bank finished renovations on an administrative facility purchased in 2007. Accordingly, this facility was not in service during 2008 or 2007 and will be put into service in 2009. This will have a direct impact on many of the components of non-interest expense. We are continuously looking for new branch opportunities and may open new branches in the future as circumstances permit. In February, 2009, the Corporation opened a new grocery store branch in Jennersville, PA.

INCOME TAXES

        Income tax expense was $1.7 million in 2008 compared with $2.9 million in 2007 and $2.9 million in 2006, representing an effective tax rate of 24.3%, 27.7%, and 28.2%, respectively. The lower effective tax rates in 2008 as compared with 2007, and 2007 as compared to 2006, are primarily due to increases in permanent differences as a relative percentage of pretax income.

CAPITAL ADEQUACY

        The Corporation is subject to Risk-Based Capital Guidelines adopted by the Federal Reserve Board for bank holding companies. The Bank is also subject to similar capital requirements adopted by the OCC. Under these requirements, the regulatory agencies have set minimum thresholds for Tier I Capital, Total Capital, and Leverage ratios. At December 31, 2008, both the Corporation's and the Bank's capital exceeded all minimum regulatory requirements and the Bank was considered "well capitalized", as defined in the regulations issued pursuant to the FDIC Improvement Act of 1994. The Corporation's and Bank's Risk-Based Capital Ratios, shown below, have been computed in accordance with regulatory accounting policies.

	December 31,
										"Well Capitalized" Requirements
RISK-BASED CAPITAL RATIOS	2008			2007			2006
Corporation
Leverage Ratio		9.87	%		9.22	%		9.34	%		N/A
Tier I Capital Ratio		9.14	%		10.84	%		11.26	%		N/A
Total Risk-Based Capital Ratio		10.15	%		11.92	%		12.49	%		N/A
Bank
Leverage Ratio		9.95	%		8.58	%		8.58	%		5.00	%
Tier I Capital Ratio		9.40	%		10.08	%		10.31	%		6.00	%
Total Risk-Based Capital Ratio		10.42	%		11.18	%		11.53	%		10.00	%

        The Bank is not under any agreement with the regulatory authorities nor is it aware of any current recommendations by the regulatory authorities that, if they were to be implemented, would have a material effect on liquidity, capital resources or operations of the Corporation.

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CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

        The following table sets forth contractual obligations and other commitments representing required and potential cash outflows as of December 31, 2008:

(Dollars in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More Than 5 Years
Minimum Annual Rentals on non-cancelable operating leases	$	12,736	$	1,737	$	3,065	$	2,881	$	5,053
Contractual maturities of time deposits		451,691		416,556		25,967		5,813		3,355
Loan commitments		237,630		233,467		3,931		—		232
Federal Home Loan Bank and other borrowings		171,170		47,671		101,151		20,168		2,180
Subordinated debt		15,465		—		—		—		15,465
Standby letters of credit		6,403		6,403		—		—		—
Total	$	895,095	$	705,834	$	134,114	$	28,862	$	26,285

BRANCHING, TECHNOLOGY AND CAPITAL PROJECTS

        During the first quarter of 2008, the Bank opened two new branch facilities. The first, a newly constructed, full-service branch located in Kennett Square, Pennsylvania, features the Bank's signature building design, first showcased by the Oxford Branch, which opened in 2005. The second, a full-service branch located in Downingtown, Pennsylvania, replaced the Coatesville Branch. The Coatesville branch was closed in the first quarter of 2008. The Bank also added two new branches through the acquisition of AHB. Technological improvements, including enhanced security over customer information, a more proactive disaster recovery system and an improved infrastructure to support more internet banking products are also expected in the future. We are continuously looking for opportunities to expand our branch system and invest in technology to better serve our customers. In the first quarter of 2009, the Bank opened a new grocery store branch in Jennersville, PA.

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

        The accounting and reporting policies of the Corporation conform with GAAP and general practices within the financial services industry. The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

        The Corporation considers that the determination of the allowance for loan and lease losses involves a higher degree of judgment and complexity than its other significant accounting policies. The balance in the allowance for loan and lease losses is determined based on Management's review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions, and other pertinent factors, including Management's assumptions as to future delinquencies, recoveries and losses. All of these factors may be susceptible to significant change. To the extent actual outcomes differ from Management's estimates, additional provisions for loan and lease losses may be required that would adversely impact earnings in future periods.

        Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities. Deferred tax assets are subject to Management's judgment based upon available evidence that future realization is more likely than not. If Management determines that the Corporation may be unable to realize all or part of the net deferred tax assets in the future, a direct charge to income tax expense may be required to reduce the recorded value of the net deferred tax asset to the expected realizable amount.

37

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

        In October 2008, the FASB issued FSP FAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS 157-3"). FSP FAS 157-3 clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. We adopted the provisions of FSP FAS 157-3 in September 2008. FSP FAS 157-3 did not have a material impact on our consolidated financial statements.

        In June 2008, the FASB posted FASB Staff Position No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities," ("FSP EITF 03-6-1"). This statement addressed whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the calculation of earnings per share (EPS) as described in FASB Statement No. 128, Earnings per Share. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008 with prior period EPS data adjusted retrospectively to conform to its provisions. The Corporation has not yet determined the impact, if any, that FSP EITF 03-6-1 will have on our consolidated financial statements.

        In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, "The Hierarchy of Generally Accepted Accounting Principles," ("SFAS No. 162"). This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements presented in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS No. 162 did not have a material impact on our consolidated financial statements.

        In February 2008, the FASB issued Staff Position 157-2 ("FSP 157-2"), "Effective Date of FASB Statement No. 157." This FSP delays the effective date of FAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. FSP 157-2 did not have a material impact on our consolidated financial statements.

        In December 2007, the SEC released Staff Accounting Bulletin SAB 110 ("SAB 110"), "Share Based Payment." SAB 110 expresses the views of the SEC staff regarding the use of a simplified method, as discussed in SAB 107, in developing an estimate of the expected term of share options in accordance with SFAS 123R. This interpretation gives specific examples of when it may be appropriate to use the simplified method of determining the expected term. SAB 110 is effective for fiscal years beginning on or after January 1, 2008. We adopted the provisions of SAB 110 on January 1, 2008. SAB 110 did not have a material impact on our consolidated financial statements.

        In December 2007, the FASB issued Statement No. 141(R) ("SFAS 141(R)"), "Business Combinations." This Statement replaces SFAS 141, "Business Combinations." This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the "purchase method") be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) will apply prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008. While the Corporation has not yet evaluated SFAS 141(R) for the impact, if any, that SFAS 141(R) will have on our consolidated financial statements, we will be required to expense costs related to any acquisitions on or after January 1, 2009, rather than capitalize such costs as currently required.

38

        In December 2007, the FASB issued Statement No. 160 ("SFAS 160"), "Noncontrolling Interests in Consolidated Financial Statements." This Statement amends Accounting Research Bulletin 51 to establish accounting and reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. This statement will impact the way in which the Corporation reports minority interest in the Corporation's balance sheet. After adoption of this statement, the corporation will include minority interest in the equity section of the balance sheet.

        In November 2007, the SEC released Staff Accounting Bulletin SAB 109 ("SAB 109"), "Written Loan Commitments Recorded at Fair Value Through Earnings." This bulletin expresses the views of the SEC staff regarding written loan commitments that are accounted for at fair value through earnings under GAAP. SAB 109 is effective for fiscal years beginning after December 31, 2007. We adopted the provisions of SAB 109 on January 1, 2008. SAB 109 did not have a material impact on our consolidated financial statements.

        In March 2007, the FASB ratified Emerging Issues Task Force, or EITF, Issue 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for nonvested equity-classified employee share-based payment awards as an increase to additional paid-in capital. EITF 06-11 is effective for fiscal years beginning after September 15, 2007 (our fiscal year beginning January 1, 2008). We adopted the provisions of EITF 06-11 on January 1, 2008. EITF 06-11 did not have a material impact on our consolidated financial statements.

        In February 2007, the FASB issued Statement No. 159 ("SFAS 159"), "The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115." This statement permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The statement defines items eligible for the measurement option. A business entity shall report in earnings unrealized gains and losses on items for which the fair value option has been elected at each subsequent reporting date. We adopted the provisions of SFAS No. 159 on January 1, 2008. SFAS 159 did not have a material impact on our consolidated financial statements.

        In September 2006, the FASB issued Statement No. 157 ("SFAS 157"), "Fair Value Measurements." This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The provisions of SFAS No. 157 are effective as of the beginning of our 2008 fiscal year. We adopted the provisions of SFAS No. 157 on January 1, 2008. SFAS 157 did not have a material impact on our consolidated financial statements.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

LIQUIDITY MANAGEMENT AND INTEREST RATE SENSITIVITY

        The objective of liquidity management is to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on opportunities for business expansion. Liquidity management addresses the Corporation's ability to meet deposit withdrawals either on demand or at contractual maturity, to repay borrowings as they mature and to make new loans and investments as opportunities arise. Liquidity is managed on a daily basis enabling Senior Management to monitor changes in liquidity and to react accordingly to fluctuations in market conditions. The primary sources of liquidity for the Corporation are funding available from growth of our existing deposit base, new deposits, FHLB, and cash flow from the investment and loan portfolios. The Corporation considers funds from such sources to comprise its "core" funding sources because of the historical stability of such sources of funds. Additional liquidity comes from the Corporation's non-interest bearing demand deposit accounts and credit facilities.

39

Other deposit sources include a tiered savings product and certificates of deposit in excess of $100,000. Details of deposits, non-interest-bearing demand deposit accounts and other deposit sources are highlighted in the "Deposit Analysis" table.

        The Corporation primarily utilizes borrowings from the FHLB and other entities in managing its interest rate risk and as a tool to augment deposits and in funding asset growth. The Corporation may utilize these funding sources to better match its assets that are subject to longer term repricing (i.e., between one and five years). The Bank, as a member of the FHLB, maintains several credit facilities (overnight lines of credit, amortizing and non-amortizing fixed rate term and variable rate term advances with FHLB). As of December 31, 2008, the amount outstanding under the Bank's line of credit with the FHLB was $0.

        FHLB and other borrowings totaled $171.2 million compared to $115.4 million at December 31, 2008 and 2007, respectively. These borrowings consist of short and long term borrowings representing a combination of maturities. The average interest rate on these borrowings was approximately 3.9% in both 2008 and 2007. The Bank currently has a maximum borrowing capacity with the FHLB of approximately $257.4 million. In addition, we have backup lines of credit available from other financial institutions as well as the Federal Reserve, totaling $71.8million.

        The goal of interest rate sensitivity management is to avoid fluctuating net interest margins, and to enhance consistent growth of net interest income through periods of changing interest rates. Such sensitivity is measured as the difference in the volume of assets and liabilities in the existing portfolio that are subject to repricing in a future time period. The Corporation's net interest rate sensitivity of its "gap position" within one year is a negative $293 million or -22.5% of total assets at December 31, 2008, compared with a negative $168.2 million or -18.4% of total assets at the end of 2007. The Corporation's gap position is just one tool used to evaluate interest rate risk and the stability of net interest margins. The data in the following chart represents the gap position at a specific point in time and may not be indicative of future gap positions. Another tool that Management uses to evaluate interest rate risk is a computer simulation model that assesses the impact of changes in interest rates on net interest income, net-income under various interest rate forecasts and scenarios. Management has set acceptable limits of risk within its Asset Liability Committee policy and monitors the results of the simulations against these limits quarterly. Management monitors interest rate risk as a regular part of corporate operations with the intention of maintaining a stable net interest margin.

40

INTEREST RATE SENSITIVITY GAP AS OF DECEMBER 31, 2008

		Repricing Periods
(Dollars in thousands)		Within One Year			Two Through Five Years			Greater Than Five Years			Non-Rate Sensitive			Total
ASSETS
	Federal funds sold	$	4,884		$	—		$	—		$	—		$	4,884
	Investment securities		19,080			52,652			42,852			—			114,584
	Interest bearing deposits in banks		65,327			—			—			—			65,327
	Loans held for sale		90,940												90,940
	Loans and leases		407,831			387,100			145,152			(10,335	)		929,748
	Cash and due from banks		—			—			—			24,939			24,939
	Premises & equipment		—			—			—			22,076			22,076
	Other assets		10,276			—			—			37,404			47,680
	Total assets	$	598,338		$	439,752		$	188,004		$	74,084		$	1,300,178
LIABILITIES AND CAPITAL
	Non-interest-bearing deposits	$	—		$	—		$	—		$	146,248		$	146,248
	Interest bearing deposits		829,498			31,778			7,668			—			868,944
	FHLB and other borrowings		46,300			121,000			3,870			—			171,170
	Subordinated debt		15,465			—			—			—			15,465
	Other liabilities		—			—			13,034			—			13,034
	Minority interest		—			—			—			1,485			1,485
	Capital		—			—			—			83,832			83,832
	Total liabilities and capital	$	891,263		$	152,778		$	24,572		$	231,565		$	1,300,178
	Net interest rate sensitivity gap	$	(292,925	)	$	286,974		$	163,432		$	(157,481	)	$	—
	Cumulative interest rate sensitivity gap	$	(292,925	)	$	(5,951	)	$	157,481		$	—		$	—
	Cumulative interest rate sensitivity gap divided by total assets		(22.5	)%		(0.5	)%		12.1	%

        The Corporation's gap position is one factor used to evaluate interest rate risk and the stability of net interest margins. Other factors include computer simulations of what might happen to net interest income under various interest rate forecasts and scenarios. The Corporation's Asset Liability Management Policy requires quarterly calculation of the effects of changes in interest rates on net interest income. The table below summarizes estimated changes in net interest income over the twelve-month period ending December 31, 2009, assuming a static balance sheet under alternative interest rate scenarios. The change in interest rates was modeled to simulate the effect of a proportional shift in asset and liability ratios (rate

41

ramp). The prime rate used as the "driver rate" in these simulations is the average December 2008 prime rate that is reported in the Wall Street Journal.

Change in Interest Rates	Net Interest Income		Dollar Change			Percent Change
(Dollars in thousands)
+200 Basis Points	$	49,443	$	5,612			12.8	%
+100 Basis Points		46,651		2,820			6.4	%
Flat Rate		43,831		—			—
-100 Basis Points		40,944		(2,888	)		(6.6	)%
-200 Basis Points		38,278		(5,554	)		(12.7	)%

        Management believes that the assumptions utilized in evaluating the vulnerability of the Corporation's net interest income to changes in interest rates approximate actual experience; however, the interest rate sensitivity of the Corporation's assets and liabilities, as well as the estimated effect of changes in interest rates on net interest income, could vary substantially if different assumptions are used or actual experience differs from the experience on which the assumptions were based.

        In the event the Corporation should experience a mismatch in its desired gap position or an excessive decline in its net interest income subsequent to an immediate and sustained change in interest rates, it has a number of options which it could utilize to remedy such a mismatch. The Corporation could restructure its investment portfolio through sale or purchase of securities with more favorable repricing attributes. It could also promote loan products with appropriate maturities or repricing attributes. The Corporation could also solicit deposits or search for borrowings with more desirable maturities. However, market circumstances might make execution of these strategies cost prohibitive or unattainable.

        The nature of the Corporation's current operation is such that it is not subject to foreign currency exchange or commodity price risk. The Bank is subject to interest rate risk with respect to its mortgage banking division. When the Bank contractually commits to an interest rate on a residential mortgage loan with a customer that it intends to sell, the Bank may be at risk that the value of the loan, when ultimately sold will be less than par. To hedge this risk, the Bank enters into derivative contract, primarily consisting of forward loan sale commitments.

42

Item 8.    Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
First Chester County Corporation

        We have audited the accompanying consolidated balance sheets of First Chester County Corporation (a Pennsylvania corporation) and subsidiaries (the Corporation) as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Chester County Corporation and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

        Effective January 1, 2006, the Corporation adopted Statement of Financial Accounting Standards No. 123(R), "Share-Based Payments" and Securities and Exchange Commission Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in the Current Year Financial Statements."

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), First Chester County Corporation and subsidiaries' internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 16, 2009 expressed an unqualified opinion.

/s/  GRANT THORNTON LLP

Philadelphia, Pennsylvania

March 16, 2009

43

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

				December 31,
(Dollars in thousands)				2008			2007
ASSETS
	Cash and due from banks			$	24,939		$	28,884
	Federal funds sold and other overnight investments				4,884			24,260
	Interest bearing deposits				65,327			216
			Total cash and cash equivalents		95,150			53,360
	Investment securities available-for-sale, at fair value				114,584			97,977
	Mortgage loans held for sale				90,940			665
	Loans and leases				940,083			742,775
	Less allowance for possible loan and lease losses				(10,335	)		(7,817	)
			Net loans		929,748			734,958
	Premises and equipment, net				22,076			17,560
	Net deferred tax asset				8,585			4,418
	Due from mortgage investors				9,036			—
	Bank Owned Life Insurance				1,398			—
	Goodwill				5,906			—
	Other assets				22,755			5,843
			Total assets	$	1,300,178		$	914,781
LIABILITIES
	Deposits
		Non-interest-bearing		$	146,248		$	124,199
		Interest-bearing (including certificates of deposit over $100 of $100,018 and $58,816 at December 31, 2008 and 2007, respectively)			868,944			580,699
			Total deposits		1,015,192			704,898
	Federal Home Loan Bank advances and other borrowings				171,170			115,384
	Subordinated debentures				15,465			15,465
	Other liabilities				13,034			11,055
			Total liabilities		1,214,861			846,802
	Minority Interests				1,485			—
STOCKHOLDERS' EQUITY
	Common stock, par value $1.00; authorized, 25,000,000 shares; outstanding 6,331,975 at December 31, 2008 and 5,279,815 at December 31, 2007				6,332			5,280
	Additional paid-in capital				24,708			11,113
	Retained earnings				57,899			55,347
	Accumulated other comprehensive loss				(3,292	)		(1,207	)
	Treasury stock, at cost: December 31, 2008—92,931 and December 31, 2007—119,065				(1,815	)		(2,554	)
			Total stockholders' equity		83,832			67,979
			Total liabilities and stockholders' equity	$	1,300,178		$	914,781

The accompanying notes are an integral part of these statements.

44

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

				Years ended December 31,
(Dollars in thousands, except per share)				2008			2007		2006
INTEREST INCOME
	Loans and leases, including fees			$	49,170		$	49,791	$	45,783
	Investment securities				5,021			4,232		4,358
	Federal funds sold and deposits in banks				1,117			2,413		2,061
			Total interest income		55,308			56,436		52,202
INTEREST EXPENSE
	Deposits				15,770			20,529		16,237
	Subordinated debt				896			1,460		1,304
	Federal Home Loan Bank and other borrowings				5,760			2,984		2,496
			Total interest expense		22,426			24,973		20,037
			Net interest income		32,882			31,463		32,165
PROVISION FOR LOAN AND LEASE LOSSES					1,632			80		3
			Net interest income after provision for loan and lease losses		31,250			31,383		32,162
NON-INTEREST INCOME
	Wealth management and advisory services				3,960			4,088		3,796
	Service charges on deposit accounts				2,542			2,362		2,007
	Gains (losses) on sales of investment securities, net				312			2		(79	)
	Operating lease rental income				1,285			1,273		1,153
	Net gain on fixed assets and OREO				13			1,425		19
	Net gains and fees on the sales of loans				272			628		387
	Bank-owned life insurance				165			—		—
	Asset Impairment				(1,267	)		—		—
	Other				2,248			2,009		1,929
			Total non-interest income		9,530			11,787		9,212
NON-INTEREST EXPENSE
	Salaries and employee benefits				18,372			19,025		17,432
	Occupancy, equipment, and data processing				5,787			5,152		5,359
	Depreciation expense on operating leases				1,060			1,056		987
	Bank shares tax				785			705		726
	Professional services				1,964			2,031		1,848
	Marketing				978			902		929
	Other				4,630			3,699		3,872
			Total non-interest expense		33,576			32,570		31,153
		Income before income taxes			7,204			10,600		10,221
INCOME TAXES					1,747			2,931		2,886
NET INCOME				$	5,457		$	7,669	$	7,335
PER SHARE DATA
	Net income per share (Basic)			$	1.05		$	1.49	$	1.42
	Net income per share (Diluted)			$	1.05		$	1.47	$	1.40
	Dividends declared			$	0.560		$	0.545	$	0.540

The accompanying notes are an integral part of these statements.

45

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

	Common Stock										Accumulated Other Comprehensive Income/(loss)
					Additional Paid-in Capital			Retained Earnings						Treasury Stock			Total Stockholders' Equity			Comprehensive Income/(loss)
(Dollars in thousands)	Shares		Par Value
Balances at January 1, 2006		5,279,815	$	5,280	$	12,441		$	45,938		$	(1,929	)	$	(3,618	)	$	58,112		$	—
Net Income									7,335									7,335			7,335
Cash dividends declared									(2,787	)								(2,787	)
Other Comprehensive Income
Net unrealized gains on investment securities available-for-sale												456						456			456
Treasury stock transactions						(755	)								648			(107	)
Stock based compensation						22												22
Share based compensation tax benefit						231												231
Comprehensive Income																				$	7,791
Balances December 31, 2006		5,279,815	$	5,280	$	11,939		$	50,486		$	(1,473	)	$	(2,970	)	$	63,262
Net Income									7,669									7,669			7,669
Cash dividends declared									(2,808	)								(2,808	)
Other Comprehensive Income
Net unrealized gains on investment securities available-for-sale												266						266			266
Treasury stock transactions						(1,042	)								416			(626	)
Stock based compensation						125												125
Share based compensation tax benefit						91												91
Comprehensive Income																				$	7,935
Balances December 31, 2007		5,279,815	$	5,280	$	11,113		$	55,347		$	(1,207	)	$	(2,554	)	$	67,979
Net Income									5,457									5,457			5,457
Cash dividends declared									(2,905	)								(2,905	)
Other Comprehensive Income
Net unrealized gains on investment securities available-for-sale												(2,085	)					(2,085	)		(2,085	)
Common stock issued in connection with the AHB acquisition		1,052,160		1,052		14,109												15,161
Treasury stock transactions						(677	)								739			62
Stock based compensation						163												163
Share based compensation tax benefit						—												—
Comprehensive Income																				$	3,372
Balances December 31, 2008		6,331,975	$	6,332	$	24,708		$	57,899		$	(3,292	)	$	(1,815	)	$	83,832

The accompanying notes are an integral part of this statement.

46

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Years ended December 31,
(Dollars in thousands)				2008			2007			2006
OPERATING ACTIVITIES
	Net income			$	5,457		$	7,669		$	7,335
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation			2,476			2,498			2,777
		Provision for loan and lease losses			1,632			80			3
		Amortization of investment security premiums and accretion of discounts, net			340			196			232
		Amortization of deferred loan fees			(595	)		(84	)		459
		(Gains) losses on sales of investment securities, net			(312	)		(2	)		79
		Gains from the sales of assets			(13	)		(1,425	)		(19	)
		Gains & Fees on the sale of loans			(272	)		(628	)		(387	)
		Stock-based Compensation Expense			163			125			22
		Loss on investment securities			850			—			—
		(Increase) decreases in other assets			(1,840	)		497			(1,562	)
		Increase in other liabilities			484			1,267			143
			Net cash provided by operating activities		8,370			10,193			9,082
INVESTING ACTIVITIES
	Net increase in loans				(101,328	)		(70,444	)		(51,119	)
	Proceeds from the sale of loans				14,684			21,610			21,038
	Proceeds from sales of investment securities available-for-sale				25,648			4,583			13,631
	Proceeds from maturities of investment securities available-for-sale				13,691			14,995			9,216
	Proceeds from maturities of investment securities held to maturity				—			5			—
	Purchases of investment securities available-for-sale				(42,617	)		(28,637	)		(14,094	)
	Purchase of BOLI				(10,000	)		—			—
	Purchases of premises and equipment				(5,230	)		(7,214	)		(3,031	)
	Proceeds from the sale of fixed assets				136			5,253			71
	Net cash proceeds from acquisition				5,958			—			—
			Net cash used in investing activities		(99,058	)		(59,849	)		(24,288	)
FINANCING ACTIVITIES
	Increase (decrease) in short term Federal Home Loan Bank and other short term borrowings				6,000			(5,266	)		(5,000	)
	Increase in long term Federal Home Loan Bank borrowings				111,505			65,000			—
	Repayment of long term Federal Home Loan Bank borrowings				(98,321	)		(5,946	)		(2,304	)
	Net increase (decrease) in deposits				116,137			(19,770	)		28,571
	Proceeds from issuance of subordinated debt				—			5,155			—
	Repayment of subordinated debt				—			(5,155	)		—
	Cash dividends paid				(2,905	)		(2,808	)		(2,787	)
	Net increase (decrease) in treasury stock transactions				62			(626	)		(107	)
	Share based compensation tax benefit				—			91			231
			Net cash provided by financing activities		132,478			30,675			18,604
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					41,790			(18,981	)		3,398
Cash and cash equivalents at beginning of year					53,360			72,341			68,943
Cash and cash equivalents at end of year				$	95,150		$	53,360		$	72,341

The accompanying notes are an integral part of these statements.

47

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        First Chester County Corporation (the "Corporation"), through its wholly-owned subsidiary, First National Bank of Chester County (the "Bank"), has been serving the residents and businesses of Chester County, Pennsylvania, since 1863. More recently, the Bank has expanded into Delaware and Montgomery Counties and, through the acquisition of American Home Bank ("AHB"), Lancaster and Cumberland Counties. The Bank is a locally managed community bank providing loan, deposit, cash management, trust, investment and mortgage banking services from its twenty five locations. The Bank encounters vigorous competition for market share in the communities it serves from bank holding companies, other community banks, Internet banks, thrift institutions, credit unions and other non-bank financial organizations such as mutual fund insurance, brokerage companies, and mortgage banking operations.

        The Corporation and the Bank and their subsidiaries are subject to regulations of certain state and federal agencies. These regulatory agencies periodically examine the Corporation, the Bank and their subsidiaries for adherence to laws and regulations.

1.     Basis of Financial Statement Presentation

        The accounting policies followed by the Corporation and its subsidiaries conform to generally accepted accounting principles generally accepted in the United States of America ("GAAP") and predominant practices within the banking industry. The accompanying consolidated financial statements include the accounts of the Corporation, the Bank and their subsidiaries. All significant intercompany transactions have been eliminated.

        In preparing the financial statements, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the balance sheets, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        The principal estimate that is susceptible to significant change in the near term relates to the allowance for loan and lease losses. The evaluation of the adequacy of the allowance for loan and lease losses includes an analysis of the individual loans and leases and overall risk characteristics and size of the different loan and lease portfolios, and takes into consideration current economic and market conditions, the capability of specific borrowers to pay specific loan and lease obligations, as well as current loan collateral values. However, actual losses on specific loans and leases, which also are encompassed in the analysis, may vary from estimated losses.

        Statement of Financial Accounting Standards ("SFAS") No. 131 establishes standards for public business enterprises reporting information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in subsequent interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess resources and performance. The Corporation has applied the aggregation criteria set forth in SFAS No. 131 for its operating segments and has determined that it has two operating and reporting segments: Community Banking and Mortgage Banking.

48

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        The Corporation's community banking segment consists of construction, commercial and retail banking. The community banking segment is managed as a single strategic unit, which generates revenue from a variety of products and services provided by the Corporation. For example, construction and commercial lending is dependent upon the ability of the Corporation to fund itself with retail deposits and other borrowings and to manage interest rate and credit risk. This situation is also similar for consumer lending. Total assets of the Community Banking segment were $1.12 billion at December 31, 2008.

        The Corporation's Mortgage Banking segment operates under the trade name, "American Home Bank, a division of First National Bank of Chester County." Its principle activities include providing mortgages and associated products to customers and selling most of those mortgages into the secondary market on a servicing released basis. AHB retains the servicing on a portion of the loans that it sells. AHB was acquired on December 31, 2008. Total assets of the Mortgage Banking segment were $223.8 million at December 31, 2008.

        Certain of the Corporation's subsidiaries, First Chester County Corporation Trust I, II, and III ("Trust I", "Trust II" and "Trust III", collectively, the "Trusts") qualify as variable interest entities under FASB Interpretation 46 ("FIN 46"). Each of the Trusts issued mandatory redeemable preferred stock to investors and loaned the proceeds to the Corporation. The Trusts hold, as their sole asset, subordinated debentures issued by the Corporation. Subsequent to the issuance of FIN 46, the FASB issued a revised interpretation, FIN 46(R), the provisions of which must be applied to certain variable interest entities. The Corporation adopted the provisions under the revised interpretation in the first quarter of 2004 which required the Corporation to deconsolidate the Trusts. Accordingly, the Trusts are not consolidated herein. Trust I was dissolved in 2007.

2.     Financial Instruments

        The Corporation follows SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," which requires all entities to disclose the estimated fair value of their assets and liabilities considered to be financial instruments. Financial instruments requiring disclosure consist primarily of investment securities, loans, and deposits and borrowings. See Note M for further information.

3.     Investment Securities

        The Corporation follows SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires investments in securities to be classified in one of three categories: held-to-maturity, trading, or available-for-sale. Debt securities that the Corporation has the positive intent and ability to hold to maturity are classified as held-to-maturity and are reported at amortized cost. As the Corporation does not engage in security trading, the balance of its debt securities and any equity securities are classified as available-for-sale. Net unrealized gains and losses for such securities, net of tax effect, are required to be recognized as a separate component of stockholders' equity and excluded from the determination of net income. In accordance with SFAS No. 115, the Corporation evaluates the individual securities making up the investment portfolio for other than temporary impairment on a quarterly basis. If a security is deemed to be other than temporarily impaired, the impairment is recorded in noninterest income in the period in which it is recognized. Factors considered by management in determining whether a security is other than temporarily impaired include current and forecasted market conditions for that security as well as our ability and the intent to hold the security until recovery.

49

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

4.     Loans Held for Sale

        Mortgage loans held for sale consist primarily of residential mortgages that were originated in accordance with secondary market pricing and underwriting standards. The Bank accounts for loans held for sale at fair value. Gains on the sales of these loans are recorded in the period in which the loans are sold in accordance with the provisions of Statement No. 140.

5.     Loans and Leases and Allowance for Loan and Lease Losses

        Loans and leases that Management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal, reduced by unearned discount and an allowance for loan and lease losses. The allowance for loan and lease losses is established through a provision for loan and lease losses charged to expense. Loan and lease principal considered to be uncollectible by Management is charged against the allowance for loan and lease losses. The allowance is an amount that Management believes will be adequate to absorb possible losses on existing loans and leases that may become uncollectible based upon an evaluation of known and inherent risks in the loan and lease portfolio. The evaluation takes into consideration such factors as changes in the nature and size of the loan and lease portfolio, overall portfolio quality, specific problem loans, loss experience, and current and future economic conditions which may affect the borrowers' ability to pay. The evaluation also details historical losses by loan category, the resulting loss rates for which are projected at current loan and lease total amounts. Loss estimates for specified problem loans and leases are also detailed. Interest on loans and leases is accrued and credited to operations based upon the principal amount outstanding. Certain origination and commitment fees and related direct loan or lease origination costs are deferred and amortized over the contractual life of the related loans and leases, resulting in an adjustment of the related loan's yield. Accrual of interest is discontinued on a loan when Management believes that the borrower's financial condition is such that collection of interest and principal is doubtful. Upon such discontinuance, all unpaid accrued interest is reversed.

        The Corporation accounts for impairment in accordance with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan—Income Recognition and Disclosures." SFAS No. 114 requires loan impairment to be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, its observable market price or the fair value of the collateral if the loan is collateral dependent. If it is probable that a creditor will foreclose on a property, the creditor must measure impairment based on the fair value of the collateral.

        The Corporation follows FASB Interpretation 45 ("FIN 45") "Guarantor's Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others." FIN 45 requires a guarantor entity, at the inception of a guarantee covered by the measurement provisions of FIN 45, to record a liability for the fair value of the obligation undertaken in issuing the guarantee. The Corporation has issued financial and performance letters of credit. Financial letters of credit require the Corporation to make payment if the customer's financial condition deteriorates, as defined in underlying agreements. Performance letters of credit require the Corporation to make payments if the customer fails to perform certain non-financial contractual obligations.

6.     Premises and Equipment

        Premises and equipment are stated at cost less accumulated depreciation. Assets are depreciated over their estimated useful lives, principally by the straight-line method.

50

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        The Corporation accounts for impairment of long-term assets in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The standard requires recognition and measurement of long-lived assets to be held and used or to be disposed of by sale. The Corporation had no impaired long-lived assets at December 31, 2008, 2007, or 2006.

7.     Due from Mortgage Investors

        Due from mortgage investors represents the fair value of mortgage loans sold where the respective loan files have been transferred to investors for which the corporation has not yet received proceeds. Funds due from the investor normally are received within ten days of the transfer.

8.     Bank Owned Life Insurance

        The Bank invests in bank owned life insurance ("BOLI"). BOLI involves the purchase of life insurance by the Bank on a chosen group of employees. The Bank is the owner and beneficiaries of the policies. The life insurance investment is carried as an asset at the cash surrender value of the underlying policies. Changes in the cash surrender value of the policies are reflected in the income statement. The Bank acquired $1.4 million of BOLI through the AHB acquisition. These policies continue to be outstanding.

9.     Other

        Included in other assets is a receivable $10.2 million from Hartford Life Insurance and JP Morgan Chase for proceeds from the settlement of the Bank's Bank-owned life insurance ("BOLI"). The policy was terminated in December 2008 due to unforeseen market conditions that significantly lowered the current and forecasted yield on the BOLI investment. Under the terms of the BOLI agreements, payment of the cash surrender value will be made within one year of the termination date. The Bank expects to receive the full surrender value of the policy in 2009.

10.   Mortgage Servicing Rights

        The Bank acquired mortgage servicing rights in connection with the AHB acquisition. The Corporation follows the provisions of Statement No.156 in recording its mortgage servicing rights. The table below details the mortgage servicing rights as of December 31, 2008.

(Dollars in thousands)
Fair value at beginning of year	$	—
Additions
Servicing rights acquired through purchase of AHB		239
Fair value at end of year	$	239
Loans serviced for others	$	47,298
Escrow balances		470

        Mortgage servicing rights are included in other assets.

11.   Derivatives and Hedging Activity

        The Corporation follows the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activity," as amended by SFAS No. 138. SFAS No. 133 establishes accounting and reporting

51

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

standards for derivative instruments, including certain derivative instruments imbedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives either as assets or liabilities in the statement of financial position and measure those instruments at fair value.

12.   Contributions

        The Corporation accounts for contributions in accordance with SFAS No. 116, "Accounting for Contributions Received and Contributions Made." SFAS No. 116 specifies that contributions made by the Corporation be recognized as expenses in the period made and as decreases of assets or increases of liabilities depending on the form of the benefits given. In accordance with SFAS No. 116, the Corporation incurred contribution expenses relating to long-term commitments to local not-for-profit organizations of $132 thousand, $171 thousand and $78 thousand during 2008, 2007 and 2006, respectively.

13.   Income Taxes

        The Corporation accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Under the liability method specified by SFAS No. 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense and benefits are the result of changes in deferred tax assets and liabilities.

14.   Employee Benefit Plans

        The Corporation has certain employee benefit plans covering eligible employees. The Bank accrues such costs as earned by the employee.

15.   Share-Based Compensation Plan

        Effective January 1, 2006, the Corporation adopted FASB Statement No. 123 (R), "Share-Based Payment". Statement 123 (R) requires that compensation cost relating to share-based payment transactions be recognized in financial statements. The cost is measured based on the fair value of the equity or liability instruments issued. Statement 123 (R) replaces FASB Statement No. 123, "Accounting for Stock-Based Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". Statement 123 established as preferable a fair-value-based method of accounting for share-based payment transactions with employees.

        Because the Corporation adopted Statement 123 (R) using the modified prospective transition method, prior periods have not been restated. Under this method, the Corporation is required to record compensation expense for all awards granted after the date of adoption for the unvested portion of previously granted awards that remain outstanding as of the beginning of the period of adoption. As of January 1, 2006, there were no unvested options. Forfeitures did not affect the calculated expense based upon historical activities of option grantees.

        In connection with the AHB acquisition, the Corporation assumed the outstanding obligations under AHB's option plan and the options issued under the plan, adjusted and converted into options to acquire 147,000 shares of the Corporation's common stock. These options were all fully vested as of December 31, 2008.

        The Corporation has two expired or terminated stock option plans. Although the Corporation's ability to issue stock options under the 1995 stock plan has expired, these outstanding stock options remain in

52

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

effect according to their original term. In addition, the Corporation assumed the outstanding obligations under the AHB option plan, however, no further options may be issued under this plan.

        At December 31, 2008, the Corporation has one restricted stock-based employee compensation plan. The Corporation expenses the grant date fair value of stock awards on a straight-line basis over the vesting period of the award utilizing probability weighted vesting assumptions.

16.   Wealth Management Division Assets and Income

        Assets held by the Corporation in fiduciary or agency capacities for its customers are not included in the accompanying consolidated balance sheets since such items are not assets of the Bank or Corporation. Operating income and expenses of the Wealth Management Division are included under their respective captions in the accompanying consolidated statements of income and are recorded on the accrual basis.

17.   Net Income Per Share

        The Corporation follows the provisions of SFAS No. 128, "Earnings Per Share" requires presentations of basic and diluted net income per share ("EPS") in conjunction with the disclosure of the methodology used in computing such EPS. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if options to issue common stock were exercised.

18.   Cash Flow Information

        For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold and overnight investments. Generally, federal funds and overnight investments are purchased and sold for one-day periods. Cash paid for interest for the years ended December 31, 2008, 2007, and 2006 was $23.3 million, $24.1 million and $19.7 million, respectively. Cash paid for income taxes for the years ended December 31, 2008, 2007, and 2006 was $2.8 million, $2.1 million, and $3.7 million, respectively.

19.   Reporting Comprehensive Income

        The Corporation follows the provisions of SFAS No. 130, "Reporting of Comprehensive Income," which requires the reporting of comprehensive income which includes net income as well as certain other items which result in a change to equity during the period.

	December 31, 2008
(Dollars in thousands)	Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount
Unrealized holding losses arising during the period	$	(3,471	)	$	1,180		$	(2,291	)
Reclassification adjustment for gains realized in net income		312			(106	)		206
Other comprehensive loss	$	(3,159	)	$	1,074		$	(2,085	)

53

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

	December 31, 2007
(Dollars in thousands)	Before Tax Amount		Tax (Expense) Benefit			Net of Tax Amount
Unrealized holding gains arising during the period	$	401	$	(136	)	$	265
Reclassification adjustment for gains realized in net income		2		(1	)		1
Other comprehensive income	$	403	$	(137	)	$	266

	December 31, 2006
(Dollars in thousands)	Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount
Unrealized holding gains arising during the period	$	770		$	(262	)	$	508
Reclassification adjustment for gains realized in net income		(79	)		27			(52	)
Other comprehensive income	$	691		$	(235	)	$	456

20.   Advertising Costs

        The Bank expenses advertising costs as incurred.

21.   Business Combinations and Goodwill

        The Corporation accounts for its acquisitions using the purchase accounting method as required by Statement of Financial Accounting Standards No. 141, "Business Combinations". Purchase accounting requires the total purchase price to be allocated to the estimated fair values of assets and liabilities acquired. Typically, this allocation results in the purchase price exceeding the fair value of net assets acquired, which is recorded as goodwill.

        As required by Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (Statement 142), goodwill is not amortized to expense, but is tested for impairment at least annually. Write-downs of the balance, if necessary as a result of the impairment test, are to be charged to expense in the period in which goodwill is determined to be impaired.

        Goodwill of $5.9 million was recorded as a result of the AHB acquisition transaction that occurred on 12/31/08. Management will evaluate this goodwill for impairment going forward.

22.   Variable interest entities

        Certain of the Corporation's subsidiaries, First Chester County Corporation Trust I, II, and III ("Trust I", "Trust II" and "Trust III", collectively, the "Trusts") qualify as variable interest entities under FASB Interpretation 46 ("FIN 46"). Each of the Trusts issued mandatory redeemable preferred stock to investors and loaned the proceeds to the Corporation. The Trusts hold, as their sole asset, subordinated debentures issued by the Corporation. Subsequent to the issuance of FIN 46, the FASB issued a revised interpretation, FIN 46(R), the provisions of which must be applied to certain variable interest entities. The Corporation adopted the provisions under the revised interpretation in the first quarter of 2004 which required the Corporation to deconsolidate the Trusts. Accordingly, the Trusts are not consolidated herein. Trust I was dissolved in 2007.

        The Bank has partial ownership in certain affiliated business arrangements. These entities serve as a source for retail mortgage business through the entity's relations with builders, realtors and other

54

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

businesses. Management reviewed these entities for consolidation under the requirements of FIN 46(R) and determined that the Bank is the primary beneficiary of these variable interest entities. Accordingly, the assets and liabilities of these entities that were consolidated under the requirements of FIN 46(R) as of December 31, 2008 are as follow:

(Dollars in thousands)
Cash		$	1,101
Other assets			519
	Total assets	$	1,620
Other liabilities			185
	Total liabilities	$	185

23.   Reclassifications

        Certain numbers have been reclassified to conform with the 2008 presentation. These reclassifications have no impact on net income or net income per share.

24.   New Accounting Pronouncements

        In October 2008, the FASB issued FSP FAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS 157-3"). FSP FAS 157-3 clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. We adopted the provisions of FSP FAS 157-3 in September 2008. FSP FAS 157-3 did not have a material impact on our consolidated financial statements.

        In June 2008, the FASB posted FASB Staff Position No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities," ("FSP EITF 03-6-1"). This statement addressed whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the calculation of earnings per share (EPS) as described in FASB Statement No. 128, Earnings per Share. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008 with prior period EPS data adjusted retrospectively to conform to its provisions. The Corporation has not yet determined the impact, if any, that FSP EITF 03-6-1 will have on our consolidated financial statements.

        In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, "The Hierarchy of Generally Accepted Accounting Principles," ("SFAS No. 162"). This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements presented in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS No. 162 did not have a material impact on our consolidated financial statements.

        In February 2008, the FASB issued Staff Position 157-2 ("FSP 157-2"), "Effective Date of FASB Statement No. 157." This FSP delays the effective date of FAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. FSP 157-2 did not have a material impact on our consolidated financial statements.

        In December 2007, the SEC released Staff Accounting Bulletin SAB 110 ("SAB 110"), "Share Based Payment." SAB 110 expresses the views of the SEC staff regarding the use of a simplified method, as

55

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

discussed in SAB 107, in developing an estimate of the expected term of share options in accordance with SFAS 123R. This interpretation gives specific examples of when it may be appropriate to use the simplified method of determining the expected term. SAB 110 is effective for fiscal years beginning on or after January 1, 2008. We adopted the provisions of SAB 110 on January 1, 2008. SAB 110 did not have a material impact on our consolidated financial statements.

        In December 2007, the FASB issued Statement No. 141(R) ("SFAS 141(R)"), "Business Combinations." This Statement replaces SFAS 141, "Business Combinations." This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the "purchase method") be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) will apply prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008. While the Corporation has not yet evaluated SFAS 141(R) for the impact, if any, that SFAS 141(R) will have on our consolidated financial statements, we will be required to expense costs related to any acquisitions on or after January 1, 2009, rather than capitalize such costs as currently required.

        In December 2007, the FASB issued Statement No. 160 ("SFAS 160"), "Noncontrolling Interests in Consolidated Financial Statements." This Statement amends Accounting Research Bulletin 51 to establish accounting and reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. The Corporation has not yet determined the impact, if any, that SFAS 160 will have on our consolidated financial statements. This statement will impact the way in which the Corporation reports minority interest in the Corporation's balance sheet. After adoption of this statement, the corporation will include minority interest in the equity section of the balance sheet.

        In November 2007, the SEC released Staff Accounting Bulletin SAB 109 ("SAB 109"), "Written Loan Commitments Recorded at Fair Value Through Earnings." This bulletin expresses the views of the SEC staff regarding written loan commitments that are accounted for at fair value through earnings under GAAP. SAB 109 is effective for fiscal years beginning after December 31, 2007. We adopted the provisions of SAB 109 on January 1, 2008. SAB 109 did not have a material impact on our consolidated financial statements.

        In March 2007, the FASB ratified Emerging Issues Task Force, or EITF, Issue 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for nonvested equity-classified employee share-based payment awards as an increase to additional paid-in capital. EITF 06-11 is effective for fiscal years beginning after September 15, 2007 (our fiscal year beginning January 1, 2008). We adopted the provisions of EITF 06-11 on January 1, 2008. EITF 06-11 did not have a material impact on our consolidated financial statements.

56

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In February 2007, the FASB issued Statement No. 159 ("SFAS 159"), "The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115." This statement permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The statement defines items eligible for the measurement option. A business entity shall report in earnings unrealized gains and losses on items for which the fair value option has been elected at each subsequent reporting date. We adopted the provisions of SFAS No. 159 on January 1, 2008. SFAS 159 did not have a material impact on our consolidated financial statements.

        In September 2006, the FASB issued Statement No. 157 ("SFAS 157"), "Fair Value Measurements." This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The provisions of SFAS No. 157 are effective as of the beginning of our 2008 fiscal year. We adopted the provisions of SFAS No. 157 on January 1, 2008. SFAS 157 did not have a material impact on our consolidated financial statements.

NOTE B—ACQUISITIONS

        On December 31, 2008, the Corporation completed its acquisition of AHB. Under the terms of the merger agreement, AHB merged with and into FNB (the "Merger"). AHB is now operating as a division of the Bank under the trade name, "American Home Bank, a Division of First National Bank of Chester County." The primary focus of AHB is mortgage-banking activities. AHB's mortgage- banking activities include providing mortgages and associated products to customers and selling most of those mortgages into the secondary market on a servicing released basis. AHB retains the servicing on a portion of the loans that it sells. The sourcing of mortgage loans is conducted through a direct, retail delivery channel comprised of retail loan offices, affiliated business arrangements with builders and realtors, and a wholesale lending operation. The wholesale operation sources loans through relationships with unrelated mortgage brokers. This acquisition was intended to help the Bank to further diversify the Bank's products, services, and sources of income as well as expand the Bank's geographic footprint.

        As a result of the Merger, each outstanding share of AHB common stock was converted into the right to receive either $11.00 in cash or 0.70 shares of FCCC common stock, plus cash in lieu of fractional shares. Pursuant to the allocation procedures set forth in the Merger Agreement, 1,052,160 shares of FCCC common stock were issuable to the holders of 90% of AHB's outstanding common stock and $1.8 million was payable to the holders of 10% of AHB's outstanding common stock. In addition, pursuant to the terms of the Merger Agreement, each AHB option to purchase shares of AHB common stock at the effective time of the Merger converted into an option to purchase such number of shares of FCCC common stock equal to the number of shares of the AHB option multiplied by 0.7000, rounded down to the nearest whole share, at an exercise price equal to the exercise price of the AHB option at the effective time of the Merger divided by 0.7000, rounded up to the nearest whole cent. Each outstanding AHB warrant at the effective time of the Merger was cancelled and converted into the right to receive cash in the amount equal to the difference between the AHB warrant strike price and $11.00. The merger resulted in goodwill of approximately $5.9 million.

57

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE B—ACQUISITIONS (Continued)

        The following table summarizes the estimated fair values of AHB's assets acquired and liabilities on December 31, 2008. This transaction was accounted for using the purchase method of accounting in accordance with SFAS No. 141, "Business Combinations."

(Dollars in thousands)
ASSETS
	Cash and due from banks		$	7,177
	Federal funds sold and other overnight investments			1,460
	Interest Bearing Deposits			2,156
	Investment securities available-for-sale			17,366
	Loans Held For Sale			89,494
	Loans			110,928
	Less allowance for possible loan losses			(1,236	)
		Net loans		109,692
	Premises and equipment, net			1,896
	Due from mortgage investors			9,036
	Other			9,565
		Total assets		247,842
LIABILITIES
	Deposits:
		Non-interest bearing		7,435
		Interest bearing		186,722
	Federal Home Loan Bank advances and other borrowings			36,602
	Other liabilities			2,993
		Total liabilities		233,752
	Net assets acquired		$	14,090

        Goodwill of $5.9 million was recorded in connection with the acquisition AHB. The following table provides the calculation of the goodwill. Management is in the process of evaluating and finalizing the

58

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE B—ACQUISITIONS (Continued)

purchase accounting adjustments, thus the allocation of the purchase price is subject to refinement. The following table provides the calculation of the goodwill:

(Dollars in thousands)
Purchase Price:
	Purchase price assigned to shares exchanged for stock	$	15,088
	Purchase price assigned to options issued		73
	Purchase price assigned to shares exchanged for cash, warrants and other consideration		2,139
	Deal costs and other cash paid		2,696
Total purchase price			19,996
AHB Stockholders' Equity			15,422
AHB's goodwill asset			(1,352	)
Estimated adjustments to reflect assets acquired at fair market value:
	Loans		922
	Premises and equipment		90
	Net deferred tax asset		777
Estimated adjustments to reflect liabilities acquired at fair market value:
	Time deposits		(467	)
	FHLB borrowings		(1,302	)
Net assets acquired			14,090
Goodwill		$	5,906

        The fair value of certain assets and certain liabilities were based on quoted market prices from reliable market sources. When quoted market prices were not available, the estimated fair values were based upon the best information available, including obtained prices for similar assets and liabilities, and the results of using other valuation techniques. The prominent other valuation techniques used were the present value technique and appraisal/third party valuations. When the present value technique was employed, the associated cash flow estimates incorporated assumptions that marketplace participants would use in estimating fair values. In instances where reliable market information was not available, the Corporation used its own assumptions in an effort to determine a reasonable fair value. In other instances, the Corporation assumed the historical book value of certain assets and liabilities represented a reasonable proxy of fair value. The Corporation determined that there were no other categories of identifiable intangible assets arising from the AHB acquisition.

59

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE B—ACQUISITIONS (Continued)

        The following table details pro forma financial results for the Corporation and AHB for the year ended December 31, 2008 and 2007, assuming that the merger took place January 1, 2008 and 2007, respectively:

	December 31,
Dollars in thousands except per share	2008			2007
Interest income	$	69,790		$	68,435
Interest expense		(32,020	)		(33,450	)
Provision for loan and lease losses		(2,032	)		(280	)
Non-interest income		30,569			32,292
Total revenue		66,307			66,997
Non-interest expense		62,027			56,703
Pretax net income		4,280			10,294
Income tax expense		547			2,827
Net income	$	3,733		$	7,467
EPS Basic	$	0.60		$	1.20
Diluted EPS	$	0.60		$	1.19

NOTE C—INVESTMENT SECURITIES

        The amortized cost, gross unrealized gains and losses, and fair market value of the Corporation's available-for-sale securities at December 31, 2008 and 2007 are summarized as follows:

(Dollars in thousands) 2008	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government agency	$	12,182	$	144	$	(7	)	$	12,319
Mortgage-backed securities		52,151		974		(95	)		53,030
State and municipal		10,327		74		—			10,401
Corporate securities		31,089		—		(5,072	)		26,017
Other equity securities		13,659		50		(892	)		12,817
	$	119,408	$	1,242	$	(6,066	)	$	114,584

(Dollars in thousands) 2007	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government agency	$	3,082	$	30	$	(12	)	$	3,100
Mortgage-backed securities		56,925		260		(531	)		56,654
State and municipal		13,686		73		(109	)		13,650
Corporate securities		15,121		30		(665	)		14,486
Other equity securities		10,993		44		(950	)		10,087
	$	99,807	$	437	$	(2,267	)	$	97,977

        The amortized cost and estimated fair value of debt securities classified as available-for-sale at December 31, 2008, by contractual maturity, are shown in the following table. Expected maturities will

60

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE C—INVESTMENT SECURITIES (Continued)

differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	2,898	$	2,629
Due after one year through five years		31,415		28,503
Due after five years through ten years		6,279		5,974
Due after ten years		13,006		11,631
		53,598		48,737
Mortgage-backed securities		52,151		53,030
Other equity securities		13,659		12,817
	$	119,408	$	114,584

        Proceeds from the sale of investment securities available for sale were $25.6 million, $4.6 million and $13.6 million during 2008, 2007, and 2006, respectively. Gains of $409 thousand, $21 thousand and $76 thousand and losses of $97 thousand, $19 thousand and $155 thousand were realized on sales of securities in 2008, 2007, and 2006, respectively. The Corporation uses the specific identification method to determine the cost of the securities sold. The principal amount of investment securities pledged to secure public deposits and for other purposes required or permitted by law was $89.0 million and $87.1 million at December 31, 2008 and 2007, respectively. There were no securities held from a single issuer that represented more than 10% of stockholders' equity.

        The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2008.

			Less than 12 months					12 months or longer					Total
(Dollars in thousands) Description of Securities	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Government agency		2	$	1,475	$	(5	)	$	173	$	(2	)	$	1,648	$	(7	)
Mortgage-backed securities		4		3,332		(45	)		1,809		(50	)		5,141		(95	)
State and municipal		—		—		—			—		—			—		—
Corporate Securities		25		17,605		(1,977	)		8,412		(3,095	)		26,017		(5,072	)
Marketable Equity Securities		5		—		—			13,658		(892	)		13,658		(892	)
Total temporarily impaired investment securities		36	$	22,412	$	(2,027	)	$	24,052	$	(4,039	)	$	46,464	$	(6,066	)

        Management has considered factors regarding other than temporarily impaired securities and has determined that there was one other than temporarily impaired security at December 31, 2008. The 2008 consolidated statement of income includes an $850 thousand non-cash pretax other than temporary impairment loss on a $1.0 million Lehman Brothers Note held in the Bank's investment portfolio. Management believes that there are no additional securities that were impaired as of December 31, 2008. Factors considered by management in determining whether a security is other than temporarily impaired include current and forecasted market conditions for that security as well as our ability and the intent to hold the security until recovery.

61

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE C—INVESTMENT SECURITIES (Continued)

        The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2007.

			Less than 12 months					12 months or longer					Total
(Dollars in thousands) Description of Securities	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Government agency		1	$	—	$	—		$	784	$	(12	)	$	784	$	(12	)
Mortgage-backed securities		24		3,039		(14	)		30,726		(517	)		33,765		(531	)
State and municipal		24		—		—			8,372		(109	)		8,372		(109	)
Corporate securities		15		1,915		(77	)		10,623		(588	)		12,538		(665	)
Other equity securities		13		—		—			10,993		(950	)		10,993		(950	)
Total temporarily impaired investment securities		77	$	4,954	$	(91	)	$	61,498	$	(2,176	)	$	66,452	$	(2,267	)

        Management has considered factors regarding other than temporarily impaired securities and believes that there are no securities that were impaired as of December 31, 2007.

NOTE D—LOANS AND LEASES

        Major classifications of loans are as follows:

(Dollars in thousands)	2008			2007
Commercial loans	$	327,472		$	277,715
Real estate—commercial		280,549			235,880
Real estate—commercial construction		69,057			55,414
Real estate—residential		87,413			59,508
Real estate—residential construction		45,466			—
Consumer loans		125,318			106,574
Lease financing receivables		4,808			8,349
		940,083			743,440
Less: Allowance for loan and lease losses		(10,335	)		(7,817	)
	$	929,748		$	735,623

        Loan and lease balances on which the accrual of interest has been discontinued amounted to approximately $10.5 million and $1.2 million at December 31, 2008 and 2007, respectively. Interest on these non-accrual loans and leases would have been approximately $180 thousand, $321 thousand and $682 thousand in 2008, 2007 and 2006, respectively. Loan and lease balances past due 90 days or more, which are not on a non-accrual status, but which Management expects will eventually be paid in full, amounted to $870 thousand, $142 thousand and $793 thousand at December 31, 2008, 2007 and 2006, respectively.

62

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE D—LOANS AND LEASES (Continued)

        Changes in the allowance for loan and lease losses are summarized as follows:

(Dollars in thousands)		2008			2007			2006
Balance at beginning of year		$	7,817		$	8,186		$	8,123
	Provision charged to operating expenses		1,632			80			3
	Recoveries		282			140			359
	Loans charged-off		(746	)		(582	)		(173	)
	Allowance adjustment—Other		114			(7	)		(126	)
	Allowance acquired through acquisition		1,236			—			—
Balance at end of year		$	10,335		$	7,817		$	8,186

        The Bank identifies a loan as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. The accrual of interest is discontinued on impaired loans and no income is recognized until all recorded amounts of interest and principal are recovered in full. Previously accrued interest is reversed.

        The balance of impaired loans was $10.5 million, $1.2 million, and $7.3 million at December 31, 2008, 2007, and 2006, respectively. The associated allowance for loan and lease losses for impaired loans was $856 thousand, $72 thousand and $840 thousand at December 31, 2008, 2007, and 2006, respectively. The following chart presents additional information about impaired loan and lease balances as of December 31, 2008 and 2007:

		December 31,
		2008				2007
(Dollars in thousands)		Impaired Loan Balance		Associated Allowance		Impaired Loan Balance		Associated Allowance
Commercial loans		$	3,632	$	285	$	972	$	70
Real estate—commercial			1,650		126
Real estate—commercial construction			—		—		—		—
Real estate—residential			3,876		350		—		—
Real estate—residential construction			—		—		—		—
Consumer loans			1,166		95		222		2
Lease financing receivables			190		—		—		—
	Total	$	10,514	$	856	$	1,194	$	72

        During 2008, activity in the allowance for impaired loan and lease losses included a provision of $473 thousand, chargeoffs of $31 thousand, recoveries of $0, and loans returned to performing status of $8 thousand. Interest income of $0 was recorded in 2008, while contractual interest in the same period amounted to $180 thousand. Cash collected on impaired loans in 2008 was $456 thousand, of which $456 thousand was applied to principal and $0 was applied to interest income.

        During 2007, activity in the allowance for impaired loan and lease losses included a provision of $11 thousand, chargeoffs of $1 thousand, recoveries of $0, and loans paid off or returned to performing status of $0. Interest income of $0 was recorded in 2007, while contractual interest in the same period amounted to $321 thousand. Cash collected on impaired loans in 2007 was $6.9 million, of which

63

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE D—LOANS AND LEASES (Continued)

$6.4 million was applied to principal and $282 thousand was applied to interest income and $225 thousand was recorded as a gain on sale.

        During 2006, activity in the allowance for impaired loan and lease losses included a provision of $0, chargeoffs of $11 thousand, recoveries of $0, and loans paid off or returned to performing status of $0. Interest income of $0 was recorded in 2006, while contractual interest in the same period amounted to $682 thousand. Cash collected on impaired loans in 2006 was $3.2 million, of which $3.2 million was applied to principal and $0 was applied to past due interest.

        In the normal course of business, the Bank makes loans to certain officers, directors, and their related interests. All loan transactions entered into between the Bank and such related parties were made on substantially the same terms and conditions as comparable transactions with all other parties. In Management's opinion, such loans are consistent with sound banking practices and are within applicable regulatory lending limitations. The balance of these loans at December 31, 2008 and 2007 was approximately $22.0 million and $31.1 million, respectively. In 2008 and 2007, principal payments on these loans were $35.4 million and $29.0 million, respectively. In 2008 and 2007, new loans to these individuals and their related interests were $38.0 million and $2.3 million, respectively.

NOTE E—PREMISES AND EQUIPMENT

        Premises and equipment are summarized as follows:

(Dollars in thousands)	Useful Lives	2008			2007			2006
Premises	5-40 Years	$	18,078		$	16,989		$	16,979
Equipment	1-5 Years		28,577			23,897			22,045
Construction in process			5,549			1,629			220
			52,204			42,515			39,244
Less Accumulated depreciation			(30,128	)		(24,955	)		(25,256	)
		$	22,076		$	17,560		$	13,988

        Included in the equipment category above is $6.0 million and $6.1 million of operating lease assets as of December 31, 2008 and 2007, respectively. Included in the accumulated depreciation line above is $3.0 million and $2.6 million of accumulated depreciation on these operating lease assets as of December 31, 2008 and 2007, respectively.

64

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE F—DEPOSITS

        At December 31, 2008, the scheduled maturities of certificates of deposit are as follows:

(Dollars in thousands)
2009	$	416,556
2010		22,878
2011		3,089
2012		3,171
2013		2,642
Thereafter		3,355
	$	451,691

        In the normal course of business, the Bank holds deposits from certain officers, directors, and their related interests. All deposit transactions entered into between the Bank and such related parties were made on substantially the same terms and conditions as comparable transactions with all other parties. The balance of these deposits was $4.6 million and $8.4 million at December 31, 2008 and 2007, respectively.

NOTE G—BORROWINGS

        The Bank, as a member of the FHLB, maintains several credit facilities secured by the Bank's mortgage-related assets. FHLB borrowings provide additional funds to meet the Bank's liquidity needs. The Bank currently has a maximum borrowing capacity with the FHLB of approximately $257.4 million of which 36.3%, or $93.5 million, is currently available. FHLB borrowings are collateralized by a pledge on the Bank's entire portfolio of unencumbered investment securities, certain mortgage loans and a lien on the Bank's FHLB stock. The Bank also maintains borrowing facilities with Wachovia Bank, Atlantic Central Bankers' Bank and the Federal Reserve.

1.     Short Term Borrowings

        Short term FHLB and other borrowings generally have maturities of less than one year. The details of these short term borrowings are as follows:

(Dollars in thousands)	2008			2007		2006
Average balance outstanding	$	276		$	—	$	4,000
Maximum amount outstanding at any month-end during the period	$	6,000		$	—	$	5,000
Balance outstanding at period end	$	6,000		$	—	$	—
Weighted-average interest rate during the period		0.02	%		—		0.94	%
Weighted-average interest rate at period end		3.25	%		—		—

2.     Long Term Borrowings

        At December 31, 2008 and 2007, long term borrowings from the FHLB totaled $165,170 and $115,384. Long term borrowings consist of fixed-rate amortizing and non-amortizing borrowings that will mature within one to nine years. The amortizing borrowings had a weighted average interest rate of 5.33%, 5.31%, and 5.43% and the non-amortizing borrowings had a weighted average interest rate of 4.12%, 4.20%, and 3.48% for 2008, 2007 and 2006, respectively.

65

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE G—BORROWINGS (Continued)

        As of December 31, 2008, long term FHLB borrowings mature as follows:

(Dollars in thousands)
2009	$	41,671
2010		81,573
2011		19,577
2012		20,082
2013		86
Thereafter		2,181
	$	165,170

NOTE H—OTHER NON-INTEREST EXPENSE

        The components of other non-interest expense are detailed as follows:

(Dollars in thousands)	2008		2007		2006
Communication, postage, and supplies	$	1,223	$	1,125	$	1,190
Loan and deposit supplies		619		548		504
FDIC premiums and assessments		490		87		88
Director costs		390		379		290
Travel and mileage		292		264		291
Dues and subscriptions		135		115		151
Wealth Management processing		210		122		317
General expenses		766		675		585
Other		505		384		456
	$	4,630	$	3,699	$	3,872

NOTE I—INCOME TAXES

        The components of income tax expense are detailed as follows:

(Dollars in thousands)		2008			2007			2006
Current expense		$	2,686		$	3,039		$	2,938
Deferred expense (benefit)			(939	)		(108	)		(52	)
	Total tax expense	$	1,747		$	2,931		$	2,886

        The income tax provision reconciled to the statutory federal rate follows:

		2008			2007			2006
Statutory rate			34.0	%		34.0	%		34.0	%
Increase (decrease) in tax rate from
	Tax-exempt loan and investment income		(6.4	)		(3.9	)		(3.7	)
	Tax credits		(3.5	)		(2.8	)		(2.6	)
	Other, net		0.2			0.4			0.5
Applicable income tax rate			24.3	%		27.7	%		28.2	%

66

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE I—INCOME TAXES (Continued)

        The net deferred tax asset consists of the following:

(Dollars in thousands)			2008			2007
Allowance for loan and lease losses			$	3,507		$	2,658
Net operating loss carryforward(1)				1,575			—
Unrealized losses on investment securities available-for-sale				1,637			622
Prepaid expenses				(142	)		(222	)
Accrued pension and deferred compensation				235			246
Depreciation				875			880
Net unrealized gain on loans and derivatives				(365	)		—
Mortgage servicing rights				(81	)		—
Bond accretion				285			(32	)
Allowance for unfunded loans
	and unused lines of credit			151			190
Other				908			76
		Total net deferred tax asset	$	8,585		$	4,418

(1)

As a result of the AHB acquisition, the Corporation acquired a net deferred tax asset of approximately $1.7 million. Included in the net deferred tax asset is a net operating loss carryforward of approximately $1.6 million. Due to the ownership changes that occurred, as defined by Section 382 of the Internal Revenue Code, the Corporation is limited in the use of this net operating loss carryforward. The Corporation expects to fully utilize this loss carryforward over the next five years.

NOTE J—ACCOUNTING FOR STOCK-BASED COMPENSATION PLANS

        At December 31, 2008, the Corporation currently has one unexpired stock based compensation plan, pursuant to which, shares of the Corporation's common stock could be issued, subject to certain restrictions. The plan, adopted in 2005, allows the Corporation to grant up to 150 thousand shares of restricted stock to employees. During 2008, the Corporation granted 34,500 shares valued at $17.80 per share at the grant date. These shares, or a portion thereof, will vest on the third anniversary of the grant date subject to certain employment and company performance requirements. During 2007, the Corporation granted 22,900 shares valued at $21.05 per share at the grant date. One third of these shares vest on each of the first three anniversaries of the date of the grant. These restricted stock grants are also subject to accelerated vesting of all or a portion of the shares upon the occurrence of certain events. A summary of the Corporation's unvested restricted shares is as follows:

(Dollars in thousands, except per share data)	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value of Unvested Shares
Unvested at January 1, 2008		21,400
Granted		34,500
Vested		(7,133	)
Forfeited		(4,692	)
Unvested at December 31, 2008		44,075		$	18.74	$	425

67

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE J—ACCOUNTING FOR STOCK-BASED COMPENSATION PLANS (Continued)

        The Corporation recorded $163 thousand and $125 thousand of restricted stock expense in 2008 and 2007, respectively. As of December 31, 2008, there was a total of $503 thousand of unrecognized compensation cost related to unvested stock awards. This cost may be recognized over the next 26 months depending upon whether the performance requirements are met.

        The Corporation also has two expired or terminated stock option plans. Although the Corporation's ability to issue stock options under its 1995 Stock Option Plan has expired, these outstanding stock options remain in effect according to their terms. In addition, in connection with the AHB acquisition, the Corporation assumed the outstanding obligations under AHB's option plan and the options issued under the plan, adjusted and converted into options to acquire 147,000 shares of the Corporation's common stock. Aggregated information regarding the Corporation's Stock Option Plan and the options assumed by the Corporation in connection with the AHB acquisition as of December 31, 2008 is presented below.

(Dollars in thousands, except per share data) Options	Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2008		208,308		$	15.00		—
Acquired via acquisition		147,000			16.41		—
Exercised		—			—		—
Forfeited		—			—		—
Expired		(57,274	)		16.38		—
Outstanding at December 31, 2008		298,034		$	15.43		3.53	$	0
Exercisable at December 31, 2008		298,034		$	15.43		3.53	$	0

        The total intrinsic value (market value on date of exercise less grant price) of options at December 31, 2008 was $0 because all options had an exercise price that was higher than the December 31, 2008 market price.

        Cash received from option exercises under the stock option plan was $0 and $1.1 million for the years ended December 31, 2008 and 2007, respectively. The actual tax benefit realized for the tax deductions from option exercises under the plan was $0 and $91 thousand for the years ended December 31, 2008 and 2007, respectively. The impact of these cash receipts is included under "Financing Activities" in the accompanying Consolidated Statements of Cash Flows. The impact of the tax benefit realized is included in other liabilities under "Operating Activities" in the Corporation's Consolidated Statements of Cash Flows.

NOTE K—NET INCOME PER SHARE

        The following table illustrates the reconciliation of the numerators and denominators of the basic and diluted net income per share computations:

	For the Year Ended December 31, 2008
	Income		Shares		Per-Share Amount
Net income per share (Basic):	$	5,456,819		5,188,171	$	1.05
Effect of Dilutive Securities
Add options to purchase common stock		—		12,152		—
Net income per share (Diluted):	$	5,456,819		5,200,323	$	1.05

68

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE K—NET INCOME PER SHARE (Continued)

        52,429 shares have been excluded in the computation of 2008 diluted EPS because the options' exercise price was greater than the average market price of the common shares. The average market price on December 31, 2008 was $9.65.

	For the Year Ended December 31, 2007
	Income		Shares		Per-Share Amount
Net income per share (Basic):	$	7,669,250		5,160,607	$	1.49
Effect of Dilutive Securities
Add options to purchase common stock		—		59,333		(0.02	)
Net income per share (Diluted):	$	7,669,250		5,219,940	$	1.47

        12,817 shares have been excluded in the computation of 2007 diluted EPS because the options' exercise price was greater than the average market price of the common shares. The average market price on December 31, 2007 was $17.38.

	For the Year Ended December 31, 2006
	Income		Shares		Per-Share Amount
Net income per share (Basic):	$	7,334,945		5,160,340	$	1.42
Effect of Dilutive Securities
Add options to purchase common stock		—		88,860		(0.02	)
Net income per share (Diluted):	$	7,334,945		5,249,200	$	1.40

        16,399 shares have been excluded in the computation of 2006 diluted EPS because the options' exercise price was greater than the average market price of the common shares. The average market price on December 31, 2006 was $20.96.

NOTE L—REGULATORY MATTERS

        The Bank is required to maintain average reserve balances with the Federal Reserve Bank based upon deposit levels and other factors. The required average amount of those reserve balances was $25 thousand as of December 31, 2008 and 2007.

        Dividends are paid by the Corporation from its assets which are mainly provided by dividends from the Bank. However, certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. The Bank, without the prior approval of regulators, can declare dividends to the Corporation totaling approximately $8.3 million plus additional amounts equal to the net earnings of the Bank for the period from January 1, 2009 through the date of declaration of such a dividend, less dividends previously paid subject to the further limitations that dividends may be paid only to the extent the retained net profits (including the portion transferred to surplus) exceed bad debts and provided that the Bank would not become "undercapitalized" (as defined by Federal law).

        The Corporation and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory

69

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE L—REGULATORY MATTERS (Continued)

framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Corporation's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

        Quantitative measures established by regulation to ensure capital adequacy require the Corporation to maintain minimum amounts and ratios of Total and Tier I Capital to risk-weighted assets, and Tier I Capital to average quarterly assets (Total Risk Based Capital ratio, Tier I Capital ratio, and Leverage ratio, respectively). Management believes that the Corporation and the Bank meet all capital adequacy requirements to which it is subject, as of December 31, 2008.

        Federal banking agencies categorized the Corporation and the Bank as well capitalized under the regulatory framework for corrective action. To be categorized as adequately capitalized the Corporation and the Bank must maintain minimum Total Risk-Based, Tier I Risk-Based, and Tier I leverage ratios as set forth in the table.

70

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE L—REGULATORY MATTERS (Continued)

        The Corporation's and Bank's actual capital amounts and ratios are presented below:

		Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)		Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2008:
	Leverage Ratio
	Corporation	$	96,822		9.87	%	$	39,253		³4.00	%		N/A		N/A
	Bank	$	99,320		9.95	%	$	39,920		³4.00	%	$	49,900		³5.00	%
	Tier I Capital Ratio
	Corporation	$	96,822		9.14	%	$	42,386		³4.00	%		N/A		N/A
	Bank	$	99,320		9.40	%	$	42,284		³4.00	%	$	63,427		³6.00	%
	Total Risk Based Capital Ratio
	Corporation	$	107,602		10.15	%	$	84,772		³8.00	%		N/A		N/A
	Bank	$	110,123		10.42	%	$	84,569		³8.00	%	$	105,711		³10.00	%
As of December 31, 2007:
	Leverage Ratio
	Corporation	$	83,664		9.22	%	$	36,280		³4.00	%		N/A		N/A
	Bank	$	77,537		8.58	%	$	33,130		³4.00	%	$	45,162		³5.00	%
	Tier I Capital Ratio
	Corporation	$	83,664		10.84	%	$	30,882		³4.00	%		N/A		N/A
	Bank	$	77,537		10.08	%	$	30,755		³4.00	%	$	46,133		³6.00	%
	Total Risk Based Capital Ratio
	Corporation	$	92,040		11.92	%	$	61,764		³8.00	%		N/A		N/A
	Bank	$	85,933		11.18	%	$	61,511		³8.00	%	$	76,889		³10.00	%

        The Bank is subject to deposit insurance assessments by the FDIC. The FDIC's assessment rates have increased significantly in 2008 over 2007 and 2006 due to the Federal Insurance Reform Act of 2005. In 2008 and 2009, the FDIC adopted rules that will increase FDIC premiums significantly for assessment periods beginning in the first quarter of 2009. This will cause our 2009 FDIC premiums and assessment expense to increase significantly over 2008. Management currently estimates that this expense will increase by 240%.

        FDIC insurance expense was $490 thousand, $87 thousand and $88 thousand for the years 2008, 2007 and 2006.

71

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE M—FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS

        Statement 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. Statement 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FSP FAS 157-3 clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. We considered the requirements of FSP 157-3 when estimating fair value.

        FASB Statement No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The Corporation elected to account for loans held for sale under this election option.

        Statement 157 describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

        The Corporation used the following methods and significant assumptions to estimate fair value.

        Securities: Trading securities and investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities. Level 1 securities include those traded on nationally recognized securities exchanges, U.S. Treasury and Agency securities, and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

        Loans held for sale: The fair value of loans held for sale is based primarily on secondary-market price quotes. If no such quoted price exists, the fair value of a loan is determined using quoted prices for comparable instruments. As such, the Corporation classifies loans subjected to nonrecurring fair value adjustments as Level 2.

        Loans: The Corporation does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with SFAS 114, "Accounting by Creditors for Impairment of a Loan," ("SFAS 114"). The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At

72

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE M—FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

December 31, 2008, substantially all of the total impaired loans were evaluated based on the fair value of the collateral. In accordance with SFAS 157, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Corporation records the impaired loan as nonrecurring Level 3.

        Other Real Estate Owned ("OREO"): OREO is adjusted to fair value upon transfer of the loans to foreclosed assets. Subsequently, OREO is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Corporation records the foreclosed asset as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Corporation records the foreclosed asset as nonrecurring Level 3.

        Mortgage Servicing Rights: To determine the fair value of MSRs, the Bank uses an independent third party to estimate the present value of estimated future net servicing income. This valuation method incorporates assumption that market participants would use in estimating future net servicing income, which include estimates of the cost to service, the discount rate, custodial earnings rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses. The fair value of servicing rights was determined using discount rates ranging from 8.0% to 10.0%, prepayment speeds ranging from 8.1% to 48.18% depending on the stratification of the specific right, and a weighted average default rate of 2.14%.

        Derivative instruments: The fair value of interest rate lock commitments and forward sales commitments are estimated using a process similar to mortgage loans held for sale. Loan commitments and best efforts commitments are assigned a probability that the related loan will be funded and the commitment will be exercised. The Bank relies on historical "pull-through" percentages in establishing probability.

        The table below presents the balance of assets and liabilities at December 31, 2008 measured at fair value on a recurring basis:

Dollars in thousands	Level 1		Level 2		Level 3		Total
Assets
Investment securities available for sale	$	1,825	$	112,759	$	—	$	114,584
Loans held for sale				90,940				90,940
Mortgage servicing rights						239		239
Interest rate lock commitments						412		412
Liabilities
Mandatory forward sales commitments				583				583
Best efforts forward sales commitments				35				35

        The aggregate unpaid principal balance of mortgage loans held for sale is $89.3 million

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FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE M—FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

        The table below presents the balance of assets and liabilities at December 31, 2008 measured at fair value on a nonrecurring basis:

Dollars in thousands	Level 1		Level 2		Level 3		Total
Loans	$	—	$	—	$	10,515	$	10,515
OREO	$	—	$	—	$	1,872	$	1,872

        The table below presents the rollforward of assets that are valued using significant unobservable inputs (Level 3) for the year ended December 31, 2008:

Dollars in thousands	Mortgage Servicing Rights		Interest Rate lock Commitments		Loans			OREO
Beginning balance	$	—	$	—	$	1,194		$	—
Net transferred into level 3						5,832			346
Net unrealized losses						(485	)
Acquired through acquisition		239		412		3,974			1,526
Ending Balance	$	239	$	412	$	10,515		$	1,872

        SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of the estimated fair value of an entity's assets and liabilities considered to be financial instruments. For the Corporation, as for most financial institutions, the majority of its assets and liabilities are considered financial instruments as defined in SFAS No. 107. However, many such instruments lack an available trading market, as characterized by a willing buyer and seller engaging in an exchange transaction. Also, it is the Corporation's general practice and intent to hold its financial instruments (other than certain Investment Securities and loans held for sale) to maturity and not to engage in trading or sales activities. Therefore, the Corporation had to use significant estimations and present value calculations to prepare this disclosure.

        Changes in the assumptions or methodologies used to estimate fair values may materially affect the estimated amounts. Also, Management is concerned that there may not be reasonable comparability between institutions due to the wide range of permitted assumptions and methodologies in the absence of active markets. This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values.

        Fair values have been estimated using data which Management considered the best available and estimation methodologies deemed suitable for the pertinent category of financial instrument. The estimated fair value of cash and cash equivalents, deposits with no stated maturities, repurchase agreements and the fair value of commitments to extend credit, is estimated based upon the amount of unamortized deferred loan commitment fees. The fair value of letters of credit is based on the amount of unearned fees plus the estimated cost to terminate the letter of credit. Quoted market prices were used to determine the estimated fair value of available-for-sale investment securities. Fair values of net loans and deposits with stated maturities were calculated using estimated discounted cash flows based on the year-end offering rate for instruments with similar characteristics and maturities.

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FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE M—FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

        The estimated fair values and carrying amounts are summarized as follows:

		2008				2007
(Dollars in thousands)		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount
Financial Assets
	Cash and cash equivalents	$	95,150	$	95,150	$	53,360	$	53,360
	Investment securities available-for-sale		114,584		114,584		97,977		97,977
	Loans held for sale		90,940		90,940		665		665
	Gross loans and leases		1,042,799		940,083		727,372		742,775
	Due from mortgage investors		9,036		9,036		—		—
	Mortgage servicing rights		239		239		—		—
	Derivative instruments		412		412		—		—
Financial Liabilities
	Deposits with no stated maturities		524,737		563,501		429,158		486,292
	Deposits with stated maturities		451,691		451,691		214,854		218,606
	FHLB and other borrowings		167,766		171,170		107,813		115,384
	Subordinated debentures		15,465		15,465		15,465		15,465
	Derivative instruments		618		618		—		—
Off-Balance-Sheet Investments
	Commitments for extended credit and outstanding letters of credit	$	244,033	$	244,033	$	202,893	$	202,893

NOTE N—SUBORDINATED DEBENTURES

        In 2007, Trust III issued $5.0 million (net proceeds of $4.82 million) of preferred capital securities in a pooled institutional placement transaction. These securities were issued through Trust III, a special purpose statutory trust created expressly for the issuance of these securities and investing the proceeds in junior subordinated debentures of the Corporation. These subordinated debentures are subject to mandatory redemption in the year 2037. The debentures and securities will each be callable by the Corporation or Trust III, as applicable, at their option, five years after the date of issuance. At December 31, 2008, the rate paid on these subordinated debentures, based on three-month London Inter-bank offering rate ("LIBOR") plus 140 basis points, was 3.58%.

        In 2003, Trust II issued $10.0 million (net proceeds of $9.79 million) of preferred capital securities in a pooled institutional placement transaction. These securities were issued through Trust II, a special purpose statutory trust created expressly for the issuance of these securities and investing the proceeds in subordinated debentures of the Corporation. These subordinated debentures are subject to mandatory redemption in the year 2033. The debentures and securities will each be callable by the Corporation or Trust II, as applicable, at their option, five years after the date of issuance. At December 31, 2008, the rate paid on these subordinated debentures, based on three-month LIBOR plus 295 basis points, was 6.14%.

        In 2002, Trust I issued $5.0 million (net proceeds of $4.82 million) of preferred capital securities in a pooled institutional placement transaction. These securities were issued through Trust I, a special purpose statutory trust created expressly for the issuance of these securities and investing the proceeds in junior subordinated debentures of the Corporation. These securities were redeemed by the Corporation on

75

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE N—SUBORDINATED DEBENTURES (Continued)

July 7, 2007, and, accordingly, Trust I was dissolved. The redemption of the debentures was coordinated with the $5.0 million Trust III issuance on June 29, 2007. The new issuance bears an interest rate of 3 month LIBOR plus 140 basis points while the redeemed issuance had an interest rate of 3 month LIBOR plus 365 basis points. The Corporation recorded a $161 thousand charge to interest expense in 2007 for accelerated amortization of issuance costs on the redeemed issuance.

        For 2008, 2007, and 2006, interest expense for Trust I, II & III was $896 thousand, $1.5 million and $1.3 million, respectively, with an average interest rate of 9.35%, 9.35%, 8.43%, respectively.

        In March 2005, the Federal Reserve Board adopted a final rule that continues to allow the inclusion of trust preferred securities in Tier I Capital, but with stricter quantitative limits. Under the final rule, after a five-year transition period, the aggregate amount of trust preferred securities and certain other capital elements would be limited to 25% of Tier I Capital elements, net of goodwill. The amount of trust preferred securities and certain other elements in excess of the limit could be included in Tier II Capital, subject to restriction. Based on the final rule, the Corporation includes all of its $15.5 million in trust preferred securities in Tier I Capital.

NOTE O—FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK

        The Corporation is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers and reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. Those instruments involve, to varying degrees, elements of credit and interest rate risks in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Corporation has in particular classes of financial instruments.

        The Corporation's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

        Unless noted otherwise, the Corporation does not require collateral or other security to support financial instruments with credit risk. The contract amounts are as follows:

(Dollars in thousands)		2008		2007
Financial instruments whose contract amounts represent credit risk
	Commitments to grant mortgage loans	$	38,073	$	—
	Unfunded construction loans		22,096		—
	Unfunded commitments under lines of credit		237,630		193,777
	Standby letters of credit and financial guarantees written		6,403		9,115

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer's creditworthiness on a case-by-case basis. The

76

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE O—FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK (Continued)

amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on Management's credit evaluation.

        Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Corporation holds residential or commercial real estate, accounts receivable, inventory and equipment as collateral supporting those commitments for which collateral is deemed necessary. The extent of collateral held for those commitments at December 31, 2008 and 2007, varies up to 100%. Standby letters of credit are collateralized within Management policies. Commercial and standby letters of credit were granted primarily to commercial borrowers.

        A Substantial portion all of the Corporation's loans, commitments, and commercial and standby letters of credit have been granted to customers in the Corporation's primary market area, Chester County, Pennsylvania. Investments in state and municipal securities also involve governmental entities within the Corporation's market area. The concentrations of credit by type of loan are set forth in Note C—Loans. Although the Corporation has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent upon Chester County's economy. The distribution of commitments to extend credit approximates the distribution of loans outstanding.

NOTE P—INTEREST RATE RISK AND DERIVATIVE INSTRUMENTS

        The Bank, as part of its traditional real estate lending and mortgage banking activities, originates fixed-rate 1-4 unit residential loans for sale in the secondary market. At the time of origination, management identifies loans that are expected to be sold in the near future. These warehoused loans have been classified as mortgage loans held for sale in the consolidated balance sheet. These loans expose the Bank to variability in their fair value due to changes in interest rates. If interest rates increase, the value of the loans decreases. Conversely, if interest rates decrease, the value of the loans increases.

        The Bank enters into rate lock commitments to extend credit to borrowers at a specified interest rate upon the ultimate funding of the loan. These rate lock commitments are generally 30 days for a permanent loan and can range up to 360 days for a construction loan. Unfunded loans for which commitments have been entered into are called "pipeline loans." Some of these rate lock commitments will ultimately expire without being completed. To the extent that a loan is ultimately granted and the borrower ultimately accepts the terms of the loan, these rate lock commitments expose the Bank to variability in their fair value due to changes in interest rates. If interest rates increase, the value of these rate lock commitments decreases. Conversely, if interest rates decrease, the value of these rate lock commitments increases.

        Loan commitment related to the origination of mortgage loans that will be held for sale must be accounted for as derivative instruments. Such commitments, along with any related fees received from potential borrowers, are recorded at fair value in derivative assets or liabilities, with changes in fair value recorded in net revenue from sales and brokering of loans.

        To mitigate the effect of this interest rate risk on both the held for sale loans and interest rate lock commitments, the Bank enters into offsetting derivative contracts, primarily forward loan commitments. The forward loan sales commitments lock in the price for the sale of specific loans or loans to be funded under specific interest rate lock commitments or for a generic group of loans with similar characteristics.

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FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE P—INTEREST RATE RISK AND DERIVATIVE INSTRUMENTS (Continued)

These commitments outstanding at December 31, 2008 mature at various dates through February 19, 2009. Mandatory forward sales commitments are agreements to sell a certain notional amount of loans at a specified future time period at a specified price. The Bank incurs a penalty for failure to follow through with the commitment. Best efforts forward sales commitments also result in direct or indirect financial penalties for failure to follow through if the related loans close. The notional amount of forward loan sales commitments hedging warehouse loans and interest rate lock commitments, as well as interest rate lock commitments themselves, and their fair values are summarized as follows at December 31, 2008. The fair values of all of these items are recorded on the balance sheet within other assets and other liabilities as these items are financial derivatives. Notional amounts are not reflected in the consolidated financial statements but represent the dollar amounts of loans that are subject to potential sale under the forward sales commitments or the potential loan amounts to be funded under the interest rate lock commitments.

	December 31, 2008
(Dollars in thousands)	Notional Amount		Fair Value
Mandatory forward sales commitments	$	43,715	$	(583	)
Best efforts forward sales commitments		84,282		(35	)
Interest rate lock commitments		38,073		412

NOTE Q—EMPLOYEE BENEFIT PLANS

1.     Qualified

        The Corporation has two qualified deferred salary savings 401(k) plans. The first plan is the First National Bank of Chester County 401(k) Plan, under which the Corporation contributes $0.75 for each $1.00 that an employee contributes, up to the first 5% of the employee's salary. The second plan is the AHB legacy 401(k) plan under which employees are entitled to $1.00 for each $1.00 that an employee contributes, up to the first 3% of the employee's salary. The Corporation's contribution expense included in the Corporation's income statement is $381 thousand, $306 thousand and $340 thousand in 2008, 2007, and 2006, respectively.

        The Corporation also has a qualified discretionary contribution pension plan (the "QDCP Plan"). Under the QDCP Plan, the Corporation may make annual contributions into the 401(k) Plan on behalf of each eligible participant in an amount equal to 3% of salary up to $30,000 in salary plus 6% of salary in excess of $30 thousand up to $200 thousand. Contribution expense in 2008, 2007 and 2006 under the QDCP Plan was $500 thousand, $512 thousand and $343 thousand, respectively. The Corporation may make additional discretionary employer contributions subject to approval of the Board of Directors.

2.     Non-Qualified

        The Corporation makes contributions to a non-qualified supplemental benefit retirement plan ("SBRP") equal to 3% of the participant's salary. Participation is limited to senior officers of the Bank. Contribution expense for 2008, 2007 and 2006 under the SBRP was $88 thousand, $85 thousand and $72 thousand, respectively. The Corporation may make additional discretionary employer contributions subject to the approval of the Board of Directors.

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FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE R—COMMITMENTS, CONTINGENCIES AND GUARANTEES

        Future minimum rental payments are as follow:

(Dollars in thousands)
2009	$	1,737
2010		1,594
2011		1,471
2012		1,439
2013		1,442
Thereafter		5,053
	$	12,736

        The Corporation leases facilities from a director for which it paid $308 thousand, $356 thousand and $182 thousand during the years ended December 31, 2008, 2007 and 2006, respectively.

        The Corporation has agreements with several of the Corporation's officers that provide for severance payments upon termination of employment under certain circumstances or a change of control as defined.

        The Corporation is involved in certain litigation arising in the ordinary course of business. In the opinion of Management, the outcome of this litigation will not have a significant effect on the accompanying financial statements.

        The Bank currently guarantees to a third party the residual value of equipment that is leased by that third party to our customers. At December 31, 2008 the maximum amount that the Bank my have to pay under these guarantees is $31 thousand. The Bank's leasing department management believes that the probability of payment on these guarantees is remote.

        During the ordinary course of business, the Bank sells mortgage loans and indemnifies the purchaser for breaches of representations and warranties. Additionally, the Bank is liable to reimburse certain investors for profits pertaining to loans that payoff within 180 days of sale or to repurchase loans that go into early payment default as defined in the individual agreements with investors. The recorded liability for such indemnifications was $433,500 at December 31, 2008.

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FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE S—CONDENSED FINANCIAL INFORMATION—PARENT COMPANY ONLY

        Condensed financial information for First Chester County Corporation (Parent Company only) follows:

CONDENSED BALANCE SHEETS

			December 31
(Dollars in thousands)			2008		2007
ASSETS
	Cash and cash equivalents		$	747	$	730
	Investment securities available for sale, at fair value			1,849		2,763
	Investment in subsidiaries			101,280		77,957
	Intercompany loan			565		1,248
	Other assets			1,321		1,227
		Total assets	$	105,762	$	83,925
LIABILITIES AND STOCKHOLDERS' EQUITY
	Subordinated debt		$	15,465	$	15,465
	Other short-term borrowings			6,000		—
	Other liabilities			465		481
	Stockholders' equity			83,832		67,979
		Total liabilities and stockholders' equity	$	105,762	$	83,925

CONDENSED STATEMENTS OF INCOME

			Years ended December 31
(Dollars in thousands)			2008			2007			2006
INCOME
	Dividends from investment securities		$	156		$	155		$	166
	Other income			94			291			195
		Total income		250			446			361
EXPENSES
	Other expenses			1,375			1,986			1,636
		Total expenses		1,375			1,986			1,636
		Income before income taxes		(1,125	)		(1,540	)		(1,275	)
INCOME TAX (BENEFIT)				(383	)		(524	)		(434	)
		Income before equity in undistributed
		income of subsidiaries		(742	)		(1,016	)		(841	)
EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES				6,199			8,685			8,176
		NET INCOME	$	5,457		$	7,669		$	7,335

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FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE S—CONDENSED FINANCIAL INFORMATION—PARENT COMPANY ONLY (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

				Years ended December 31
(Dollars in thousands)				2008			2007			2006
OPERATING ACTIVITIES
	Net income			$	5,457		$	7,669		$	7,335
	Adjustments to reconcile net income to net cash provided by (used in) operating activities Equity in undistributed income of subsidiary				(6,199	)		(8,685	)		(8,176	)
		(Increase) decrease in other assets			483			192			135
		Increase (decrease) in other liabilities			(90	)		(202	)		(250	)
			Net cash used in operating activities		(349	)		(1,026	)		(956	)
INVESTING ACTIVITIES
	Proceeds from sales and maturities of investment securities available for sale				974			—			—
	Purchases of investment securities available for sale				—			(2	)		(8	)
	Dividends received from subsidiaries				3,572			3,975			4,118
	Investment in subsidiary				(7,500	)		—			—
	Net cash provided by (used in) investing activities				(2,954	)		3,973			4,110
FINANCING ACTIVITIES
	Proceeds from increases in short term borrowings				6,000			—			—
	Dividends paid				(2,905	)		(2,808	)		(2,786	)
	Proceeds from issuance of subordinated debt				—			5,155			—
	Repayment of subordinated debt				—			(5,155	)		—
	Net increase (decrease) in treasury stock transactions				225			(501	)		(85	)
	Share based compensation tax benefit				—			91			231
			Net cash provided by (used in) financing activities		3,320			(3,218	)		(2,640	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					17			(271	)		514
Cash and cash equivalents at beginning of year					730			1,001			487
Cash and cash equivalents at end of year				$	747		$	730		$	1,001

81

FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES (Continued)

NOTE T—QUARTERLY FINANCIAL DATA (UNAUDITED)

        A summary of the unaudited quarterly results of operations is as follows:

2008 (Dollars in thousands, except per share)	December 31		September 30		June 30		March 31
Interest income		13,559		13,876		13,796		14,077
Interest expense		5,253		5,326		5,647		6,199
Net interest income		8,306		8,550		8,149		7,878
Net income		1,288		807		1,842		1,520
Net income per share (Basic)		0.25		0.16		0.36		0.29
Net Income per share (Diluted)		0.25		0.16		0.35		0.29

2007 (Dollars in thousands, except per share)
Interest income	14,209	14,381	14,323	13,523
Interest expense	6,391	6,390	6,369	5,823
Net interest income	7,818	7,991	7,954	7,700
Net income	1,737	2,777	1,779	1,376
Net income per share (Basic)	0.34	0.54	0.34	0.27
Net Income per share (Diluted)	0.33	0.53	0.34	0.26

82

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        None.

Item 9A.    Controls and Procedures

        Appearing as Exhibits 31.1, 31.2, and 31.3 (the "302 Certifications") to this Annual Report are three certifications, one by each of the Corporation's Chairman and Chief Executive Officer ("CEO"), President, and Treasurer and Chief Financial Officer ("CFO") (the Corporation's principal executive, operating, and accounting and financial officer, and, collectively, the "Principal Officers"). This Item 9A contains information concerning the evaluation of the Corporation's disclosure controls and procedures and matters regarding its internal control over financial reporting that are referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented in the 302 Certifications.

Disclosure Controls and Procedures

        The SEC requires that as of the end of the period covered by this Annual Report on Form 10-K, the Corporation's CEO and CFO/Treasurer evaluate the effectiveness of the design and operation of the Corporation's "disclosure controls and procedures" and report their conclusions on the effectiveness of the design and operation of the Corporation's disclosure controls and procedures in this Annual Report.

        "Disclosure controls and procedures" mean the controls and other procedures that are designed with the objective of ensuring that information required to be disclosed in the Corporation's reports filed under the Securities Exchange Act of 1934 (the "Exchange Act"), such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms promulgated by the SEC. The Corporation's disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to Management, including the Principal Officers, as appropriate to allow timely decisions regarding required disclosure.

        Management, including the Principal Officers, conducted an evaluation, as of the end of the period covered by this Report, of the effectiveness of the Corporation's disclosure controls and procedures. Based upon their evaluation of the disclosure controls and procedures, the Principal Officers have concluded that the Corporation's disclosure controls and procedures are effective and allow timely decisions regarding required disclosure. During the quarter ended December 31, 2008, there were no significant changes to the Corporation's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        Management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Corporation's principal executive and principal financial officers and implemented by Management and other personnel, subject to the oversight of the Corporation's Board of Directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•

Pertain to the maintenance of records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts

83

and expenditures of the Corporation are being made only in accordance with authorizations of management and directors of the Corporation; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Corporation's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        Management assessed the effectiveness of the Corporation's internal control over financial reporting as of December 31, 2008. In making this assessment, Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

        Our independent registered public accounting firm, Grant Thornton LLP, audited the Corporation's internal control over financial reporting as of December 31, 2008 and their report dated March 16, 2009, expressing an unqualified opinion, is included following this Item 9A.

        On December 31, 2008, we completed our acquisition of American Home Bank, National Association ("AHB"). For additional information regarding the acquisition, please see item 1 of this Annual Report on Form 10-K. As of December 31, 2008, AHB represented approximately 19% of our total consolidated assets.

        Our management has excluded AHB from the scope of its report on internal control over financial reporting for the year ended December 31, 2008. Management is in the process of implementing our internal control structure over the operations of AHB, and expects that this effort will be completed during 2009. The assessment and documentation of internal controls requires a complete review of controls operating in a stable and effective environment.

        Based upon its assessment, Management believes that, as of December 31, 2008, the Corporation's internal control over financial reporting was effective.

March 16, 2009

84

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
First Chester County Corporation

        We have audited First Chester County Corporation (a Pennsylvania corporation) and subsidiaries' (the Corporation) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on The Corporation's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A Corporation's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Corporation's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Corporation's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, First Chester County Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by COSO.

        As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of American Home Bank, National Association ("AHB"), which was acquired on December 31, 2008 and is included in the 2008 consolidated financial statements of First Chester County Corporation and Subsidiaries. AHB represented approximately 19% of total consolidated assets as of December 31, 2008. Our audit of internal control over financial reporting for First Chester County Corporation and Subsidiaries also did not include an evaluation of the internal control over financial reporting of AHB.

85

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of First Chester County Corporation and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2008 and our report dated March 16, 2009 expressed an unqualified opinion.

/s/  GRANT THORNTON LLP

Philadelphia, Pennsylvania
March 16, 2009

86

Item 9B.    Other Information

None.

87

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

        The information called for by this Item is incorporated herein by reference to the Corporation's Proxy Statement for its 2009 Annual Meeting of Shareholders.

Item 11.    Executive Compensation.

        The information called for by this Item is incorporated herein by reference to the Corporation's Proxy Statement for its 2009 Annual Meeting of Shareholders.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

        The information called for in Item 201(d) of Regulation S-K is set forth below. The other information called for by this Item is incorporated herein by reference to the Corporation's Proxy Statement for its 2009 Annual Meeting of Shareholders.

Equity Compensation Plan Information Form

	Number of securities to be issued upon exercise of outstanding options, warrants and rights*			Weighted- average exercise price of outstanding options, warrants and rights*		Number of securities remaining available for future issuance under equity compensation plans**
Equity compensation plans approved by security holders		151,034	***	$	14.48		97,792
Equity compensation plans not approved by security holders		—			—		—
Total(1)		151,034	***	$	14.48		97,792

*

The securities referred to in these columns are shares of the Corporation's Common Stock issuable upon exercise of options issued pursuant to the Corporation's 1995 Stock Option Plan.

**

The securities referred to in this column are shares of the Corporation's Common Stock which may be awarded pursuant to the Company's 2005 Restricted Stock Plan.

***

Number of options issued and outstanding that were exercisable as December 31, 2008.

(1)

Does not include options to purchase 147,000 shares of the Corporation's Common Stock which were assumed in connection with the acquisition of AHB.

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

        The information called for by this item is incorporated herein by reference to the Corporation's Proxy Statement for its 2009 Annual Meeting of Shareholders.

Item 14.    Principal Accountant Fees and Services

        The information called for by this Item is incorporated herein by reference to the Corporation's Proxy Statement for its 2009 Annual Meeting of Shareholders.

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PART IV

Item 15.    Exhibits, Financial Statements and Schedules.

1.     Financial Statements

        The Consolidated Financial Statements, as of December 31, 2008 and for each of the three years in the period ending December 31, 2008 and 2007, together with the report thereon of Grant Thornton LLP dated March 16, 2009, are filed as part of this Report under Item 8.

2.     Financial Statement Schedules

        Financial Statement Schedules are not required under the related instructions of the Securities and Exchange Commission, are inapplicable or are included in the Consolidated Financial Statements or notes thereto.

3.     Exhibits

        The following is a list of the exhibits filed with, or incorporated by reference into, this Report (those exhibits marked with an asterisk are filed herewith and those exhibits marked "(CP)" are management contracts or compensatory plans, contracts or arrangements in which a director or executive officer participates):

2.1	Agreement and Plan of Merger, dated as of September 18, 2008, among First Chester County Corporation, First National Bank of Chester County and American Home Bank, National Association with Schedules and Annexes thereto. (Incorporated herein by reference to Annex A of First Chester County Corporation's Registration Statement on Form S-4/A, filed October 30, 2008 (SEC File No. 333-154273)).
2.2	Amendment to Agreement and Plan of Merger, dated as of October 14, 2008, among First Chester County Corporation, First National Bank of Chester County and American Home Bank, National Association. (Incorporated herein by reference to Annex A of First Chester County Corporation's Registration Statement on Form S-4/A, filed October 30, 2008 (SEC File No. 333-154273)).
3.1	Amended Articles of Incorporation of First Chester County Corporation. (Incorporated herein by reference to Exhibit 3(i) to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.)
3.2	Bylaws of First Chester County Corporation, as amended. (Incorporated herein by reference to Exhibit 3(ii) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2007.)
10.1	Employment Agreement, dated as of June 27, 2008, by and between First Chester County Corporation and First National Bank of Chester County and John A. Featherman, Chairman and Chief Executive Officer. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.) (CP)

89

10.2 Amendment to the Employment Agreement among First Chester County Corporation, First National Bank of Chester County and John A. Featherman, III, dated as of December 23, 2008. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Form 8-K, dated February 17, 2009.) (CP) The form of this amendment is substantially identical in all material respects (except as to the parties thereto, the dates of execution and other details) with amendments to the following agreements:

Agreement	Date of Agreement	Executive	Date of Amendment
Employment Agreement (CP)	June 27, 2008	Kevin C. Quinn President	December 23, 2008
Employment Agreement (CP)	September 18, 2008	James M. Deitch Managing Director of the AHB Division of the Bank	December 31, 2008
Employment Agreement (CP)	September 18, 2008	Anna Ruth Smith President of the AHB Division of the Bank	December 31, 2008
Change of Control Agreement (CP)	June 3, 2005	John Balzarini Chief Financial Officer	December 23, 2008
Change of Control Agreement (CP)	June 10, 2005	Michelle Venema EVP—Business Banking	December 24, 2008
Separation Benefits Agreement (CP)	October 2, 2006	Clay T. Henry EVP—Wealth Management Division	December 24, 2008

10.3	Employment Agreement, dated as of June 27, 2008, by and between First Chester County Corporation and First National Bank of Chester County and Kevin C. Quinn, President. (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.) (CP)
10.4	Employment Agreement, dated September 18, 2008, by and between First Chester County Corporation, First National Bank of Chester County and James M. Deitch. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Form 8-K, dated September 18, 2008.) (CP)
10.5	Employment Agreement, dated September 18, 2008, by and between First Chester County Corporation, First National Bank of Chester County and Anna Ruth Smith. (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Form 8-K, dated September 18, 2008.) (CP)
10.6	Change of Control Agreement between First National Bank of Chester County and John Balzarini, dated June 3, 2005. (Incorporated herein by reference to Exhibit 10.6 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.7	Change of Control Agreement between First National Bank of Chester County and Michelle Venema, dated June 10, 2005. (Incorporated herein by reference to Exhibit 10.8 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)

90

10.8	Separation Benefits Agreement, dated as of October 2, 2006, by and between First National Bank of Chester County and Clay T. Henry. (Incorporated herein by reference to Exhibit 10(bb) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.) (CP)
10.9	Change of Control Agreement between First National Bank of Chester County and Karen Walter, dated May 6, 2005. (Incorporated herein by reference to Exhibit 10.4 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.10	Amendment to the Change of Control Agreement among First National Bank of Chester County and Karen Walter, dated as of December 30, 2008. (CP)* The form of this amendment is substantially identical in all material respects (except as to the parties thereto, the dates of execution and other details) with amendments to the following agreements:

Agreement	Date of Agreement		Executive	Date of Amendment
Change of Control Agreement (CP)		May 25, 2005	Anthony Poluch EVP—Business Development of FNB	December 30, 2008
Change of Control Agreement (CP)		June 7, 2007	Sheri Ashman EVP—Marketing of FNB	December 23, 2008
Change of Control Agreement (CP)		March 28, 2006	Michael Steinberger SVP—FNB	December 31, 2008
Change of Control Agreement (CP)		June 19, 2006	Andrew Stump SVP—Commercial Lending	December 31, 2008

10.11	Change of Control Agreement between First National Bank of Chester County and Anthony Poluch, dated May 25, 2005. (Incorporated herein by reference to Exhibit 10.9 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.12	Change of Control Agreement between First National Bank of Chester County and Sheri Ashman, dated June 7, 2007. (Incorporated herein by reference to Exhibit 10(ee) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2007.) (CP)
10.13	[Reserved]
10.14	Change of Control Agreement between First National Bank of Chester County and Michael Steinberger, dated March 28, 2006. (CP)*
10.15	Change of Control Agreement between First National Bank of Chester County and Andrew Stump, dated June 19, 2006. (CP)*
10.16	Compensatory Arrangements of Executive Officers and Directors for 2009. (CP)*
10.17	Support Agreement, dated September 18, 2008, by and between First Chester County Corporation and Franklin Financial Services Corporation. (Incorporated herein by reference to Exhibit 10.3 to First Chester County Corporation's Form 8-K, dated September 18, 2008.)

91

10.18	First Chester County Corporation's Dividend Reinvestment and Stock Purchase Plan. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's registration statement on Form S-3, filed August 7, 2003 (SEC File No. 333-107739).)
10.19	First Chester County Corporation's Amended and Restated Stock Bonus Plan. (Incorporated herein by reference to Exhibit 10 to First Chester County Corporation's registration statement on Form S-8, filed August 12, 1997 (SEC File No. 333-33411).) (CP)
10.20	First National Bank of Chester County's Amended and Restated Supplemental Benefit Retirement Plan, effective date January 1, 2005. (Incorporated herein by reference to Exhibit 10(f) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.) (CP)
10.21	First National Bank of Chester County's Amendment to the Amended and Restated Supplemental Benefit Retirement Plan, effective date June 19, 2008. (CP)*
10.22	First Chester County Corporation's Amended and Restated 1995 Stock Option Plan. (Incorporated herein by reference to an appendix to First Chester County Corporation's Proxy Statement for the 2001 Annual Meeting of Shareholders.) (CP)
10.23	First Chester County Corporation's Form of Stock Option Agreement for Directors. (Incorporated herein by reference to Exhibit 10(j) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.) (CP)
10.24	First Chester County Corporation's Form of Stock Option Agreement for Executive Officers. (Incorporated herein by reference to Exhibit 10(k) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.) (CP)
10.25	First Chester County Corporation's 2005 Restricted Stock Plan. (Incorporated herein by reference to Appendix A to First Chester County Corporation's 2005 Proxy Statement filed March 17, 2005.) (CP)
10.26	First Chester County Corporation's Form of Restricted Stock Award Agreement used for grants of restricted stock on March 8, 2007. (Incorporated herein by reference to Exhibit 10(k) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.) (CP)
10.27	First Chester County Corporation's Form of Restricted Stock Awards Agreement used for grants of restricted stock on February 7, 2008. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.) (CP)
10.28	Amendment to First Chester County Corporation's Form of Restricted Stock Awards Agreement used for grants of restricted stock on February 7, 2008. (CP)*
10.29	Severance Agreement and General Release between First National Bank of Chester County and Deborah Pierce, dated November 19, 2008. (CP)*
10.30	First Chester County Corporation's Amended and Restated Executive Incentive Plan, as amended June 19, 2008, for the year ended December 31, 2008. (CP)*
10.31	Amendment to First Chester County Corporation's Executive Incentive Plan as of December 10, 2008. (CP)*
10.32	Lease Agreement, dated as of March 28, 2005, by and between First National Bank of Chester County and B.K. Campbell, Inc. (an affiliate of Brian Campbell, a Director of First Chester County Corporation). (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.)

92

10.33	Joint Marketing Agreement, dated as of July 1, 2005, by and between First National Bank of Chester County, First National Wealth Advisory Services and the Elite Group, LLC (an affiliate of Matthew Naylor, a Director of First Chester County Corporation). (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.)
10.34	Lease Agreement, dated as of May 1, 2007, by and between First National Bank of Chester County and Beiler-Campbell Inc. (an affiliate of Brian Campbell, a director of First Chester County Corporation). (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.)
10.35	Sale Agreement, dated as of September 28, 2007, by and between First National Bank of Chester County and FTN Ramp, LLC. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.)
10.36	Lease Agreement, dated as of September 28, 2007, by and between First National Bank of Chester County and FI Properties Pool I LP. (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.)
10.37	American Home Bank, National Association Stock Option Plan.*
10.38	Form of Stock Option Agreement issued under American Home Bank, National Association Stock Option Plan. (Incorporated herein by reference to Exhibit 10.36 to First Chester County Corporation's Registration Statement on Form S-4, filed October 15, 2008 (SEC File No. 333-154273)).
14.1	First Chester County Corporation's Code of Conduct (Ethics) (Incorporated herein by reference to Exhibit 14 to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.)
21.1	Subsidiaries of First Chester County Corporation.*
23.1	Consent of Grant Thornton LLP, dated March 16, 2009.*
31.1	Certification of Chief Executive Officer.*
31.2	Certification of President.*
31.3	Certification of Treasurer and Chief Financial Officer.*
32.1	Certification of Chief Executive Officer.*
32.2	Certification of President.*
32.3	Certification of Treasurer and Chief Financial Officer.*

93

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FIRST CHESTER COUNTY CORPORATION
By:	/s/ JOHN A. FEATHERMAN, III John A. Featherman, III Chief Executive Officer and Chairman of the Board

Date: March 16, 2009

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Corporation and in the capacities indicated as of March 16, 2009.

Name	Title
/s/ JOHN A. FEATHERMAN, III John A. Featherman, III	Chief Executive Officer and Chairman of the Board
/s/ JOHN BALZARINI John Balzarini	Treasurer and Chief Financial Officer (Principal Accounting and Financial Officer)
/s/ JOHN A. FEATHERMAN, III John A. Featherman, III	Director
/s/ M. ROBERT CLARKE M. Robert Clarke	Director
/s/ CLIFFORD E. DEBAPTISTE Clifford E. DeBaptiste	Director
/s/ JOHN S. HALSTED John S. Halsted	Director
/s/ J. CAROL HANSON J. Carol Hanson	Director
/s/ LYNN JOHNSON-PORTER Lynn Johnson- Porter	Director
/s/ EDWARD A. LEO Edward A. Leo	Director

94

Name	Title
/s/ DAVID L. PEIRCE David L. Peirce	Director
/s/ JOHN B. WALDRON John B. Waldron	Director
/s/ KEVIN C. QUINN Kevin C. Quinn	Director
/s/ BRIAN K. CAMPBELL Brian K. Campbell	Director
/s/ MATTHEW S. NAYLOR Matthew S. Naylor	Director
/s/ JAMES M. DEITCH James M. Deitch	Director

95

INDEX TO EXHIBITS

        The following is a list of the exhibits filed with, or incorporated by reference into, this Report (those exhibits marked with an asterisk are filed herewith and those exhibits marked "(CP)" are management contracts or compensatory plans, contracts or arrangements in which a director or executive officer participates):

2.1	Agreement and Plan of Merger, dated as of September 18, 2008, among First Chester County Corporation, First National Bank of Chester County and American Home Bank, National Association with Schedules and Annexes thereto. (Incorporated herein by reference to Annex A of First Chester County Corporation's Registration Statement on Form S-4/A, filed October 30, 2008 (SEC File No. 333-154273)).
2.2	Amendment to Agreement and Plan of Merger, dated as of October 14, 2008, among First Chester County Corporation, First National Bank of Chester County and American Home Bank, National Association. (Incorporated herein by reference to Annex A of First Chester County Corporation's Registration Statement on Form S-4/A, filed October 30, 2008 (SEC File No. 333-154273)).
3.1	Amended Articles of Incorporation of First Chester County Corporation. (Incorporated herein by reference to Exhibit 3(i) to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.)
3.2	Bylaws of First Chester County Corporation, as amended. (Incorporated herein by reference to Exhibit 3(ii) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2007.)
10.1	Employment Agreement, dated as of June 27, 2008, by and between First Chester County Corporation and First National Bank of Chester County and John A. Featherman, Chairman and Chief Executive Officer. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.) (CP)
10.2	Amendment to the Employment Agreement among First Chester County Corporation, First National Bank of Chester County and John A. Featherman, III, dated as of December 23, 2008. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Form 8-K, dated February 17, 2009.) (CP) The form of this amendment is substantially identical in all material respects (except as to the parties thereto, the dates of execution and other details) with amendments to the following agreements:

Agreement	Date of Agreement		Executive	Date of Amendment
Employment Agreement (CP)		June 27, 2008	Kevin C. Quinn President	December 23, 2008
Employment Agreement (CP)		September 18, 2008	James M. Deitch Managing Director of the AHB Division of the Bank	December 31, 2008
Employment Agreement (CP)		September 18, 2008	Anna Ruth Smith President of the AHB Division of the Bank	December 31, 2008
Change of Control Agreement (CP)		June 3, 2005	John Balzarini Chief Financial Officer	December 23, 2008
Change of Control Agreement (CP)		June 10, 2005	Michelle Venema EVP—Business Banking	December 24, 2008
Separation Benefits Agreement (CP)		October 2, 2006	Clay T. Henry EVP—Wealth Management Division	December 24, 2008

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10.3	Employment Agreement, dated as of June 27, 2008, by and between First Chester County Corporation and First National Bank of Chester County and Kevin C. Quinn, President. (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.) (CP)
10.4	Employment Agreement, dated September 18, 2008, by and between First Chester County Corporation, First National Bank of Chester County and James M. Deitch. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Form 8-K, dated September 18, 2008.) (CP)
10.5	Employment Agreement, dated September 18, 2008, by and between First Chester County Corporation, First National Bank of Chester County and Anna Ruth Smith. (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Form 8-K, dated September 18, 2008.) (CP)
10.6	Change of Control Agreement between First National Bank of Chester County and John Balzarini, dated June 3, 2005. (Incorporated herein by reference to Exhibit 10.6 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.7	Change of Control Agreement between First National Bank of Chester County and Michelle Venema, dated June 10, 2005. (Incorporated herein by reference to Exhibit 10.8 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.8	Separation Benefits Agreement, dated as of October 2, 2006, by and between First National Bank of Chester County and Clay T. Henry. (Incorporated herein by reference to Exhibit 10(bb) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.) (CP)
10.9	Change of Control Agreement between First National Bank of Chester County and Karen Walter, dated May 6, 2005. (Incorporated herein by reference to Exhibit 10.4 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.10	Amendment to the Change of Control Agreement among First National Bank of Chester County and Karen Walter, dated as of December 30, 2008. (CP)* The form of this amendment is substantially identical in all material respects (except as to the parties thereto, the dates of execution and other details) with amendments to the following agreements:

Agreement	Date of Agreement		Executive	Date of Amendment
Change of Control Agreement (CP)		May 25, 2005	Anthony Poluch EVP—Business Development of FNB	December 30, 2008
Change of Control Agreement (CP)		June 7, 2007	Sheri Ashman EVP—Marketing of FNB	December 23, 2008
Change of Control Agreement (CP)		March 28, 2006	Michael Steinberger SVP—FNB	December 31, 2008
Change of Control Agreement (CP)		June 19, 2006	Andrew Stump SVP—Commercial Lending	December 31, 2008

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10.11	Change of Control Agreement between First National Bank of Chester County and Anthony Poluch, dated May 25, 2005. (Incorporated herein by reference to Exhibit 10.9 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.) (CP)
10.12	Change of Control Agreement between First National Bank of Chester County and Sheri Ashman, dated June 7, 2007. (Incorporated herein by reference to Exhibit 10(ee) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2007.) (CP)
10.13	[Reserved]
10.14	Change of Control Agreement between First National Bank of Chester County and Michael Steinberger, dated March 28, 2006. (CP)*
10.15	Change of Control Agreement between First National Bank of Chester County and Andrew Stump, dated June 19, 2006. (CP)*
10.16	Compensatory Arrangements of Executive Officers and Directors for 2009. (CP)*
10.17	Support Agreement, dated September 18, 2008, by and between First Chester County Corporation and Franklin Financial Services Corporation. (Incorporated herein by reference to Exhibit 10.3 to First Chester County Corporation's Form 8-K, dated September 18, 2008.)
10.18	First Chester County Corporation's Dividend Reinvestment and Stock Purchase Plan. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's registration statement on Form S-3, filed August 7, 2003 (SEC File No. 333-107739).)
10.19	First Chester County Corporation's Amended and Restated Stock Bonus Plan. (Incorporated herein by reference to Exhibit 10 to First Chester County Corporation's registration statement on Form S-8, filed August 12, 1997 (SEC File No. 333-33411).) (CP)
10.20	First National Bank of Chester County's Amended and Restated Supplemental Benefit Retirement Plan, effective date January 1, 2005. (Incorporated herein by reference to Exhibit 10(f) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.) (CP)
10.21	First National Bank of Chester County's Amendment to the Amended and Restated Supplemental Benefit Retirement Plan, effective date June 19, 2008. (CP)*
10.22	First Chester County Corporation's Amended and Restated 1995 Stock Option Plan. (Incorporated herein by reference to an appendix to First Chester County Corporation's Proxy Statement for the 2001 Annual Meeting of Shareholders.) (CP)
10.23	First Chester County Corporation's Form of Stock Option Agreement for Directors. (Incorporated herein by reference to Exhibit 10(j) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.) (CP)
10.24	First Chester County Corporation's Form of Stock Option Agreement for Executive Officers. (Incorporated herein by reference to Exhibit 10(k) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2004.) (CP)
10.25	First Chester County Corporation's 2005 Restricted Stock Plan. (Incorporated herein by reference to Appendix A to First Chester County Corporation's 2005 Proxy Statement filed March 17, 2005.) (CP)

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10.26	First Chester County Corporation's Form of Restricted Stock Award Agreement used for grants of restricted stock on March 8, 2007. (Incorporated herein by reference to Exhibit 10(k) to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.) (CP)
10.27	First Chester County Corporation's Form of Restricted Stock Awards Agreement used for grants of restricted stock on February 7, 2008. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.) (CP)
10.28	Amendment to First Chester County Corporation's Form of Restricted Stock Awards Agreement used for grants of restricted stock on February 7, 2008. (CP)*
10.29	Severance Agreement and General Release between First National Bank of Chester County and Deborah Pierce, dated November 19, 2008. (CP)*
10.30	First Chester County Corporation's Amended and Restated Executive Incentive Plan, as amended June 19, 2008, for the year ended December 31, 2008. (CP)*
10.31	Amendment to First Chester County Corporation's Executive Incentive Plan as of December 10, 2008. (CP)*
10.32	Lease Agreement, dated as of March 28, 2005, by and between First National Bank of Chester County and B.K. Campbell, Inc. (an affiliate of Brian Campbell, a Director of First Chester County Corporation). (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.)
10.33	Joint Marketing Agreement, dated as of July 1, 2005, by and between First National Bank of Chester County, First National Wealth Advisory Services and the Elite Group, LLC (an affiliate of Matthew Naylor, a Director of First Chester County Corporation). (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.)
10.34	Lease Agreement, dated as of May 1, 2007, by and between First National Bank of Chester County and Beiler-Campbell Inc. (an affiliate of Brian Campbell, a director of First Chester County Corporation). (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.)
10.35	Sale Agreement, dated as of September 28, 2007, by and between First National Bank of Chester County and FTN Ramp, LLC. (Incorporated herein by reference to Exhibit 10.1 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.)
10.36	Lease Agreement, dated as of September 28, 2007, by and between First National Bank of Chester County and FI Properties Pool I LP. (Incorporated herein by reference to Exhibit 10.2 to First Chester County Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.)
10.37	American Home Bank, National Association Stock Option Plan.*
10.38	Form of Stock Option Agreement issued under American Home Bank, National Association Stock Option Plan. (Incorporated herein by reference to Exhibit 10.36 to First Chester County Corporation's Registration Statement on Form S-4, filed October 15, 2008 (SEC File No. 333-154273)).

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14.1	First Chester County Corporation's Code of Conduct (Ethics) (Incorporated herein by reference to Exhibit 14 to First Chester County Corporation's Annual Report on Form 10-K for the year ended December 31, 2006.)
21.1	Subsidiaries of First Chester County Corporation.*
23.1	Consent of Grant Thornton LLP, dated March 16, 2009.*
31.1	Certification of Chief Executive Officer.*
31.2	Certification of President.*
31.3	Certification of Treasurer and Chief Financial Officer.*
32.1	Certification of Chief Executive Officer.*
32.2	Certification of President.*
32.3	Certification of Treasurer and Chief Financial Officer.*

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STOCK PRICE PERFORMANCE GRAPH

        The following graph illustrates a five year comparison of cumulative shareholder return on the Corporation's Common Stock as compared to the NASDAQ Composite, the SNL $500 Million to $1 Billion Bank Index, and the SNL $1 Billion to $5 Billion Bank Index for the years ended December 31, 2004, 2005, 2006, 2007 and 2008. Previously, the Corporation presented only the NASDAQ Composite and the SNL $500 Million to $1 Billion Bank Index. However, this year, because the Corporation's assets exceeded $1 Billion at September 30, 2008 and December 31, 2008, the Corporation believes the SNL $1 Billion to $5 Billion Bank Index provides a better comparison and a more appropriate benchmark against which to measure stock performance going forward. In accordance with SEC regulations, the following graph presents both SNL indices for the five year period.

	Period Ending
Index	12/31/03		12/31/04		12/31/05		12/31/06		12/31/07		12/31/08
First Chester County Corporation		100.00		111.79		89.24		100.43		84.88		51.16
NASDAQ Composite		100.00		108.59		110.08		120.56		132.39		78.72
SNL Bank $500M-$1B		100.00		113.32		118.18		134.41		107.71		69.02
SNL Bank $1B-$5B		100.00		123.42		121.31		140.38		102.26		84.81

Source: SNL Financial LC, Charlottesville, VA © 2009

For additional information regarding the SNL Index contact SNL Support at performancegraph@snl.com.

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EX-10.10

Exhibit 10.10

AMENDMENT TO CHANGE OF CONTROL AGREEMENT

THIS AMENDMENT (the “Amendment”) is made as of December 30, 2008, by and between FIRST NATIONAL BANK OF CHESTER COUNTY, a wholly-owned subsidiary of First Chester County Corporation, and a national banking association (the “Bank”“) and Karen D. Walter (“Executive”).

BACKGROUND

WHEREAS, the Bank and Executive entered into an agreement, dated as of    May 6, 2005 (the “Change of Control Agreement”) under which Executive is entitled to certain payments and benefits in connection with Executive’s termination of employment from the Bank in certain circumstances (“Severance”);

WHEREAS, it is in the best interests of Executive and the Bank to amend the Change of Control Agreement to comply with final regulations issued by the Internal Revenue Service under Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) in order for Executive to avoid the adverse tax consequences that would arise from a failure to comply with Code Section 409A, including the accelerated recognition of income by Executive and an imposition of an additional 20% excise tax on Severance payable to Executive under the Change of Control Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, the parties, intending to be legally bound hereby amend the Change of Control Agreement by eliminating Section 9 in its entirety and replacing it with the following new Section 9:

9)RESTRICTIONS AND LIMITATIONS.

For purposes of this Agreement, Executive’s termination of employment shall mean Executive’s “separation from service” as defined under Code Section 409A.  Each payment under this Agreement that is determined to be subject to Section 409A shall be treated as a separate payment.  In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement.  Notwithstanding any provision of this Agreement to the contrary, if Executive is a  “specified employee” (as defined in Section 409A of the Code) as of his “separation from service” (as defined in Section 409A of the Code), then the payment of any amounts payable hereunder that are subject to Section 409A of the Code shall be postponed in compliance with Section 409A (without any reduction in such payments ultimately paid or provided to Executive) until the first payroll date that occurs after the date that is six (6) months following Executive’s “separation from service.”  Any such postponed payments shall be paid in a lump sum to Executive on the first payroll date that occurs after the date that is six (6) months following Executive’s “separation from service.”  If Executive dies during the postponement period prior to the payment of the postponed amount, the amounts withheld on account of Section 409A shall be paid to Executive’s estate within sixty (60) days after the date of his death.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first written above.

FIRST NATIONAL BANK OF CHESTER COUNTY
By:	/s/ Kevin C. Quinn
	Kevin C. Quinn, President
EXECUTIVE
	/s/ Karen D. Walter
	Karen D. Walter

EX-10.14

Exhibit 10.14

CHANGE OF CONTROL, NON-COMPETE AND
NON-DISCLOSURE AGREEMENT

THIS CHANGE OF CONTROL, NON-COMPETE AND NON-DISCLOSURE AGREEMENT (the “Agreement”) is made as of this 28 day of March, 2006, by and between FIRST NATIONAL BANK OF CHESTER COUNTY, a wholly-owned subsidiary of First Chester County Corporation and a national banking association with its principal offices located at 9 North High Street, West Chester, Pennsylvania (hereinafter individually referred to as the “Bank”) and Michael T.  Steinberger of 906 Tallmadge Drive, West Chester, PA 19380 (hereinafter referred to as “Executive”).

BACKGROUND

WHEREAS, the Bank desires to ensure the continued employment of Executive with the Bank by providing certain benefits to Executive in connection with a Change of Control (as defined below) and the compensation increase effective on the date of the signing of this Agreement;

WHEREAS, Executive is desirous of securing such benefits on the terms and conditions set forth herein; and

WHEREAS, in consideration of the receipt of such benefits, Executive is willing to be bound by certain non-compete and non-disclosure obligations as set forth herein;

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, the parties, intending to be legally bound hereby agree as follows:

1.TERM OF AGREEMENT.

This Agreement is effective as of the latest to occur of the following dates: (a) the date this Agreement is executed and delivered by both Executive and the Bank, (b) the date on which Executive’s employment as Officer commences, or (c) the date set forth above.  This Agreement will continue in effect as long as Executive is actively employed by the Bank, unless Executive and the Bank agree in writing to termination of this Agreement.

2.TERMINATION COMPENSATION.

If Executive’s employment with the Bank is terminated without “Cause” (as defined in Section 6) at any time within two years following a “Change of Control” (as defined in Section 4), Executive will receive the “Termination Benefits” (as defined in Section 3).  Executive will also receive the Termination Benefits if Executive terminates his or her employment for “Good Reason” (as defined in Section 5) at any time within two years following a Change of Control.

Executive is not entitled to receive the Termination Benefits if Executive’s employment is terminated by Executive or the Bank for any or no reason before a Change of Control occurs or more than two years after a Change of Control has occurred.

In order to receive the Termination Benefits, Executive must execute any release of claims that Executive may have pursuant to this Agreement (but not any other claims) that may be requested by the Bank.

The Termination Benefits will be paid to Executive under the terms and conditions hereof, without regard to whether Executive looks for or obtains alternative employment following Executive’s termination of employment with the Bank.

3.TERMINATION BENEFITS DEFINED.

For purposes of this Agreement, the term “Termination Benefits” will mean and include the following:

(a)For a period of one year from Executive’s termination (the “Benefit Period”), payment of Executive’s base salary on the same basis that Executive was paid immediately prior to Executive’s termination; Payment of any bonus Executive would otherwise be eligible to receive for the year in which Executive’s termination occurs and for that portion of the following year which is included in the Benefit Period, such bonus to be calculated and paid as provided below; and

(b)Continuation during the Benefit Period of all fringe benefits that Executive was receiving immediately prior to Executive’s termination, including, without limitation, life, disability, accident and group health insurance benefits coverage for Executive and Executive’s immediate family (“Fringe Benefits”), such Fringe Benefits to be provided on substantially the same terms and conditions as they were provided immediately prior to Executive’s termination.

(c)The bonus component of Executive’s Termination Benefits will equal the sum of (i) the bonus to which Executive would have been entitled for the year during which Executive’s termination occurs (calculated after annualizing the Bank’s consolidated financial results through the date of termination if such bonus is based upon a percentage of profits) (the “Annual Amount”), and (ii) an amount equal to the product of (x) the Annual Amount times (y) a fraction the numerator of which is the number of days in the year following termination which is included in the Benefit Period and the denominator of which is 365 (the “Prorated Amount”).  Both the Annual Amount and the Prorated Amount will be paid to Executive not later than March 31st of the year following Executive’s termination.

Notwithstanding the foregoing, if Executive terminates his or her employment for Good Reason, Executive’s Termination Benefits will be based upon the greater of (i) Executive’s salary, bonus and benefits immediately prior to Executive’s termination or (ii) Executive’s salary, bonus and benefits immediately prior to the Change of Control which gives rise to Executive’s right to receive Termination Benefits under this Agreement.

The Bank does not intend to provide duplicative Fringe Benefits.  Consequently, Fringe Benefits otherwise receivable pursuant to this Section will be reduced or eliminated if and

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to the extent that Executive receives comparable Fringe Benefits from any other source (for example, another employer); provided, however, that Executive will have no obligation to seek, solicit or accept employment from another employer in order to receive such benefits.

4.CHANGE OF CONTROL DEFINED.

For purposes of this Agreement, a “Change of Control” will be deemed to have occurred upon the earliest to occur of the following events:

(a)the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) approve a plan or other arrangement pursuant to which the Bank will be dissolved or liquidated;

(b)the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) approve a definitive agreement to sell or otherwise dispose of all or substantially all of the assets of the Bank;

(c)the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) and the shareholders of the other constituent corporation (or its board of directors if shareholder action is not required) have approved a definitive agreement to merge or consolidate the Bank with or into such other corporation, other than, in either case, a merger or consolidation of the Bank in which holders of shares of the common stock of the Bank (the “Common Stock”) immediately prior to the merger or consolidation will hold at least a majority of the ownership of common stock of the surviving corporation (and, if one class of common stock is not the only class of voting securities entitled to vote on the election of directors of the surviving corporation, a majority of the voting power of the surviving corporation’s voting securities) immediately after the merger or consolidation, which common stock (and, if applicable, voting securities) is to be held in the same proportion as such holders’ ownership of Common Stock immediately before the merger or consolidation;

(d)the date any entity, person or group, (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Bank or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Bank or any of its subsidiaries, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of the Common Stock; or

(e)the first day after the date this Plan is adopted when directors are elected so that a majority of the Board of Directors shall have been members of the Board of Directors for less than twenty-four (24) months, unless the nomination for election of each new director who was not a director at the beginning of such twenty-four (24) month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

Notwithstanding any provision herein to the contrary, the filing of a proceeding for the reorganization of the Bank under Chapter 11 of the Federal Bankruptcy Code or any successor or other statute of similar import will not be deemed to be a Change of Control for purpose of this Agreement.

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5.GOOD REASON DEFINED.

For purposes of this Agreement, the term “Good Reason” will mean and include the following situations:

(a)any material adverse change in Executive’s status, responsibilities or Fringe Benefits;

(b)any failure to nominate or elect Executive as Senior Vice President - Senior Commercial Real Estate Loan Officer;

(c)causing or requiring Executive to report to anyone other than the Executive Vice President - Business Banking;

(d)assignment to Executive of duties materially inconsistent with Executive’s position as Senior Vice President - Senior Commercial Real Estate Loan Officer;

(e)any reduction of Executive’s annual base salary or annual bonus (or, if applicable, a change in the formula for determining Executive’s annual bonus which would have the effect of reducing by more than 10% Executive’s annual bonus as it would otherwise have been calculated immediately prior to the Change of Control that gives rise to Executive’s right to receive Termination Benefits as provided in this Agreement) or other reduction in compensation or benefits, or

(f)requiring Executive to be principally based at any office or location more than 50 miles from the current offices of the Bank in West Chester, Pennsylvania.

6.CAUSE DEFINED.

For purposes of this Agreement, the term “Cause” will mean and include the following situations:

(a)Executive’s conviction by a court of competent jurisdiction of any criminal offense involving dishonesty or breach of trust or any felony or crime involving moral turpitude;

(b)Executive’s failure to perform the duties reasonably assigned to Executive by the Board of Directors of the Bank fail without reasonable cause or excuse, which failure or breach continues for more than ten days after written notice thereof is given to Executive.

7.CEILING ON BENEFITS.

Under the “golden parachute” rules in the Internal Revenue Code (the “Code”) Executive will be subject to a 20% excise tax (over and above regular income tax) on any “excess parachute payment” that Executive receives following a Change in Control, and the Bank will not be permitted to deduct any such excess parachute payment.  Very generally, compensation paid to Executive that is contingent upon a Change in Control will be considered a “parachute payment” if the present value of such consideration equals or exceeds three times Executive’s average annual compensation from the Bank for the five years prior to the Change in

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Control.  If payments are considered “parachute payments,” then all such payments to Executive in excess of Executive’s base annual compensation will be considered “excess parachute payments” and will be subject to the 20% excise tax imposed under Section 4999 of the Code.

For example, if Executive’s base annual compensation was $100,000, Executive could receive $299,000 following a Change in Control without payment of any excise tax.  If Executive received $301,000 in connection with a Change in Control, however, the entire $301,000 would be considered a parachute payment and $201,000 of this amount would be considered an excess parachute payment subject to excise tax.

In order to avoid this excise tax and the related adverse tax consequences for the Bank, by signing this Agreement, Executive agrees that the Termination Benefits payable to Executive under this Agreement will in no event exceed the maximum amount that can be paid to Executive without causing any portion of the amounts paid or payable to Executive by the Bank following a Change in Control, whether under this Agreement or otherwise, to be considered an “excess parachute payment” within the meaning of Section 280G(b) of the Code.

If the Bank believes that these rules will result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive within 60 days following delivery of the “Notice of Termination” described in Section 8.  If Executive wishes to have such determination reviewed, Executive may, within 30 days of the date Executive is notified of a reduction of payments, ask that the Bank retain, at its expense, legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants (an “Outside Expert”) to provide an opinion concerning whether, and to what extent, Executive’s Termination Benefits must be reduced so that no amount payable to Executive by the Bank (whether under this Agreement or otherwise) will be considered an excess parachute payment.

The Outside Expert will be as mutually agreed by Executive and the Bank, provided that if we are not able to reach a mutual agreement, the Bank will select an Outside Expert, Executive will select an Outside Expert, and the two Outside Experts will select a third Outside Expert to provide the opinion required under this Section.  The determination of the Outside Expert will be final and binding, subject to any contrary determination made by the Internal Revenue Service.

If the Bank believes that Executive’s Termination Benefits will exceed the limitation contained in this Section, it will nonetheless make payments to Executive, at the times stated above, in the maximum amount that it believes may be paid without exceeding such limitation.  The balance, if any, will then be paid after the opinion of the Outside Expert has been received.

If the amount paid to Executive by the Bank following a Change in Control is ultimately determined, pursuant to the opinion of the Outside Expert or by the Internal Revenue Service, to have exceeded the limitation contained in this Section, the excess will be treated as a loan to Executive by the Bank and will be repayable on the 90th day following demand by the Bank, together with interest at the “applicable federal rate” provided in Section 1274(d) of the Code.

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In the event that the provisions of Sections 280G and 4999 of the Code are repealed without successor provisions, this Section will be of no further force or effect.

8.TERMINATION NOTICE AND PROCEDURE.

Any termination by the Bank or Executive of Executive’s employment during the two years immediately following a Change of Control will be communicated by written Notice of Termination to Executive if such Notice of Termination is delivered by the Bank and to the Bank if such Notice of Termination is delivered by Executive, all in accordance with the following procedures:

The Notice of Termination will indicate the specific termination provision in this Agreement relied upon, if applicable, and will set forth in reasonable detail the facts and circumstances alleged to provide a basis for such termination.

Any Notice of Termination by the Bank will be in writing signed by the Chairman of the Board of the Bank.

If the Bank furnishes Executive with a Notice of Termination or if Executive furnishes the Bank with a Notice of Termination, and no good faith dispute exists regarding such termination, then the date of Executive’s termination will be the date such Notice of Termination is deemed given pursuant to Section 11 of this Agreement.

If the Bank in good faith furnishes Executive with a Notice of Termination for Cause and Executive in good faith notifies the Bank that a dispute exists concerning such termination within the 15-day period following Executive’s receipt of such notice, Executive may elect to continue Executive’s employment during such dispute.  If it is thereafter determined that (i) Cause did exist, the date of Executive’s termination will be the earlier of (A) the date on which the dispute is finally determined or (B) the date of Executive’s death or permanent disability; or (ii) Cause did not exist, Executive’s employment will continue as if the Bank had not delivered its Notice of Termination and there will be no termination arising out of such notice.

If Executive in good faith furnishes a Notice of Termination for Good Reason and the Bank notifies Executive that a dispute exists concerning the termination within the 15-day period following the Bank’s receipt of such notice, Executive may elect to continue Executive’s employment during such dispute.  If it is thereafter determined that (i) Good Reason did exist, Executive’s date of termination will be the earlier of (A) the date on which the dispute is finally determined or (B) the date of Executive’s death or permanent disability; or (ii) Good Reason did not exist, Executive’s employment will continue after such determination as if Executive had not delivered the Notice of Termination asserting Good Reason.  If Good Reason is determined to exist, Executive’s salary, bonus and Fringe Benefits prior to such determination will be no less than Executive’s salary, bonus and benefits immediately prior to the Change of Control which gives rise to Executive’s right to receive Termination Benefits as provided in this Agreement.

If Executive does not elect to continue employment pending resolution of a dispute regarding a Notice of Termination, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by

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Executive, Executive will be deemed to have voluntarily terminated Executive’s employment other than for Good Reason and if delivered by the Bank, the Bank will be deemed to have terminated Executive without Cause.

9.DEFERRAL OF PAYMENTS.

To the extent that any payment under this Agreement, when combined with all other payments received during the year that are subject to the limitations on deductibility under Section 162(m) of the Code, exceeds the limitations on deductibility under Section 162(m) of the Code, such payment will, in the discretion of the Bank, be deferred to the next succeeding calendar year.   Such deferred amounts will be paid no later than the 60th day after the end of such next succeeding calendar year, provided that such payment, when combined with any other payments subject to the Section 162(m) limitations received during the year, does not exceed the limitations on deductibility under Section 162(m) of the Code.

10.COMPETITION.

During the Term of this Agreement and for a period of six (6) months following Executive’s termination of employment on a voluntary basis, Executive shall not, directly or indirectly be employed by any other bank or similar financial institution doing business in Chester County, Pennsylvania.  During the term of this Agreement and for a period of one (1) year following Executive’s voluntary termination, Executive shall not (a) on behalf of a competing bank or similar financial institution, solicit, engage in, or accept business or perform any services for any organization or individual that at any time during the one (1) year ending with Executive’s termination was a Bank client, customer or affiliate, or a source of business with which or who Executive dealt or had any contact during the term of Executive’s employment with the bank; (b) solicit any employee of the Bank for the purpose of inducing such employee to resign from the bank; nor (c) induce or assist others in engaging in the activities described in all subparagraphs herein.  Notwithstanding the foregoing if (i) Executive’s employment is terminated due to a Change of Control, (ii) the Bank’s current Chief Executive Officer or President no longer are employed by the Bank (other than due to such person’s death, disability or retirement), or (iii) the Bank and Executive otherwise agree in writing, the provisions of clause (a) of the prior sentence shall be null and void and Executive shall be entitled to be employed by any bank or financial institution doing business in Chester County, Pennsylvania or in any other location.

11.DISCLOSURE OF CONFIDENTIAL INFORMATION.

During the period during which Executive is employed by the Bank and following the voluntary or involuntary termination of Executive’s employment with the Bank for any reason whatsoever, Executive shall not use for any non-Bank purpose or disclose to any person or entity any confidential information acquired during the course of employment with the Bank.  Executive shall not, directly or indirectly, copy, take, or remove from the Bank’s premises, any of the Bank’s books, records, customer lists, or any other documents or materials.  The term “confidential information” as used in this Agreement includes, but is not limited to, records, lists, and knowledge of the Bank’s customers, suppliers, methods of operation, processes, trade

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secrets, methods of determination of prices and rates, financial condition, as the same may exist from time to time.

12.SUCCESSORS.

The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank or any of its subsidiaries to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession had taken place.  Failure of the Bank to obtain such assumption and agreement prior to the effectiveness of any such succession will be a breach of this Agreement and will entitle Executive to compensation in the same amount and on the same terms to which Executive would be entitled hereunder if Executive terminates his or her employment for Good Reason following a Change of Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective will be deemed the date of Executive’s termination.  As used in this agreement “the Bank” will mean “the Bank” as hereinbefore defined and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law or otherwise.

13.BINDING AGREEMENT.

This Agreement will inure to the benefit of and be enforceable by Executive and Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If Executive should die while any amount would still be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to Executive’s estate.

14.NOTICES.

For purposes of this Agreement, notices and all other communications provided for in this Agreement will be in writing and will be deemed to have been duly given when personally delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to Executive at the last address Executive has filed in writing with the Bank or, in the case of the Bank, at its main office, attention of the Chairman of the Board of Directors, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address will be effective only upon receipt.

15.MISCELLANEOUS.

No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and the Chairman of the Board of the Bank.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by

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either party which are not expressly set forth in this Agreement.  The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of Pennsylvania without regard to its conflicts of law principles.  All references to sections of the Exchange Act or the Code will be deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder will be paid net of any applicable withholding required under federal, state or local law.  The obligations of the Bank that arise prior to the expiration of this Agreement will survive the expiration of the term of this Agreement.

16.VALIDITY.

The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

17.COUNTERPARTS.

This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

18.EXPENSES AND INTEREST.

If a good faith dispute arises with respect to the enforcement of Executive’s rights under this Agreement or if any arbitration or legal proceeding will be brought in good faith to enforce or interpret any provision contained herein, or to recover damages for breach hereof, and Executive is the prevailing party, Executive will recover from the Bank any reasonable attorneys’ fees and necessary costs and disbursements incurred as a result of such dispute or legal proceeding, and prejudgment interest on any money judgment obtained by Executive calculated at the rate of interest announced by Chase Manhattan Bank, New York from time to time as its prime rate from the date that payments to Executive should have been made under this Agreement.  It is expressly provided that the Bank will in no event recover from Executive any attorneys’ fees, costs, disbursements or interest as a result of any dispute or legal proceeding involving the Bank and Executive.

19.PAYMENT OBLIGATIONS ABSOLUTE.

The Bank’s obligation to pay Executive the Termination Benefits in accordance with the provisions herein will be absolute and unconditional and will not be affected by any circumstances; provided, however, that the Bank may apply amounts payable under this Agreement to any debts owed to the Bank by Executive on the date of Executive’s termination.  All amounts payable by the Bank in accordance with this Agreement will be paid without notice or demand.  If the Bank has paid Executive more than the amount to which Executive is entitled under this Agreement, the Bank will have the right to recover all or any part of such overpayment from Executive or from whomsoever has received such amount.

20.ENTIRE AGREEMENT.

This Agreement sets forth the entire agreement between Executive and the Bank concerning the subject matter discussed in this Agreement and supersedes all prior agreements,

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promises, covenants, arrangements, communications, representations, or warranties, whether written or oral, by any officer, employee or representative of the Bank.  Any prior agreements or understandings with respect to the subject matter set forth in this Agreement are hereby terminated and canceled.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.

FIRST NATIONAL BANK OF CHESTER COUNTY
By:	/s/ Deborah R. Pierce
	Deborah R. Pierce
	Executive Vice President – Human Resources
	/s/ Michael T. Steinberger
	Michael T. Steinberger
	Senior Vice President – Senior Commercial
	Real Estate Loan Officer

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EX-10.15

Exhibit 10.15

CHANGE OF CONTROL, NON-COMPETE AND

NON-DISCLOSURE AGREEMENT

THIS CHANGE OF CONTROL, NON-COMPETE AND NON-DISCLOSURE AGREEMENT (the “Agreement”) is made as of this 19 day of June, 2006, by and between FIRST NATIONAL BANK OF CHESTER COUNTY, a wholly-owned subsidiary of First Chester County Corporation and a national banking association with its principal offices located at 9 North High Street, West Chester, Pennsylvania (hereinafter individually referred to as the “Bank”) and Andrew H. Stump of 811 Peter Christopher Drive, West Chester, PA 19382 (hereinafter referred to as “Executive”).

BACKGROUND

WHEREAS, the Bank desires to ensure the continued employment of Executive with the Bank by providing certain benefits to Executive in connection with a Change of Control (as defined below) and the compensation increase effective on the date of the signing of this Agreement;

WHEREAS, Executive is desirous of securing such benefits on the terms and conditions set forth herein; and

WHEREAS, in consideration of the receipt of such benefits, Executive is willing to be bound by certain non-compete and non-disclosure obligations as set forth herein;

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, the parties, intending to be legally bound hereby agree as follows:

1.TERM OF AGREEMENT.

This Agreement is effective as of the latest to occur of the following dates:  (a) the date this Agreement is executed and delivered by both Executive and the Bank, (b) the date on which Executive’s employment as Officer commences, or (c) the date set forth above.  This Agreement will continue in effect as long as Executive is actively employed by the Bank, unless Executive and the Bank agree in writing to termination of this Agreement.

2.TERMINATION COMPENSATION.

If Executive’s employment with the Bank is terminated without “Cause” (as defined in Section 6) at any time within two years following a “Change of Control” (as defined in Section 4), Executive will receive the “Termination Benefits” (as defined in Section 3).  Executive will also receive the Termination Benefits if Executive terminates his or her employment for “Good Reason” (as defined in Section 5) at any time within two years following a Change of Control.

Executive is not entitled to receive the Termination Benefits if Executive’s employment is terminated by Executive or the Bank for any or no reason before a Change of Control occurs or more than two years after a Change of Control has occurred.

In order to receive the Termination Benefits, Executive must execute any release of claims that Executive may have pursuant to this Agreement (but not any other claims) that may be requested by the Bank.

The Termination Benefits will be paid to Executive under the terms and conditions hereof, without regard to whether Executive looks for or obtains alternative employment following Executive’s termination of employment with the Bank.

3.TERMINATION BENEFITS DEFINED.

For purposes of this Agreement, the term “Termination Benefits” will mean and include the following:

(a)For a period of one year from Executive’s termination (the “Benefit Period”), payment of Executive’s base salary on the same basis that Executive was paid immediately prior to Executive’s termination; Payment of any bonus Executive would otherwise be eligible to receive for the year in which Executive’s termination occurs and for that portion of the following year which is included in the Benefit Period, such bonus to be calculated and paid as provided below; and

(b)Continuation during the Benefit Period of all fringe benefits that Executive was receiving immediately prior to Executive’s termination, including, without limitation, life, disability, accident and group health insurance benefits coverage for Executive and Executive’s immediate family (“Fringe Benefits”), such Fringe Benefits to be provided on substantially the same terms and conditions as they were provided immediately prior to Executive’s termination.

(c)The bonus component of Executive’s Termination Benefits will equal the sum of (i) the bonus to which Executive would have been entitled for the year during which Executive’s termination occurs (calculated after annualizing the Bank’s consolidated financial results through the date of termination if such bonus is based upon a percentage of profits) (the “Annual Amount”), and (ii) an amount equal to the product of (x) the Annual Amount times (y) a fraction the numerator of which is the number of days in the year following termination which is included in the Benefit Period and the denominator of which is 365 (the “Prorated Amount”).  Both the Annual Amount and the Prorated Amount will be paid to Executive not later than March 31st of the year following Executive’s termination.

Notwithstanding the foregoing, if Executive terminates his or her employment for Good Reason, Executive’s Termination Benefits will be based upon the greater of (i) Executive’s salary, bonus and benefits immediately prior to Executive’s termination or (ii) Executive’s salary, bonus and benefits immediately prior to the Change of Control which gives rise to Executive’s right to receive Termination Benefits under this Agreement.

The Bank does not intend to provide duplicative Fringe Benefits.  Consequently, Fringe Benefits otherwise receivable pursuant to this Section will be reduced or eliminated if and

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to the extent that Executive receives comparable Fringe Benefits from any other source (for example, another employer); provided, however, that Executive will have no obligation to seek, solicit or accept employment from another employer in order to receive such benefits.

4.CHANGE OF CONTROL DEFINED.

For purposes of this Agreement, a “Change of Control” will be deemed to have occurred upon the earliest to occur of the following events:

(a)the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) approve a plan or other arrangement pursuant to which the Bank will be dissolved or liquidated;

(b)the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) approve a definitive agreement to sell or otherwise dispose of all or substantially all of the assets of the Bank;

(c)the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) and the shareholders of the other constituent corporation (or its board of directors if shareholder action is not required) have approved a definitive agreement to merge or consolidate the Bank with or into such other corporation, other than, in either case, a merger or consolidation of the Bank in which holders of shares of the common stock of the Bank (the “Common Stock”) immediately prior to the merger or consolidation will hold at least a majority of the ownership of common stock of the surviving corporation (and, if one class of common stock is not the only class of voting securities entitled to vote on the election of directors of the surviving corporation, a majority of the voting power of the surviving corporation’s voting securities) immediately after the merger or consolidation, which common stock (and, if applicable, voting securities) is to be held in the same proportion as such holders’ ownership of Common Stock immediately before the merger or consolidation;

(d)the date any entity, person or group, (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Bank or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Bank or any of its subsidiaries, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of the Common Stock; or

(e)the first day after the date this Plan is adopted when directors are elected so that a majority of the Board of Directors shall have been members of the Board of Directors for less than twenty-four (24) months, unless the nomination for election of each new director who was not a director at the beginning of such twenty-four (24) month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

Notwithstanding any provision herein to the contrary, the filing of a proceeding for the reorganization of the Bank under Chapter 11 of the Federal Bankruptcy Code or any successor or other statute of similar import will not be deemed to be a Change of Control for purpose of this Agreement.

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5.GOOD REASON DEFINED.

For purposes of this Agreement, the term “Good Reason” will mean and include the following situations:

(a)any material adverse change in Executive’s status, responsibilities or Fringe Benefits;

(b)any failure to nominate or elect Executive as Senior Vice President - Senior Commercial Loan Officer;

(c)causing or requiring Executive to report to anyone other than the Executive Vice President - Business Banking;

(d)assignment to Executive of duties materially inconsistent with Executive’s position as Senior Vice President - Senior Commercial Loan Officer;

(e)any reduction of Executive’s annual base salary or annual bonus (or, if applicable, a change in the formula for determining Executive’s annual bonus which would have the effect of reducing by more than 10% Executive’s annual bonus as it would otherwise have been calculated immediately prior to the Change of Control that gives rise to Executive’s right to receive Termination Benefits as provided in this Agreement) or other reduction in compensation or benefits, or

(f)requiring Executive to be principally based at any office or location more than 50 miles from the current offices of the Bank in West Chester, Pennsylvania.

6.CAUSE DEFINED.

For purposes of this Agreement, the term “Cause” will mean and include the following situations:

(a)Executive’s conviction by a court of competent jurisdiction of any criminal offense involving dishonesty or breach of trust or any felony or crime involving moral turpitude;

(b)Executive’s failure to perform the duties reasonably assigned to Executive by the Board of Directors of the Bank fail without reasonable cause or excuse, which failure or breach continues for more than ten days after written notice thereof is given to Executive.

7.CEILING ON BENEFITS.

Under the “golden parachute” rules in the Internal Revenue Code (the “Code”) Executive will be subject to a 20% excise tax (over and above regular income tax) on any “excess parachute payment” that Executive receives following a Change in Control, and the Bank will not be permitted to deduct any such excess parachute payment.  Very generally, compensation paid to Executive that is contingent upon a Change in Control will be considered a “parachute payment” if the present value of such consideration equals or exceeds three times Executive’s average annual compensation from the Bank for the five years prior to the Change in

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Control.  If payments are considered “parachute payments,” then all such payments to Executive in excess of Executive’s base annual compensation will be considered “excess parachute payments” and will be subject to the 20% excise tax imposed under Section 4999 of the Code.

For example, if Executive’s base annual compensation was $100,000, Executive could receive $299,000 following a Change in Control without payment of any excise tax.  If Executive received $301,000 in connection with a Change in Control, however, the entire $301,000 would be considered a parachute payment and $201,000 of this amount would be considered an excess parachute payment subject to excise tax.

In order to avoid this excise tax and the related adverse tax consequences for the Bank, by signing this Agreement, Executive agrees that the Termination Benefits payable to Executive under this Agreement will in no event exceed the maximum amount that can be paid to Executive without causing any portion of the amounts paid or payable to Executive by the Bank following a Change in Control, whether under this Agreement or otherwise, to be considered an “excess parachute payment” within the meaning of Section 280G(b) of the Code.

If the Bank believes that these rules will result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive within 60 days following delivery of the “Notice of Termination” described in Section 8.  If Executive wishes to have such determination reviewed, Executive may, within 30 days of the date Executive is notified of a reduction of payments, ask that the Bank retain, at its expense, legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants (an “Outside Expert”) to provide an opinion concerning whether, and to what extent, Executive’s Termination Benefits must be reduced so that no amount payable to Executive by the Bank (whether under this Agreement or otherwise) will be considered an excess parachute payment.

The Outside Expert will be as mutually agreed by Executive and the Bank, provided that if we are not able to reach a mutual agreement, the Bank will select an Outside Expert, Executive will select an Outside Expert, and the two Outside Experts will select a third Outside Expert to provide the opinion required under this Section.  The determination of the Outside Expert will be final and binding, subject to any contrary determination made by the Internal Revenue Service.

If the Bank believes that Executive’s Termination Benefits will exceed the limitation contained in this Section, it will nonetheless make payments to Executive, at the times stated above, in the maximum amount that it believes may be paid without exceeding such limitation. The balance, if any, will then be paid after the opinion of the Outside Expert has been received.

If the amount paid to Executive by the Bank following a Change in Control is ultimately determined, pursuant to the opinion of the Outside Expert or by the Internal Revenue Service, to have exceeded the limitation contained in this Section, the excess will be treated as a loan to Executive by the Bank and will be repayable on the 90th day following demand by the Bank, together with interest at the “applicable federal rate” provided in Section 1274(d) of the Code.

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In the event that the provisions of Sections 280G and 4999 of the Code are repealed without successor provisions, this Section will be of no further force or effect.

8.TERMINATION NOTICE AND PROCEDURE.

Any termination by the Bank or Executive of Executive’s employment during the two years immediately following a Change of Control will be communicated by written Notice of Termination to Executive if such Notice of Termination is delivered by the Bank and to the Bank if such Notice of Termination is delivered by Executive, all in accordance with the following procedures:

The Notice of Termination will indicate the specific termination provision in this Agreement relied upon, if applicable, and will set forth in reasonable detail the facts and circumstances alleged to provide a basis for such termination.

Any Notice of Termination by the Bank will be in writing signed by the Chairman of the Board of the Bank.

If the Bank furnishes Executive with a Notice of Termination or if Executive furnishes the Bank with a Notice of Termination, and no good faith dispute exists regarding such termination, then the date of Executive’s termination will be the date such Notice of Termination is deemed given pursuant to Section 11 of this Agreement.

If the Bank in good faith furnishes Executive with a Notice of Termination for Cause and Executive in good faith notifies the Bank that a dispute exists concerning such termination within the 15-day period following Executive’s receipt of such notice, Executive may elect to continue Executive’s employment during such dispute.  If it is thereafter determined that (i) Cause did exist, the date of Executive’s termination will be the earlier of (A) the date on which the dispute is finally determined or (B) the date of Executive’s death or permanent disability; or (ii) Cause did not exist, Executive’s employment will continue as if the Bank had not delivered its Notice of Termination and there will be no termination arising out of such notice.

If Executive in good faith furnishes a Notice of Termination for Good Reason and the Bank notifies Executive that a dispute exists concerning the termination within the 15-day period following the Bank’s receipt of such notice, Executive may elect to continue Executive’s employment during such dispute.  If it is thereafter determined that (i) Good Reason did exist, Executive’s date of termination will be the earlier of (A) the date on which the dispute is finally determined or (B) the date of Executive’s death or permanent disability; or (ii) Good Reason did not exist, Executive’s employment will continue after such determination as if Executive had not delivered the Notice of Termination asserting Good Reason.  If Good Reason is determined to exist, Executive’s salary, bonus and Fringe Benefits prior to such determination will be no less than Executive’s salary, bonus and benefits immediately prior to the Change of Control which gives rise to Executive’s right to receive Termination Benefits as provided in this Agreement.

If Executive does not elect to continue employment pending resolution of a dispute regarding a Notice of Termination, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by

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Executive, Executive will be deemed to have voluntarily terminated Executive’s employment other than for Good Reason and if delivered by the Bank, the Bank will be deemed to have terminated Executive without Cause.

9.DEFERRAL OF PAYMENTS.

To the extent that any payment under this Agreement, when combined with all other payments received during the year that are subject to the limitations on deductibility under Section 162(m) of the Code, exceeds the limitations on deductibility under Section 162(m) of the Code, such payment will, in the discretion of the Bank, be deferred to the next succeeding calendar year.  Such deferred amounts will be paid no later than the 60th day after the end of such next succeeding calendar year, provided that such payment, when combined with any other payments subject to the Section 162(m) limitations received during the year, does not exceed the limitations on deductibility under Section 162(m) of the Code.

10.COMPETITION.

During the Term of this Agreement and for a period of six (6) months following Executive’s voluntary termination of employment, Executive shall not, (a) directly or indirectly be employed by any other bank or similar financial institution doing business in Chester County, Pennsylvania, or (b) on behalf of a competing bank or similar financial institution, solicit, engage in, or accept business or perform any services for any organization or individual that at any time during the six (6) months ending with Executive’s termination was a Bank client, customer or affiliate, or a source of business with which or who Executive dealt or had any contact during the term of Executive’s employment with the Bank.  During the term of this Agreement and for a period of one (1) year following Executive’s termination, Executive shall not (a) solicit any employee of the Bank for the purpose of inducing such employee to resign from the Bank; nor (b) induce or assist others in engaging in the activities described in all subparagraphs herein.  Notwithstanding the foregoing if Executive’s employment is terminated due to a Change of Control, the provisions of the first sentence of this section shall be null and void and Executive shall be entitled to be employed by any bank or financial institution doing business in Chester County, Pennsylvania or in any other location.

11.DISCLOSURE OF CONFIDENTIAL INFORMATION.

During the period during which Executive is employed by the Bank and following the voluntary or involuntary termination of Executive’s employment with the Bank for any reason whatsoever, Executive shall not use for any non-Bank purpose or disclose to any person or entity any confidential information acquired during the course of employment with the Bank.  Executive shall not, directly or indirectly, copy, take, or remove from the Bank’s premises, any of the Bank’s books, records, customer lists, or any other documents or materials.  The term “confidential information” as used in this Agreement includes, but is not limited to, records, lists, and knowledge of the Bank’s customers, suppliers, methods of operation, processes, trade secrets, methods of determination of prices and rates, financial condition, as the same may exist from time to time.

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12.SUCCESSORS.

The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank or any of its subsidiaries to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession had taken place.  Failure of the Bank to obtain such assumption and agreement prior to the effectiveness of any such succession will be a breach of this Agreement and will entitle Executive to compensation in the same amount and on the same terms to which Executive would be entitled hereunder if Executive terminates his or her employment for Good Reason following a Change of Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective will be deemed the date of Executive’s termination.  As used in this agreement “the Bank” will mean “the Bank” as hereinbefore defined and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law or otherwise.

13.BINDING AGREEMENT.

This Agreement will inure to the benefit of and be enforceable by Executive and Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If Executive should die while any amount would still be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to Executive’s estate.

14.NOTICES.

For purposes of this Agreement, notices and all other communications provided for in this Agreement will be in writing and will be deemed to have been duly given when personally delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to Executive at the last address Executive has filed in writing with the Bank or, in the case of the Bank, at its main office, attention of the Chairman of the Board of Directors, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address will be effective only upon receipt.

15.MISCELLANEOUS.

No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and the Chairman of the Board of the Bank.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  The validity, interpretation,

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construction and performance of this Agreement will be governed by the laws of the State of Pennsylvania without regard to its conflicts of law principles.  All references to sections of the Exchange Act or the Code will be deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder will be paid net of any applicable withholding required under federal, state or local law.  The obligations of the Bank that arise prior to the expiration of this Agreement will survive the expiration of the term of this Agreement.

16.VALIDITY.

The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.

17.COUNTERPARTS.

This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

18.EXPENSES AND INTEREST.

If a good faith dispute arises with respect to the enforcement of Executive’s rights under this Agreement or if any arbitration or legal proceeding will be brought in good faith to enforce or interpret any provision contained herein, or to recover damages for breach hereof, and Executive is the prevailing party, Executive will recover from the Bank any reasonable attorneys’ fees and necessary costs and disbursements incurred as a result of such dispute or legal proceeding, and prejudgment interest on any money judgment obtained by Executive calculated at the rate of interest announced by Chase Manhattan Bank, New York from time to time as its prime rate from the date that payments to Executive should have been made under this Agreement.  It is expressly provided that the Bank will in no event recover from Executive any attorneys’ fees, costs, disbursements or interest as a result of any dispute or legal proceeding involving the Bank and Executive.

19.PAYMENT OBLIGATIONS ABSOLUTE.

The Bank’s obligation to pay Executive the Termination Benefits in accordance with the provisions herein will be absolute and unconditional and will not be affected by any circumstances; provided, however, that the Bank may apply amounts payable under this Agreement to any debts owed to the Bank by Executive on the date of Executive’s termination.  All amounts payable by the Bank in accordance with this Agreement will be paid without notice or demand.  If the Bank has paid Executive more than the amount to which Executive is entitled under this Agreement, the Bank will have the right to recover all or any part of such overpayment from Executive or from whomsoever has received such amount.

20.ENTIRE AGREEMENT.

This Agreement sets forth the entire agreement between Executive and the Bank concerning the subject matter discussed in this Agreement and supersedes all prior agreements, promises, covenants, arrangements, communications, representations, or warranties, whether

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written or oral, by any officer, employee or representative of the Bank.  Any prior agreements or understandings with respect to the subject matter set forth in this Agreement are hereby terminated and canceled.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.

FIRST NATIONAL BANK OF CHESTER COUNTY
By:	/s/ Deborah R. Pierce
	Deborah R. Pierce
	Executive Vice President – Human Resources
	/s/ Andrew H. Stump
	Andrew H. Stump
	Senior Vice President – Senior Commercial Loan Officer

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EX-10.16

Exhibit 10.16

Compensatory Arrangements of Executive Officers and Directors for 2009

Messrs. Featherman, Quinn and Deitch and Ms. Smith are employed by the Corporation and the Bank pursuant to employment agreements included as exhibits to this Annual Report on Form 10-K.  Each of our other executive officers is employed on an at will basis.  The compensation to be paid in 2009 to the Corporation’s CEO, President, CFO, Executive Vice Presidents who were Named Executive Officers in our last filed proxy statement and key individuals of the American Home Bank division of the Bank (the “AHB Division”) will be based upon the annual salaries as set forth in the chart below.  The 2009 salaries indicated below reflect no increases over 2008 salaries.

Executive Officer	2009 Salary
John A. Featherman, III, CEO and Chairman of the Corporation and the Bank	$	364,109
Kevin C. Quinn, President of the Corporation and the Bank	$	275,734
John E. Balzarini, CFO of the Corporation and the Bank	$	205,363
James M. Deitch, Managing Director of the AHB Division	$	203,000
Clay T. Henry, Executive Vice President of the Wealth Management Division of the Bank	$	196,267
Anna Ruth Smith, President of the AHB Division	$	195,000

Messrs. Featherman, Quinn and Deitch and Ms. Smith receive benefits as described in their respective Employment Agreements.  Each of the other listed officers receives the Bank’s standard benefits package and is paid a car allowance or provided with an automobile leased by the Bank.  Each of the other listed officers is a party to a separate agreement with the Bank that provides certain benefits upon a change of control and, in the case of Mr. Henry, termination of service for certain other events.  Each of these agreements is included as an exhibit to this Annual Report on Form 10-K.  In addition, each of the listed executive officers may be eligible to receive incentive compensation pursuant to the Executive Incentive Plan, as amended (filed as Exhibits 10.30 and 10.31 to this Report), however, no executive incentive compensation was paid to these individuals in 2008, and no executive incentive plan has been adopted for 2009 at this time.

In 2009, directors who are not also officers of the Corporation or Bank (each a “non-employee director”) will receive a fee of $750 for each Corporation or Bank board meeting attended and $400 for each committee meeting attended.  Each non-employee director will also receive a $1,000 monthly retainer.  Additionally, a quarterly fee of $250 will be paid to Mr. DeBaptiste for serving as Second Vice Chair of the Board, a quarterly fee of $250 will be paid to Mr. Waldron for serving as the Secretary of the Board, a quarterly fee of $750 will be paid to Mr. Clarke for serving as the Chairman of the Audit Committee.  Other Committee Chairmen will be paid a quarterly fee of $250 for such service.  The non-employee directors receive a $1,000 fee for attending a training seminar.

EX-10.21

Exhibit 10.21

AMENDMENT TO THE

FIRST NATIONAL BANK OF CHESTER COUNTY

SUPPLEMENTAL BENEFIT RETIREMENT PLAN

The First National Bank of Chester County Supplemental Retirement Benefit Plan is hereby amended in the following respects, effective January 1, 2005:

1. Section 3.3B is amended by adding the following to the end of the last sentence thereof:  “, subject to any election under Section 3.4 by the Member as to when payments are to commence.”

2. Section 3.4 is amended by adding the following at the end of the first sentence thereof:  “, beginning at any time after the Member becomes eligible to receive such benefit.”

Dated:	June 19, 2008	FIRST NATIONAL BANK OF CHESTER COUNTY
		By:	/s/ Kevin C. Quinn
			Kevin C. Quinn

EX-10.28

Exhibit 10.28

FIRST CHESTER COUNTY CORPORATION

AMENDMENT TO

RESTRICTED STOCK

AWARD AGREEMENT

FOR

[ELIGIBLE PARTICIPANT NAME]

DATE OF GRANT:  FEBRUARY 7, 2008

We are pleased to advise you that the terms of Paragraph 4 of the Restricted Stock Award Agreement awarded to you as of the Date of Grant set forth above, has been amended and restated to read in its entirety as follows:

“4.Retirement, Death, Disability or Change in Ownership or Effective Control.  The Vesting Date shall be accelerated in the event:  (A) you die; (B) you incur a Disability; (C) you retire (as provided in the EIP); or (D) a Change of Ownership or Effective Control occurs; provided, however, that you satisfy the requirements of Section 3 of this Agreement, and provided further that (i) in the case of acceleration for the events listed in (A) through (C), the number of Vested Shares shall be equal to (I) the number of full months of service completed from and including January 2008 divided by 36 months multiplied by (II) the number of shares determined in 2011 based upon the provisions of Section 2 of this Agreement,, and (ii) in the case of acceleration for the events listed in (D), the number of Vested Shares shall be the maximum number of shares issued pursuant to this Agreement.  The terms “Disability” and “Change in Ownership or Effective Control” are defined in the Plan.”

Please attach this Amendment to the Restricted Stock Award previously delivered to you.

FIRST CHESTER COUNTY CORPORATION

By:

Title:

Date:

EX-10.29

Exhibit 10.29

AGREEMENT AND GENERAL RELEASE

THIS SEVERANCE AGREEMENT AND GENERAL RELEASE (“Agreement”) is made and entered into this 19th day of November 2008 by and between First National Bank of Chester County (the “Bank”) and Deborah R. Pierce (“Employee”).

WHEREAS, the Bank has restructured its operations and as a result thereof, the Employee’s position has been eliminated; and

WHEREAS, the Bank and Employee desire to resolve and settle all issues, existing as of the date of execution of this Agreement, whether arising from any aspect of Employee’s employment or separation from employment with the Bank, or otherwise;

NOW, THEREFORE, in consideration of the covenants and mutual promises and agreements contained herein, and other valuable consideration, the receipt of which hereby is acknowledged, it is agreed as follows:

1.Termination Date.  Employee shall be separated from employment effective October 29, 2008, which shall be considered the termination date (“Termination Date”).

2.Severance.  Employee will receive total severance pay equivalent to twelve (12) months of base salary, (which shall include auto allowance) as reduced by applicable taxes commencing on October 30, 2008 and terminating October 29, 2009.  Payment of the severance shall be made at normal payroll periods.

3.Benefits.  In the event the Employee elects to continue medical coverage under COBRA, the Bank will pay the Employee’s share of the COBRA premiums for a period not to exceed twelve (12) months from the Termination Date for the Employee and her spouse, provided that Employee pays applicable employee co-pays and has not obtained comparable

medical coverage elsewhere.  Medical care coverage shall cease in the event Employee obtains other coverage.

4.By December 31, 2008, the Employee shall be paid the sum of $9,317.28 as cash equivalent payment for 2008 401(K) Profit Sharing Plan.

5.Outplacement.  The Bank will pay for outplacement services for the Employee, directly to a firm selected by the Employee in an amount not to exceed fourteen thousand dollars ($14,000).

6.PTO.  Employee will also receive pay for accrued and unused PTO (“Paid Time Off”).

7.Bonus.  Although the Bank does not intend to pay a 2008 Executive Annual Bonus, in the event it does, it will pay Employee a pro rata share of that bonus for 2008 up to and including the date of her termination October 29, 2008.

8.The Bank will pay Employee the amount of $12,650 as reduced by applicable taxes, representing the 2007 LTIP by December 31, 2008

9.Except as specifically set forth herein, the Employee is not entitled to any further compensation or benefits from the Bank except for those benefits governed by other documents or plans such as the SBRP and continuation of certain life insurance policies and other benefits to the extent those plans may allow but in no event shall the Bank be responsible for any further contributions or payment of premiums.  The Bank will not oppose Employee’s application for Pennsylvania Unemployment Compensation benefits.

10.Non-Disparagement.  The Employee agrees that she will not make or cause to be made any statements that disparage or inimical to or damage the reputation of the Bank or any of its past or present affiliates, subsidiaries, agents, officers, directors, or employees.  In the event

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such a communication is made to anyone, including but not limited to media, public interest groups and publishing companies, it will be considered a material breach of the terms of this Agreement and the Bank will be permitted to pursue any and all remedies at law and equity.

11.Return of Property.  The Employee agrees that she has returned all property of the Bank, including, but not limited to, her Bank-owned credit card, all Bank files, all keys including those to Bank-owned real estate and property.

12.Costs and Expenses.  The Bank and Employee acknowledge, understand and agree that each party shall bear her or its own costs, attorneys’ fees and expenses.

13.Acknowledgement.  The Bank and Employee understand, represent and warrant that this Agreement is a full and final compromise of any existing claims and not an admission of wrongdoing or liability by or on the part of the Bank.

14.General Release.  In consideration of the undertakings provided for in Paragraph 2, 3,4,5 and 8 herein, the sufficiency of which is hereby acknowledged and to which Employee is not otherwise entitled, Employee, on behalf of herself and her heirs, estates, executors, administrators, successors and assigns, does hereby fully, finally and unconditionally release and forever discharge the Bank, its former, current and future shareholders, directors, officers, parent company, subsidiaries, affiliates, agents, employees, representatives, successors and assigns, whether acting in their individual or official capacities, from any and all claims, demands, losses, liabilities, and causes of action of any nature or kind whatsoever related to Employee’s employment by the Bank, known or unknown, suspected or unsuspected, which arose or accrued on or before the effective date of the Agreement, including, but not limited to, any claims under any federal, state or local laws and regulations and any common law prohibiting pregnancy, sex, race, age, religion, national origin, disability, handicap, citizenship,

3

or marital status discrimination or any other form of discrimination or claims under any other employment statute or law, claims for attorneys’ fees, and any claims whatsoever under any other federal, state, and local laws or regulations or common law arising out of any legal restrictions on an employer’s right to terminate its employees or in any way governing the employment relationship, including, but not limited to, claims arising under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, the Employee Retirement Income Security Act of 1974, as amended, the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964 and 1991, as amended, the Equal Pay Act, the Americans With Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, as amended, the Pennsylvania Human Relations Act, the Pennsylvania Wage Payment and Collection Law, and those based on contract, implied-in-fact contract, or tort law, relating to Employee’s employment by the Bank.

15.Confidentiality.  The existence of this Agreement and its terms are to be held in strict confidence by the Bank and Employee.  Disclosure by Employee shall be limited to immediate family and to persons representing or advising her for accounting, tax, business or legal purposes or as otherwise required by law, and shall be further limited to financial matters.  Employee further agrees not to disclose confidential information about the operations of the Bank to anyone.

16.Confidential Information.  The Employee acknowledges that, in connection with her employment at the Bank, she obtained knowledge about confidential and proprietary information of the Bank, including but not limited to privileged and confidential matters relating to the Bank’s legal matters, lists of customers, technical information about Bank products, and strategic plans of the Bank’s business (hereinafter the “Information”).  Employee agrees not to

4

use, publish or otherwise disclose any information to others, including but not limited to a subsequent employer or competitor of the Bank, either prior to or following the Effective Date.  If the Employee has any question regarding what data or information would be considered by the Bank to be information subject to this provision, the Employee agrees to contact the President of the Bank in writing for clarification.

17.Employee Representations.  Employee makes the following additional representations to the Bank, each of which is significant and an important consideration for the Bank’s willingness to enter into the Agreement:

i.Employee expressly acknowledges that if she did not execute the Agreement, she would not be entitled to receive the money and benefits set forth in paragraphs 2 and 3.

ii.Employee acknowledges that she has been given a full and fair opportunity to review the Agreement, the Bank specifically recommended that Employee consult with an attorney before executing the Agreement, and she has been allowed up to twenty-one (21) days to consider whether to accept the Agreement.

iii.Employee understands that she may change her mind and revoke the Agreement at any time during the seven (7) days immediately following the date she signs the Agreement, provided she does so in writing, in which case none of the provisions of the Agreement will have any effect.  Employee understands that she will not be entitled to receive any payment under the Agreement until the seven (7) day revocation period has expired without revocation of the Agreement.

5

18.Governing Law.  This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania and any applicable federal laws, without regard to choice of law provisions.

19.Severability of Provisions.  If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining terms of provisions hereof, and such term or provision shall be deemed modified to the extent necessary to make it enforceable.

20.Revocation.  If Employee elects to revoke her acceptance of this Agreement, she will do so by letter within seven (7) days after executing this Agreement, and ensure that the letter of revocation is received within eight (8) days of her executing this Agreement:

Such a letter shall advise that Employee has elected to revoke her acceptance of this Agreement, and sent to James F. Kilcur, Esquire at Saul Ewing LLP, 1500 Market Street, 38th Floor, Centre Square West, Philadelphia, PA 19102.

21.Entire Agreement.  This is the entire agreement between the parties and any amendment to, modification of, or supplement to this Agreement must be in writing and signed by each party or an expressly authorized representative.

22.Successors and Assigns.  This Agreement shall extend to, be binding upon, and inure to the benefit of the Bank, its successors and assigns and to the Employee’s heirs.  This Agreement and the payments hereunder cannot be assigned by the Employee except to her caretaker(s) or to her designated power of attorney holder in case of Employee’s disability.

6

23.Notices/Requests.  Any notice or request under this Agreement shall be in writing and sent to the other party via overnight courier service or U.S. Postal Service certified mail with return receipt, addressed as follows:

a.If to Employee:

Deborah R. Pierce, Esq.

156 Old Kennett Road, P.O. Box 996

Kennett Square, PA  19348

b.If to the Bank:

Mr. Kevin C. Quinn

President

First National Bank of Chester County

887 South Matlack Street

West Chester, PA  19382

IN WITNESS WHEREOF, the Bank and Employee have executed this Agreement on the date and year set forth above.

THIS IS A WAIVER AND RELEASE OF CLAIMS.  YOU ARE ADVISED TO CONSULT WITH LEGAL COUNSEL AND READ THIS DOCUMENT PRIOR TO SIGNING.

Employee		First National Bank of Chester County
By:	/s/ Deborah R. Pierce	/s/ Kevin C. Quinn
	Deborah R. Pierce	Kevin C. Quinn, President
Date: November 19, 2008		Date: November 21, 2008

7

EX-10.30

Exhibit 10.30

FIRST CHESTER COUNTY CORPORATION

AMENDED AND RESTATED

EXECUTIVE INCENTIVE PLANS

ANNUAL INCENTIVE PLAN

LONG TERM INCENTIVE PLAN

Amended and Restated June 2008

FIRST CHESTER COUNTY CORPORATION

EXECUTIVE INCENTIVE PLAN

ANNUAL INCENTIVE AND LONG TERM INCENTIVE PLANS

ARTICLE I – Introduction

A vital component of the success of First Chester County Corporation (“Corporation”) is the ability of the executive management team to meet and achieve performance objectives consistent with the strategic objectives of the Corporation and the best interests of its shareholders.  The ability to grow and manage the Corporation in a positive manner is critical to the Corporation’s future success.  This Executive Incentive Plan (“Plan”), which includes both an Annual Incentive Plan and a Long Term Incentive Plan, has been developed as a meaningful compensation tool to encourage the growth and proper management of the Corporation.  The major purposes of the Plan are:

·To motivate and reward executives for positive performance of the Corporation on an annual basis;

·To provide additional compensation to executives that is directly linked to their individual and collective performance; and

·To emphasize the long term growth and profitability of the Corporation.

The focus of this Plan is to provide an incentive for the executive team to achieve annual and longer term performance objectives that are coordinated with the objectives of the Corporation.

ARTICLE II – Definitions

2.1The following definitions shall be used in this Plan:

“Board of Directors” means the Board of Directors of the Corporation.

“CEO” means the chief executive officer of the Corporation, as appointed by the Board of Directors.

“Change in Ownership or Effective Control” has the meaning provided in regulations issued pursuant to Section 409A of the Code.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Corporation” means First Chester County Corporation.

“Disability” means that a person is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.  Disability shall be determined by the Board of Directors in consultation with the medical experts it selects.

The “Effective Date” of the Plan is January 1, 2006.

“Employee” means any individual regularly employed by the Corporation.

“Participant” means an Employee chosen to participate in this Plan pursuant to the terms of Article III.

“Plan” means the First Chester County Corporation Executive Incentive Plan, as set forth in this document, and any amendments adopted by the Board of Directors.  The Plan includes within it two types of incentive arrangements — the Annual Incentive Plan and the Long Term Incentive Plan.

“Plan Year” means the calendar year.

“President” means the President of the Corporation, as appointed by the Board of Directors.

“Retirement” means that a person has retired from regular employment with the Corporation following either (i) a minimum of ten (10) years of service and attainment of sixty (60) years of age or (ii) a minimum of five (5) years of service and attainment of sixty-five (65) years of age.

2

ARTICLE III – Participation

3.1(a)Participation in the Plan will be determined at the beginning of each Plan Year by the CEO and the President, and will be approved by the Board of Directors.  To participate, an Employee must be a regular employee of the Corporation with on-going responsibilities that are executive in nature and that have a meaningful impact on the Corporation’s results.  Participation in the Plan by the CEO and the President will be approved annually by the Board of Directors.  Generally, Participants will include officers at the Senior Vice President level and above.

1.Exhibit A will list Participants each year in the Annual Incentive Plan and Exhibit C, the Participants in the Long Term Incentive Plan.  Those exhibits may include multiple levels of participation.  These levels will generally be based upon position responsibility.

2.An Employee may become a new Participant during the Plan Year if newly hired.  Any awards will be pro-rated for the portion of the year in which participation occurs, unless otherwise approved by the Board.  The CEO and the President will make the final determination (with Board approval) of new participation during the Plan Year for any position other than that of CEO or President.  The Board of Directors will decide on the participation of any new CEO or President.

3.A Participant’s eligibility will cease at the termination of employment (other than retirement, death or disability) and the Participant will not receive any awards under the Plan for the Plan Year of employment termination.  Termination as a result of retirement, death or disability will result in pro-rated awards under the Plan through the last working date for the Plan Year in which termination occurred, or, in the case of multi-year awards, as otherwise determined by the Board of Directors.

3

ARTICLE IV – Performance Factors under the Annual Incentive Plan

4.1(a)The Annual Incentive benefits provided under the Plan are based upon the Corporation’s financial performance factors, which may be amended as provided in Section 7.2.  In general, these factors will be measures such as return on assets, return on equity, net income, earnings per share or similar indicators.  The factors and weighing of the factors are determined at the beginning of each Plan Year.  Each factor has quantifiable objectives consisting of threshold, target and optimum goals.  Additionally, a portion of each Participant’s award may be based on unit, team, functional area, and individual performance objectives that are determined by management at the beginning of each Plan Year.  Generally, the CEO and President will have most or all of their performance based on the Corporation’s overall performance, and other Participants will have a proportionately greater level of their award based on individual performance or the performance of an area of responsibility.

(b)The Corporation’s performance factors for each year’s Annual Incentive awards under the Plan will be set forth in Exhibit B, which may be changed from time to time.  Individual Participant objectives will be established after discussion between the Participant and the Participant’s manager (usually the CEO or President).

ARTICLE V – Award Calculation and Distribution under the Annual Incentive Plan

5.1Awards under the Plan are calculated according to determination of the established performance factors at the end of each Plan Year.  The Corporation’s performance between the threshold and target, and between the target and optimum will be interpolated.  Unit, team, and functional area performance, if applicable, is determined by the CEO and the President.  Individual performance is determined by each Participant’s manager, as approved by the CEO and the President.  An individual Participant’s performance that does not meet the position’s requirements (an annual performance evaluation that is less than satisfactory) will result in no award granted to that Participant for that Plan Year even though the Corporation’s performance is above threshold.  If

4

the Corporation’s performance is below the threshold, no award (including no individual award) will be granted under the Annual Incentive portion of the Plan for that Plan Year.

5.2Annual awards are paid in cash less required income tax withholding.  Payment will be within two and a half months after the end of the Plan Year.  Any Participant terminating employment (except by retirement, death, or disability) prior to the actual payment of the award will forfeit that award.  The award schedule for each Plan Year is found with the performance factors in Exhibit B, as changed from time to time.

ARTICLE VI – Long Term Incentive Provisions

6.1The Participants in the Long Term Incentive portion of the Plan will be chosen from time to time  by the CEO and the President, subject to the approval of the Board of Directors.  The participation of the CEO and the President will be determined each year by the Board of Directors.

6.2The Employees chosen to participate will be listed on Exhibit C, which may be changed from time to time.

6.3The Long Term Incentive portion of the Plan will consist of restricted stock grants, under the following terms:

(a)Grants will be made within two and a half months after the end of the Plan year, following specific approval by the Board of Directors (or a committee thereof) based upon the performance for the prior year.

(b)The amount of each grant shall be determined as follows:  Participants shall be divided into categories as determined by the CEO and the President, subject to the approval of the Board of Directors (and, in the case of the CEO and President, as determined by the Board of Directors).  Each category shall have a different range of grant sizes.  The lowest level of grant will be the threshold, the middle level the target, and the highest level the optimum.  The number of shares in each level of each category will be set forth in Exhibit C, which may be changed each year.

5

(c)The determination of which level of grant will be made will be determined by the Corporation’s net income for each year, and based on the Corporation’s overall Annual Incentive Plan for that year.

(d)The shares granted pursuant to the prior subparagraph will vest at the rate determined by the Board of Directors at the time each grant is approved.  Vesting may occur at different rates for grants made in different years.  It shall be a condition of vesting that the Participant has been continuously employed by the Corporation subsequent to the grant and is actively employed on each vesting date.  Vesting will be accelerated to 100% in the event the Participant retires, dies or becomes disabled (at the pro-rated amount determined in accordance with Section 3.1(a)(3)), and also upon a Change in Ownership or Effective Control of the Corporation (at the maximum award level, unless otherwise provided in an individual award agreement).

(e)Dividends on the shares granted will be paid to the Participant without regard to vested status.

ARTICLE VII – Administration

7.1The Board of Directors may amend or terminate the Plan at any time and in any respect.  This includes the right to terminate the participation of any or all Participants under the Plan during the Plan Year with respect to that Plan Year or to amend the amount of the awards which may be granted under the Plan with respect to any Plan Year at any time prior to the final determination and approval of any such grants.

7.2Participation, performance factors, thresholds, targets and any other participation features may change from time to time, according to the performance of the Corporation and the strategic objectives of the Corporation, at the discretion of the Board of Directors.  Any adjustments to the financial performance results used in this Plan because of extraordinary gains or losses or other items must be approved by the Board of Directors.

6

7.3The Plan does not constitute a contract of employment, and participation in the Plan does not give any Employee the right to be retained in the service of the Corporation or any right or claim to an award under the Plan.

7.4Any right of a Participant or his or her beneficiary to the payment of an award under this Plan may not be assigned, transferred, pledged or encumbered.

7.5In the event that a Participant dies, his benefits payable under the Plan will be paid as soon as practicable to the beneficiaries chosen by the Participant or, if none are chosen, to the beneficiaries selected pursuant to the Corporation’s retirement plans.

7.6This Plan will be administered and interpreted in accordance with the laws of the Commonwealth of Pennsylvania.

FIRST CHESTER COUNTY CORPORATION

By:

Title:

Date:

7

Exhibit A – Participation

Plan Year 2008

(Participating employees and their participant categories should be listed at the beginning of each year and adjusted for changes in participation throughout the year.)

Category 1 –	John A. Featherman, III - Chief Executive Officer
	Kevin C. Quinn – President
Category 2 –	Sheri Ashman – Executive Office of Marketing
	John E. Balzarini – Chief Financial Officer
	Clay Henry – Executive Officer Trust & Investment Services
	Deborah R. Pierce – Executive Officer of Human Resources and Administration
	Anthony J. Poluch – Executive Officer of Business Development
	Michelle E. Venema – Executive Officer of Business Banking
	Karen D. Walter – Executive Officer of Retail Banking
Category 3 –	Linda Hicks – Chief Fiduciary Officer
	Tom Imler – Senior Trust Business Development Manager
	Richard W. Kaufmann – Credit Policy Officer
	Lynn Mander – Chief Investment Officer
	Richard D. McMullen – Senior Mgr. Retail Lending
	Donna J. Steigerwalt – Branch Administrator
	Michael T. Steinberger – Senior Commercial Real Estate Loan Officer
	Andrew H. Stump – Senior Commercial Loan Officer
	Patricia A. Travaglini – Senior Residential Mortgage Loan Officer

A-1

First Chester County Corporation

EXECUTIVE ANNUAL INCENTIVE PLAN

EXHIBIT B – BANK PERFORMANCE FACTORS AND AWARD SCHEDULE

PLAN YEAR 2008

Category 1 – CEO and President Positions

COMPANY GOALS

Performance Measures

Net Income (50%)

Threshold			Budget Target			Stretch Target			Optimum
$	7,723,000		$	8,129,000		$	8,373,000		$	8,698,000
Return on Average Equity (50%)
Threshold			Budget Target			Stretch Target			Optimum
10.84		%	11.38		%	11.70		%	12.12		%
AWARDS (% of Base Pay)
Threshold			Budget Target			Stretch Target			Optimum
8		%	20		%	30		%	40		%

Parameters

1.Company measures will be 50% Net Income and 50% ROAE.

2.Both Financial Measures must meet threshold to initiate an award in the plan.

3.Will interpolate awards between threshold, budget target, stretch target and optimum.

4.Will pay for performance above optimum at a scale of one-half the increase between target and optimum.

5.Pay is defined as total base pay for the applicable plan year.

B-1

Category 2 – EVP Positions

COMPANY GOALS

Performance Measures

Net Income (50%)

Threshold			Budget Target			Stretch Target			Optimum
$	7,723,000		$	8,129,000		$	8,373,000		$	8,698,000
Return on Average Equity (50%)
Threshold			Budget Target			Stretch Target			Optimum
10.84		%	11.38		%	11.70		%	12.12		%
COMPANY GOAL AWARD (% of Base Pay)
Threshold			Budget Target			Stretch Target			Optimum
4		%	8		%	16		%	20		%

FUNCTIONAL AREA/INDIVIDUAL GOAL AWARD
(% of Base Pay)

Minimum Performance		Meets Goals/Target		Exceptional Performance
1	%	4	%	10	%

TOTAL AWARDS
(ASSUMING INDIVIDUAL PERFORMANCE “MEETS GOALS”)(% of Base Pay)

Threshold		Budget Target		Stretch Target		Optimum
8	%	12	%	20	%	24	%

Parameters

1.Company measures will be 50% Net Income and 50% ROAE.

2.Both Financial Measures must meet threshold and Individual Performance must meet Minimum Performance to initiate an award in the plan.

3.Will interpolate between threshold, budget target, stretch target and optimum.

4.Will pay for performance above optimum at a scale of one-half the increase between target and optimum.

5.Pay is defined as total base pay for the applicable plan year.

6.Functional area/individual goals will be established at the beginning of each year.

B-2

Category 3 – SVP Positions

COMPANY GOALS

Performance Measures

Net Income (50%)

Threshold			Budget Target			Stretch Target			Optimum
$	7,723,000		$	8,129,000		$	8,373,000		$	8,698,000
Return on Average Equity (50%)
Threshold			Budget Target			Stretch Target			Optimum
10.84		%	11.38		%	11.70		%	12.12		%
COMPANY GOAL AWARD (% of Base Pay)
Threshold			Budget Target			Stretch Target			Optimum
2		%	4		%	8		%	12		%

FUNCTIONAL AREA/INDIVIDUAL GOAL AWARD
(% of Base Pay)

Minimum Performance		Meets Goals/Target		Exceptional Performance
2	%	4	%	8	%

TOTAL AWARDS
(ASSUMING INDIVIDUAL PERFORMANCE “MEETS GOALS”)
(% of Base Pay)

Threshold		Budget Target		Stretch Target		Optimum
6	%	8	%	12	%	16	%

Parameters

1.Company measures will be 50% Net Income and 50% ROAE.

2.Both Financial Measures must meet threshold and Individual Performance must meet Minimum Performance to initiate an award in the plan.

3.Will interpolate between threshold, budget target, stretch target and optimum.

4.Will pay for performance above optimum at a scale of one-half the increase between target and optimum.

5.Pay is defined as total base pay for the applicable plan year.

6.Functional area/individual goals will be established at the beginning of each year.

B-3

First Chester County Corporation

EXECUTIVE ANNUAL INCENTIVE PLAN

First Chester County Corporation

Exhibit C – Long Term Incentive Plan

Plan Year 2008

2008 GRANT PARAMETERS – RECOMMENDED

Following are the parameters for the 2008 restricted stock grant for executives at First Chester County Corporation:

I.              Participants/Categories

Category 1	John A. Featherman Kevin C. Quinn
Category 2	Sheri Ashman John E. Balzarini Clay Henry Deborah R. Pierce Anthony J. Poluch Michelle E. Venema Karen D. Walter
Category 3	Linda M. Hicks Thomas A. Imler Richard W. Kaufmann Lynn Mander Richard D. McMullen Donna J. Steigerwalt Michael T. Steinberger Andrew H. Stump Patricia A. Travaglini

II.Grant Date:  TBD in accordance with action of the Personnel and Compensation Committee

III.Grant Size

	Threshold	Target	Maximum
·   Category 1	1,500	3,000	4,500 shares
·   Category 2	750	1,500	2,250 shares
·   Category 3	325	650	975 shares

 Numbers of shares will not be interpolated between points for performance between points.

C-1

IV.Restrictions

A.Performance – size of grant to be determined by company Earnings Per Share and Efficiency Ratio performance for 2010 – threshold, target, and maximum are outlined below

To be measured in 2011 based upon performance for the year ending 12/31/10

	Threshold	Target	Maximum
EPS (60%)	$1.63 (3%)	$1.72 (5%)	$1.82 (7%)
Efficiency Ratio (40%)	71%	70%	68%

At least one performance measure threshold must be met for an award to be paid.  EPS is weighted 60% of award and Efficiency Ratio is weighted 40%.

B.Vesting – the shares will vest on the third anniversary of date of grant as approved by the Board of Directors, subject to Participant’s continued employment as provided in Plan (assuming threshold performance is met)

V.Expense/Taxation

A.Fair market value will be expensed on pro rata basis over remainder of vesting period, when deemed that an award will be paid, according to accounting practices

B.Participant – ordinary income at fair market value as restrictions are met/vested; participant responsible for payment of tax withholding due upon vesting

VI.Dividends

·Paid immediately from date of grant on all shares awarded, including shares granted but not vested; taxable as ordinary income

VII.Change of Control, Retirement, Death, Disability

·Accelerate vesting of shares at Change of Control

·Possible acceleration of vesting at Retirement, Death & Disability – determined by Personnel & Compensation Committee

C-2

EX-10.31

Exhibit 10.31

AMENDMENT TO

FIRST CHESTER COUNTY CORPORATION

EXECUTIVE INCENTIVE PLAN

Pursuant to the authority reserved to the Board of Directors of First Chester County Corporation under Section 7.1 of the First Chester County Corporation Executive Incentive Plan (the “Plan”), the Plan is hereby amended as of this 10th day of December, 2008 as follows:

FIRST AND ONLY CHANGE

The Plan is hereby amended to add the following new Article 8 to the end thereof:

“ARTICLE VIII—Limitations and Restrictions

8.1           Notwithstanding any provision of this Plan to the contrary, in the event that the Corporation or any of its subsidiaries participates in the Capital Purchase Program established by the U. S. Treasury pursuant to the Emergency Economic Stabilization Act of 2008 (the “CPP”), the benefits and payments otherwise due a Participant under this Plan shall be restricted, modified or eliminated as is necessary to satisfy the requirements of 31 CFR Part 30 or such other guidance or regulations promulgated by the U. S. Treasury under the CPP (“CPP Regulations”), including but not limited to the limitations and restrictions described in Section 8.2 an 8.3.

8.2           If a Participant is or becomes a “senior executive officer”(SEO) , within the meaning of the CPP Regulations, during the period that the U. S. Treasury holds an equity or debt position of the Corporation or any subsidiary thereof acquired under the CPP, the present value of all benefits and payments otherwise due the Participant under the Plan and all other compensation arrangements with the Corporation on account of Executive’s “applicable severance from employment,” as defined under the CPP Regulations, shall be limited to 2.99 times the Participant’s “base amount,” as defined under the CPP Regulations.

8.3           If a Participant is or becomes an SEO, any payments made to the Participant under this Plan during the period the U. S. Treasury holds an equity or debt position of the Corporation or any subsidiary thereof acquired under the CPP, shall be subject to recovery by the Corporation and its subsidiaries at anytime to the extent such payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric.”

IN WITNESS WHEREOF, this Amendment is executed on behalf of the Corporation as of the day and year first written above.

FIRST CHESTER COUNTY CORPORATION
By:	/s/ John A. Featherman, III
	John A. Featherman, III, Chairman and Chief       Executive Officer

2

EX-10.37

Exhibit 10.37

THE AMERICAN HOME BANK, NATIONAL ASSOCIATION

2001 STOCK OPTION INCENTIVE PLAN(1)

1.Purpose.  American Home Bank, N.A., a national banking association (“Bank”), has adopted this 2001 Stock Option Incentive Plan (the “Plan”).  The Plan is intended to recognize the contributions made to Bank by employees (including employees who are members of the Board of Directors) of Bank or any Affiliate, to provide such persons with additional incentive to devote themselves to the future success of Bank or an Affiliate, and to improve the ability of Bank or an Affiliate to attract, retain and motivate individuals upon whom Bank’s sustained growth and financial success depend.  Through the Plan, Bank will provide such persons with an opportunity to acquire or increase their proprietary interest in Bank, and to align their interest with the interests of shareholders, through receipt of rights to acquire Bank’s Common Stock, par value $1.00 per Share (the “Common Stock”), and through the transfer or issuance of Common Stock or other Awards.  In addition, the Plan is intended as an additional incentive to directors of Bank who are not employees of Bank or an Affiliate to serve on the Board of Directors and to devote themselves to the future success of Bank by providing them with an opportunity to acquire or increase their proprietary interest in Bank through the receipt of rights to acquire Common Stock.  Furthermore, the Plan may be used to encourage consultants and advisors of Bank to further the success of Bank.

2.Definitions.  Unless the context clearly indicates otherwise, the following terms shall have the following meanings:

“Affiliate” shall mean a corporation which is a parent corporation or a subsidiary corporation with respect to Bank within the meaning of Section 424(e) or (f) of the Code, or any successor provision.

“Award” shall mean a transfer of Common Stock made pursuant to the terms of the Plan or the grant to a person of performance units or other rights containing such terms, benefits or restrictions as the Committee shall specify in the Award Agreement.

“Award Agreement” shall mean the agreement between Bank and a Grantee with respect to an Award made pursuant to the Plan.

“Bank” shall mean American Home Bank, N.A., a national banking association.

“Board” shall mean the Board of Directors of Bank.

(1) Effective December 31, 2008, American Home Bank, National Association was merged with and into First National Bank of Chester County, a wholly-owned subsidiary of First Chester County Corporation and the options issued and outstanding under the Plan became options to acquire shares of First Chester County Corporation.  All references to the “Bank” herein should be deemed to be references to First Chester County Corporation (except that in Section 15, the reference to the “Bank” should be deemed to be a reference to either First Chester County Corporation or First National Bank of Chester County).  No further options may be granted under this Plan.

“Change of Control” shall have the meaning as set forth in Section 9 of the Plan.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, and the rules and regulations issued pursuant to that statute or any successor statute.

“Committee” shall have the meaning set forth in Section 3 of the Plan.

“Common Stock” shall have the meaning set forth in Section 1 of the Plan.

“Disability” shall mean the inability of an Optionee or Award holder to perform the essential duties of his or her position with Bank, as determined in good faith by the Committee.

“Employee” shall mean an employee of Bank or an Affiliate.

“Fair Market Value” shall have the meaning set forth in Subsection 8(b) of the Plan.

“Grantee” shall mean a person to whom an Award has been granted pursuant to the Plan.

“ISO” shall mean an Option granted under the Plan which qualifies and is intended to qualify as an “incentive stock option” within the meaning of Section 422(b) of the Code.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations issued pursuant to that statute or any successor statute.

“Non-Employee Director” shall mean a member of the Board who is a “non-employee director”, as that term is defined in paragraph (b)(3) of Rule 16b-3, and an “outside director”, as that term is defined in Treasury Regulations Section 1.162-27 promulgated under the Code.

“Non-qualified Stock Option” shall mean an Option granted under the Plan which is not intended to qualify, or otherwise does not qualify, as an ISO.

“Option” shall mean either an ISO or a Non-qualified Stock Option granted under the Plan.

“Optionee” shall mean a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated.

“Option Document” shall mean the document described in Section 8 of the Plan, which sets forth the terms and conditions of each grant of Options.

“Option Price” shall mean the price at which Shares may be purchased upon exercise of an Option, as calculated pursuant to Subsection 8(b) of the Plan.

“Rule 16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act, or any successor rule.

“Section 16 Officers” shall mean any person who is an “officer” within the meaning of Rule 16a-1(f) promulgated under the Exchange Act or any successor rule, and who is subject to the reporting requirements under Section 16 of the Exchange Act with respect to Bank’s Common Stock.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations issued pursuant to that statute or any successor statute.

“Shares” shall mean the shares of Common Stock of Bank which are the subject of Options or granted as Awards under the Plan.

3.Administration of the Plan.  The Board may administer the Plan and/or it may, in its discretion, designate a committee composed of two or more directors to operate and administer the Plan with respect to all or a designated portion of the participants.  To the extent that the Committee is empowered to grant Options to Section 16 Officers or persons whose compensation might have limits on deductibility under Code Section 162(m), each member of the Committee designated by the Board shall be a Non-Employee Director.  Any such committee designated by the Board, and the Board itself in its administrative capacity with respect to the Plan, is referred to as the “Committee.”

(a)Meetings.  The Committee shall hold meetings at such times and places as it may determine and shall keep minutes of its meetings.  The Committee may take action only upon the agreement of a majority of the whole Committee.  Any action which the Committee shall take through a written instrument signed by all of its members shall be as effective as though it had been taken at a meeting duly called and held.

(b)Exculpation.  No member of the Committee shall be personally liable for monetary damages for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options or Awards under the Plan, unless (i) the member has breached or failed to perform the duties of such member’s office under Subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law, and (ii) the breach or failure to perform constitutes self-dealing, wilful misconduct or recklessness; provided, however, that the provisions of this Subsection 3(b) shall not apply to the responsibility or liability of a member pursuant to any criminal statute, or to the liability of a member for the payment of taxes pursuant to local, Pennsylvania or federal law.

(c)Indemnification.  Service on the Committee shall constitute service as a member of the Board.  Each member of the Committee shall be entitled, without further act on the member’s part, to indemnity from Bank and to limitation of liability, to

the fullest extent provided by applicable law and by Bank’s Articles of Association and/or Bylaws, in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options or Awards thereunder in which the member may be involved by reason of the member being or having been a member of the Committee, whether or not the member continues to be a member of the Committee at the time of the action, suit or proceeding.

(d)Interpretation.  The Committee shall have the power and authority to (i) interpret the Plan, (ii) adopt, amend and revoke rules and regulations for its administration that are not inconsistent with the express terms of the Plan including, without limitation, rules and interpretations to determine the number of Shares remaining available for issuance under the Plan, and (iii) waive requirements relating to formalities or other matters that do not either modify the substance of the rights intended to be granted by Options and Awards or constitute a material amendment for any purpose under the Code.  Any such actions by the Committee shall be final, binding and conclusive on all parties in interest.

(e)Amendment of Options and Awards.  Subject to the provisions of the Plan, the Committee shall have the right to amend any Option Document or Award Agreement issued to an Optionee or Award holder, subject to the Optionee’s or Award holder’s consent, if such amendment is not favorable to the Optionee or Award holder or if such amendment has the effect of changing an ISO to a Non-Qualified Stock Option; provided, however, that the consent of the Optionee or Award holder shall not be required for any amendment made pursuant to Subsection 8(e)(i)(C) or Section 9 of the Plan, as applicable.

4.Grants of Options under the Plan.  Grants of Options under the Plan may be in the form of a Non-qualified Stock Option, an ISO or a combination thereof, at the discretion of the Committee.

5.Eligibility.  All Employees, members of the Board and consultants and advisors to Bank shall be eligible to receive Options and Awards hereunder.  Consultants and advisors shall be eligible only if they render bona fide services to Bank unrelated to the offer or sale of securities.  The Committee, in its sole discretion, shall determine whether an individual qualifies as an Employee.  Notwithstanding the foregoing, only individuals who qualify as employees of Bank or an Affiliate under Treasury Regulations Section 1.421-7(h) shall be eligible to receive an ISO.

6.Shares Subject to Plan.  The aggregate maximum number of Shares for which Awards or Options may be granted pursuant to the Plan is 260,000(2).  The number of Shares which may be issued under the Plan shall be subject to adjustment in accordance with Section 10.  The Shares shall be issued from authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury of Bank.  If an Option terminates or expires without having been fully exercised for any reason or if Shares subject to an Award have been conveyed back to Bank pursuant to the terms of an Award Agreement, the Shares for which the Option was not exercised or the Shares

(2) No additional shares may be granted pursuant to the Plan.

that were conveyed back to Bank (in either case, as the number of such Shares may have been adjusted pursuant to Section 10 of the Plan or otherwise) shall again be available for issuance pursuant to the terms of one or more Options, or one or more Awards, granted pursuant to the Plan.

7.Term of the Plan.  The Plan is effective as of August 20, 2001, the date on which it was adopted by the Board.  No ISO may be granted under the Plan after August 19, 2001.

8.Option Documents and Terms.  Each Option granted under the Plan shall be a Non-qualified Stock Option unless the Option shall be specifically designated at the time of grant to be an ISO.  If any Option designated an ISO is determined for any reason not to qualify as an incentive stock option within the meaning of Section 422 of the Code, such Option shall be treated as a Non-qualified Stock Option for all purposes under the provisions of the Plan.  Options granted pursuant to the Plan shall be evidenced by the Option Documents in such form as the Committee shall approve from time to time, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall require from time to time which are not inconsistent with the terms of the Plan.

(a)Number of Option Shares.  Each Option Document shall state the number of Shares to which it pertains.  An Optionee may receive more than one Option, which may include Options which are intended to be ISOs and Options which are not intended to be ISOs, but only on the terms and subject to the conditions and restrictions of the Plan.  Notwithstanding anything herein to the contrary, no Optionee shall be granted Options during one fiscal year of Bank for more than 35,000 Shares (such number to be subject to adjustment in accordance with Section 10).

(b)Option Price.  Each Option Document shall state the Option Price, which, for a Non-qualified Stock Option, need not be the Fair Market Value of the Shares on the date the Option is granted and, for an ISO, shall be at least 100% of the Fair Market Value of the Shares on the date the Option is granted, as determined by the Committee in accordance with this Subsection 8(b); provided, however, that if an ISO is granted to an Optionee who then owns, directly or by attribution under Section 424(d) of the Code, Shares possessing more than ten percent of the total combined voting power of all classes of stock of Bank or an Affiliate, then, to the extent required by Section 424(d) of the Code, the Option Price shall be at least 110% of the Fair Market Value of the Shares on the date the Option is granted.  If the Common Stock is traded in a public market, then the Fair Market Value per Share shall be: (i) if the Common Stock is listed on a national securities exchange or included in the NASDAQ System, the last reported sale price thereof on the relevant date, (ii) if the Common Stock is not so listed or included, the mean between the last reported “bid” and “asked” prices thereof on the relevant date, as reported on NASDAQ, or (iii) if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines.  If the Common Stock is not traded in a public market, then the Fair Market Value per Share shall be determined in good faith by the Committee in accordance with Section 422(c)(1) of the Code and the rules and principles of valuation set forth in Treasury Regulations Section 20.2031-2(f)

relating to the valuation of stocks and bonds not actively traded.  Subject to the foregoing, the Committee shall have full authority and discretion and may rely on the opinion of a qualified business valuation consultant.

(c)Exercise.  No Option shall be deemed to have been exercised prior to the receipt by Bank of written notice of such exercise and, unless arrangements satisfactory to Bank have been made for payment through a broker in accordance with procedures permitted by rules or regulations of the Federal Reserve Board, receipt of payment in full of the Option Price for the Shares to be purchased.  Each such notice shall specify the number of Shares to be purchased and contain such other information as the Committee may require.

(d)Medium of Payment.  Subject to the terms of the applicable Option Document, an Optionee shall pay for Shares (i) in cash, (ii) by certified or cashier’s check payable to the order of Bank, or (iii) by such other mode of payment as the Committee may approve, including, without limitation, the Optionee’s note in form approved by the Committee and payment through a broker in accordance with procedures permitted by rules or regulations of the Federal Reserve Board.

(e)Termination of Options.

(i)No Option shall be exercisable after the first to occur of the following:

(A)Expiration of the Option term specified in the Option Document, which, in the case of an ISO, shall not occur after (1) ten years from the date of grant, or (2) five years from the date of grant if the Optionee on the date of grant owns, directly or by attribution under Section 424(d) of the Code, shares possessing more than ten percent of the total combined voting power of all classes of stock of Bank or of an Affiliate;

(B)Except to the extent otherwise provided in an Optionee’s Option Document, a finding by the Committee, after full consideration of the facts presented on behalf of both Bank and the Optionee, that the Optionee has been engaged in disloyalty to Bank or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of employment or service, or has disclosed trade secrets or confidential information of Bank or an Affiliate.  In such event, in addition to immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which Bank has not yet delivered the share certificates upon refund by Bank of the Option Price.  Notwithstanding anything herein to the contrary, Bank may withhold delivery of share certificates pending the resolution of any inquiry that could lead to a finding resulting in a forfeiture;

(C)The date, if any, set by the Committee as an accelerated expiration date in the event of the liquidation or dissolution of Bank;

(D)The occurrence of such other event or events as may be set forth in the Plan or the Option Document as causing an accelerated expiration of the Option; or

(E)Except as otherwise set forth in the Option Document and subject to the foregoing provisions of this Subsection 8(e), immediately upon termination of the Optionee’s employment or service with Bank or its Affiliates for any reason other than Disability or death or six months after such termination due to Optionee’s Disability or death.  With respect to this Subsection 8(e)(i)(E), the only Options that may be exercised during the six-month period are Options which were exercisable on the last date of such employment or service and not Options which, if the Optionee were still employed or rendering service during such six-month period, would become exercisable, unless the Option Document specifically provides to the contrary or the Committee otherwise approves.  The terms of an executive severance agreement or other agreement between Bank and an Optionee, approved by the Committee or the Board, whether entered into prior or subsequent to the grant of an Option, which provide for Option exercise dates later than those set forth in Subsection 8(e)(i) shall be deemed to be Option terms approved by the Committee and consented to by the Optionee.

(ii)Notwithstanding the foregoing, the Committee may extend the period during which all or any portion of an Option may be exercised, provided that any change pursuant to this Subsection 8(e)(ii) which would cause an ISO to become a Non-qualified Stock Option may be made only with the consent of the Optionee.

(iii)Notwithstanding anything to the contrary contained in the Plan or an Option Document, an ISO shall be treated as a Non-qualified Stock Option to the extent such ISO is exercised at any time after the expiration of the time period permitted under the Code for the exercise of an ISO.

(f)Transfers.  Except as otherwise provided in this Subsection 8(f), no Option granted under the Plan may be transferred, except by will or by the laws of descent and distribution, and, during the lifetime of the person to whom an Option is granted, such Option may be exercised only by the Optionee.  Notwithstanding the foregoing, an Option, other than an ISO, shall be transferable pursuant to a “domestic relations order” as defined in the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, and also shall be transferable, without payment of consideration, to (i) immediate family members of the holder (i.e., spouse or former spouse, parents, issue, including adopted and “step” issue, or siblings), (ii) trusts for the benefit of immediate family members, (iii) partnerships whose only partners are such family members, and (iv) to any transferee permitted by a rule adopted by the Committee or approved by the Committee in an individual case.  Any transferee will be subject to all of the conditions set forth in the Option prior to its transfer.

(g)Limitation on ISO Grants.  To the extent that the aggregate Fair Market Value of the Shares of Common Stock (determined at the time the ISO is granted) with respect to which ISOs under all incentive stock option plans of Bank or its Affiliates are exercisable for the first time by the Optionee during any calendar year exceeds

$100,000, such ISOs shall, to the extent of such excess, be treated as Non-qualified Stock Options.

(h)Other Provisions.  Subject to the provisions of the Plan, the Option Document shall contain such other provisions, including, without limitation, provisions authorizing the Committee to accelerate the exercisability of all or any portion of an Option granted pursuant to the Plan, additional restrictions upon the exercise of the Option or additional limitations upon the term of the Option, as the Committee deems advisable.

9.Change of Control.  In the event of a Change of Control, the Committee may take whatever actions it deems necessary or desirable with respect to any of the Options outstanding or Award Shares not yet fully vested or paid for, all of which need not be treated identically, including, without limitation, accelerating (a) the expiration or termination date in the respective Option Documents to a date no earlier than 30 days after notice of such acceleration is given to the Optionees, or (b) the exercisability of the Option.  Notwithstanding the foregoing, in the event of a Change of Control, Options granted pursuant to the Plan will become automatically exercisable in full.

A “Change of Control” shall be deemed to have occurred upon the earliest to occur of any of the following events, each of which shall be determined independently of the others:

(i)any Person (as defined below) becomes a “beneficial owner,” as such term is used in Rule 13d-3 promulgated under the Exchange Act, of fifty percent or more (as determined by the Committee) of Bank’s stock entitled to vote in the election of directors.  For purposes of the Plan, the term “Person” is used as such term is used in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that, unless the Committee determines to the contrary, the term shall not include Bank, any trustee or other fiduciary holding securities under an employee benefit plan of Bank, or any corporation owned, directly or indirectly, by the shareholders of Bank in substantially the same proportions as their ownership of stock of Bank;

(ii)individuals who are Continuing Directors cease to constitute a majority of the members of the Board (“Continuing Directors” for this purpose being the members of the Board on the date of adoption of the Plan, provided that any person becoming a member of the Board subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Continuing Directors shall be considered to be a Continuing Director);

(iii)shareholders of Bank adopt a plan of complete or substantial liquidation or an agreement providing for the distribution of all or substantially all of its assets;

(iv)Bank is party to a merger, consolidation, other form of business combination or a sale of all or substantially all of its assets, unless the business of Bank is continued following any such transaction by a resulting entity (which may be, but need not be, Bank) and the shareholders of Bank immediately prior to such transaction (the

“Prior Shareholders”) hold, directly or indirectly, at least two-thirds of the voting power of the resulting entity (there being excluded from the voting power held by the Prior Shareholders, but not from the total voting power of the resulting entity, any voting power received by Affiliates of a party to the transaction (other than Bank) in their capacities as shareholders of Bank);

(v)there is a Change of Control of Bank of a nature that would be required to be reported in response to item 1(a) of Current Report on Form 8-K or item 6(e) of Schedule 14A of Regulation 14A or any similar item, schedule or form under the Exchange Act, as in effect at the time of the change, whether or not Bank is then subject to such reporting requirement;

(vi)the Bank is a subject of a “Rule 13e-3 transaction” as that term is defined in Exchange Act Rule 13e-3; or

(vii)there has occurred a “change of control,” as such term (or any term of like import) is defined in any of the following documents which is in effect with respect to Bank at the time in question:  any note, evidence of indebtedness or agreement to lend funds to Bank, any option, incentive or employee benefit plan of Bank or any employment, severance, termination or similar agreement with any person who is then an employee of Bank.

10.Adjustments on Changes in Capitalization.

(a)In the event that the outstanding Shares are changed by reason of a reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination or exchange of Shares and the like (not including the issuance of Common Stock on the conversion of other securities of Bank which are convertible into Common Stock) or dividends payable in Shares, an equitable adjustment may be made by the Committee as it deems appropriate in the aggregate number of Shares available under the Plan and in the number of Shares and price per Share subject to outstanding Options.  Unless the Committee makes other provisions for the equitable settlement of outstanding Options, if Bank shall be reorganized, consolidated, or merged with another corporation, or if all or substantially all of the assets of Bank shall be sold or exchanged, an Optionee shall at the time of issuance of the stock under such corporate event be entitled to receive, upon the exercise of his or her Option, the same number and kind of Shares of stock or the same amount of property, cash or securities as the Optionee would have been entitled to receive upon the occurrence of any such corporate event as if the Optionee had been, immediately prior to such event, the holder of the number of Shares covered by his or her Option.

(b)Any adjustment under this Section 10 in the number of Shares subject to Options shall apply proportionately to only the unexercised portion of any Option granted hereunder.  If a fraction of a Share would result from any such adjustment, the fraction shall be eliminated, unless the Committee otherwise determines.

(c)The Committee shall have authority to determine the adjustments to be made under this Section 10, and any such determination by the Committee shall be final, binding and conclusive.

11.Terms and Conditions of Awards.  Awards granted pursuant to the Plan shall be evidenced by written Award Agreements in such form as the Committee shall approve from time to time, which Award Agreements shall comply with and be subject to the following terms and conditions and such other terms and conditions which the Committee shall require from time to time which are not inconsistent with the terms of the Plan.

(a)Number of Shares.  Each Award Agreement shall state the number of Shares or other units or rights to which it pertains.

(b)Purchase Price.  Each Award Agreement shall specify the purchase price, if any, which applies to the Award.  If the Board specifies a purchase price, the Grantee shall be required to make payment on or before the payment date specified in the Award Agreement.  A Grantee shall make payment (i) in cash, (ii) by certified check payable to the order of Bank, or (iii) by such other mode of payment as the Committee may approve.

(c)Grant.  In the case of an Award which provides for a grant of Shares without any payment by the Grantee, the grant shall take place on the date specified in the Award Agreement.  In the case of an Award which provides for a payment, the grant shall take place on the date the initial payment is delivered to Bank, unless the Committee or the Award Agreement otherwise specifies.  Notwithstanding the foregoing, as a precondition to a grant, Bank may require an acknowledgment by the Grantee as required with respect to Options under Subsection 8(c).

(d)Conditions.  The Committee may specify in an Award Agreement any conditions under which the Grantee of that Award shall be required to convey to Bank the Shares covered by the Award.  Upon the occurrence of any such specified condition, the Grantee shall forthwith surrender and deliver to Bank the certificates evidencing such Shares as well as completely executed instruments of conveyance.  The Committee, in its discretion, may provide that certificates for Shares transferred pursuant to an Award be held in escrow by Bank or its designee until such time as every condition has lapsed and that the Grantee be required, as a condition of the Award, to deliver to such escrow agent or Bank officer stock transfer powers covering the Award Shares duly endorsed by the Grantee.  Unless otherwise provided in the Award Agreement or determined by the Committee, dividends and other distributions made on Shares held in escrow shall be deposited in escrow, to be distributed to the party becoming entitled to the Shares on which the distribution was made.  Stock certificates evidencing Shares subject to conditions shall bear a legend to the effect that the Shares evidenced thereby are subject to repurchase by, or conveyance to, Bank in accordance with the terms applicable to such Shares under an Award made pursuant to the Plan, and that the Shares may not be sold or otherwise transferred.

(e)Lapse of Conditions.  Upon termination or lapse of all forfeiture conditions, Bank shall cause certificates without the legend referring to Bank’s repurchase or acquisition right (but with any other legends that may be appropriate) evidencing the Shares covered by the Award to be issued to the Grantee upon the Grantee’s surrender to Bank of the legended certificates held by the Grantee.

(f)Rights as Shareholder.  Upon payment of the purchase price, if any, for Shares covered by an Award and compliance with the acknowledgment requirement of Subsection 11(c), the Grantee shall have all of the rights of a shareholder with respect to the Shares covered thereby, including the right to vote the Shares and (subject to the provisions of Subsection 11(d)) receive all dividends and other distributions paid or made with respect thereto, except to the extent otherwise provided by the Committee or in the Award Agreement.

12.Amendment of the Plan.  The Board may amend the Plan from time to time in such manner as it may deem advisable.  Nevertheless, the Board may not change the class of persons eligible to receive an ISO or increase the maximum number of Shares as to which Options may be granted under the Plan, or to any individual under the Plan in any year, without obtaining approval, within twelve months before or after such action, by the shareholders in the manner required by state law.  No amendment to the Plan shall adversely affect any outstanding Option or Award, however, without the consent of the Optionee or Grantee, as the case may be.

13.No Commitment to Retain.  The grant of an Option or Award pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of Bank or any Affiliate to retain the Optionee or Grantee as an employee, director, consultant or advisor of Bank or any Affiliate, or in any other capacity.

14.Withholding of Taxes.  In connection with any event relating to an Option or Award, Bank shall have the right to (a) require the recipient to remit or otherwise make available to Bank an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery or transfer of any certificates for such Shares, or (b) take whatever other action it deems necessary to protect its interests with respect to tax liabilities, including, without limitation, withholding any Shares, funds or other property otherwise due to the Optionee or Grantee.  The Bank’s obligations under the Plan shall be conditioned on the Optionee’s or Grantee’s compliance, to Bank’s satisfaction, with any withholding requirement.

15.Forfeiture of Rights.  Notwithstanding anything to the contrary contained in the Plan or any Option Document or Award Agreement, if directed to do so by Bank’s primary federal regulator in the event that Bank’s capital falls below certain minimum requirements, Bank will notify all Optionees and Award holders that they must exercise all of their rights under such documents within 30 days after receipt of such notice (or such longer or shorter period as such regulator may prescribe) or forfeit such rights after the expiration of such period.  To the extent not timely exercised prior to the expiration of such period, all such rights shall become void.

16.Governing Law.  The validity, construction, interpretation and effect of the Plan shall be governed exclusively by and determined in accordance with the law of the Commonwealth of Pennsylvania, except to the extent preempted by federal law, which under such circumstances shall govern.

EX-21.1

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Exhibit 21.1

Subsidiaries of First Chester County Corporation

Names	Jurisdiction of Incorporation	Names Under which Subsidiary Also Does Business
First National Bank of Chester County	United States of America	•	American Home Bank, a division of First National Bank of Chester County
		•	American Direct Funding
		•	American Log Mortgage
		•	Beacon Mortgage
		•	Ivy League Mortgage
		•	Southeast Wholesale
Turks Head Properties, Inc.	Pennsylvania
Turks Head II, LLC	Pennsylvania
First Chester County Capital Trust II	Delaware
First Chester County Capital Trust III	Delaware

Subsidiaries of First National Bank of Chester County

Names	Jurisdiction of Incorporation	Names Under which Subsidiary Also Does Business
FNB Insurance Services, LLC	Pennsylvania	First National Financial Advisory Services
FNB Properties, LLC	Pennsylvania
All American Choice Mortgage, LLC	Delaware
American Bancorp Mortgage, LLC	Delaware	•	Achieve Independence
		•	Center City Agents Mortgage
		•	Cornerstone Financial Mortgage Funding
		•	Keystone Financial Mortgage Funding
		•	Vision Mortgage Funding
American Construction Mortgage, Inc.	Pennsylvania
American Eagle Mortgage Funding, LLC	Delaware
American Professional Finance, LLC	Delaware
Apex Home Mortgage Funding, LLC	Delaware
Builders Preferred Mortgage, LLC	Delaware
Builders Resource Funding, LLC	Delaware
Chesapeake Mortgage Funding, LLC	Pennsylvania
Community Residential Mortgage, LLC	Delaware
Dedicated Mortgage Lending, LLC	Delaware
Deltec Financial Services, LLC	Delaware
Dilsheimer Mortgage, LLC	Delaware
Guardian Home Funding, Inc.	Pennsylvania
Independence Mortgage Funding, LLC	Delaware
Integrity Bancorp Mortgage Company, LLC	Delaware
Preferred Capital Mortgage Services, LLC	Delaware
Preferred Closing Services, LLC	Delaware
ProBuilt Mortgage, LLC	Delaware
Ritz-Craft Home Mortgage, LLC	Delaware
Simplex Industries Mortgage Company, LLC	Delaware
Susquehanna Residential Mortgage, LLC	Delaware
Vision Mortgage Capital, LLC	Pennsylvania

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Exhibit 21.1

Subsidiaries of First Chester County Corporation
Subsidiaries of First National Bank of Chester County

EX-23.1

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

        We have issued our reports dated March 16, 2009, accompanying the consolidated financial statements and internal control over financial reporting included in the Annual Report of First Chester County Corporation and subsidiaries on Form 10-K for the year ended December 31, 2008. We hereby consent to the incorporation by reference of said reports in the Registration Statements of First Chester County Corporation on Forms S-3 (File No. 333-107739, effective August 7, 2003 and File No. 333-33175, effective August 8, 1997) and Forms S-8 (File No. 333-156758, effective January 16, 2009; File No. 333-128500, effective September 22, 2005; File No. 333-107763, effective August 8, 2003; File No. 333-69315, effective December 21, 1998; File No. 333-33411, effective August 12, 1997; File No. 333-15733, effective November 7, 1996 and File No. 333-09241, effective August 19, 1996).

/s/  GRANT THORNTON LLP

Philadelphia, Pennsylvania
March 16, 2009

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

EX-31.1

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Exhibit 31.1

CERTIFICATION

I, John A. Featherman, III, Chief Executive Officer of the Corporation, certify that:

        1.     I have reviewed this annual report on Form 10-K for the period ending December 31, 2008 of First Chester County Corporation;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 16, 2009

/s/ JOHN A. FEATHERMAN, III
John A. Featherman, III
Chief Executive Officer

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Exhibit 31.1

CERTIFICATION

EX-31.2

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Exhibit 31.2

CERTIFICATION

I, Kevin C. Quinn, President of the Corporation, certify that:

        1.     I have reviewed this annual report on Form 10-K for the period ending December 31, 2008 of First Chester County Corporation;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 16, 2009

/s/ KEVIN C. QUINN
Kevin C. Quinn
President

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Exhibit 31.2

CERTIFICATION

EX-31.3

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Exhibit 31.3

CERTIFICATION

I, John Balzarini, Treasurer and Chief Financial Officer of the Corporation, certify that:

        1.     I have reviewed this annual report on Form 10-K for the period ending December 31, 2008 of First Chester County Corporation;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 16, 2009

/s/ JOHN BALZARINI
John Balzarini
Treasurer and Chief Financial Officer

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Exhibit 31.3

CERTIFICATION

EX-32.1

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EXHIBIT 32.1

FIRST CHESTER COUNTY CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of First Chester County Corporation (the "Company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John A. Featherman, III, Chief Executive Officer and Chairman of the Board of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 16, 2009 /s/ JOHN A. FEATHERMAN III
John A. Featherman, III
Chief Executive Officer and Chairman of the Board

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EXHIBIT 32.1

FIRST CHESTER COUNTY CORPORATION
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

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EXHIBIT 32.2

FIRST CHESTER COUNTY CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of First Chester County Corporation (the "Company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin C. Quinn, President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 16, 2009 /s/ KEVIN C. QUINN
Kevin C. Quinn
President

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EXHIBIT 32.2

FIRST CHESTER COUNTY CORPORATION
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.3

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EXHIBIT 32.3

FIRST CHESTER COUNTY CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of First Chester County Corporation (the "Company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Balzarini, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 16, 2009 /s/ JOHN BALZARINI
John Balzarini
Treasurer and Chief Financial Officer
(Principal Accounting and Financial Officer)

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EXHIBIT 32.3

FIRST CHESTER COUNTY CORPORATION
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002