June 3, 2005



John Balzarini
310 Clearfield Drive
Lincoln University, PA 19352

Dear John:

I am pleased to offer you the full-time  position of Chief Financial  Officer at
an annualized  base salary of  $175,000.00  pending  satisfactory  reference and
fingerprinting  checks.  Per our conversation,  your start date will be June 27,
2005.

Our current  practice is to pay Executive Vice Presidents a discretionary  bonus
of $5,000.00  -$10,000.00  at the end of each year  depending upon the financial
performance of the bank. This bonus program could include cash and/or restricted
stock.

In addition to your  salary,  we will also pay you  $15,000.00  net as a sign-on
bonus  within 30 days of your start  date.  Should you leave the  employment  of
First  National  Bank of Chester  County for any reason within 12 months of your
start date, you will be required to refund this payment.

Below is a chart  summarizing  employee  benefits  as a full-time  employee  and
associated eligibility dates:




                            EMPLOYEE BENEFIT SUMMARY

NOTE: This information is based on our current benefit package, which is subject
to change at any time.
<TABLE>
<CAPTION>

                                        ELIGIBILITY
                 BENEFIT                   DATE                         DESCRIPTION
                 -------                   ----                         -----------

SAVINGS
-------
<S>                                    <C>                   <C>

401(k) Match                            October 1, 2005       o  75% match on every dollar contributed into plan up
                                                                 to 5% of annual compensation


401(k) Fixed Contribution               1st Quarter 2007      o  Discretionary Bank contribution made after the
                                                                 fourth quarter of each year to employee's 401(k)
                                                                 account
                                                              o  3% of base salary on first $30,000; 6% on remainder
                                                              o  Must have 12 months of service, 1000 hours worked
                                                                 and be an employee on 12/31 to be eligible

Medical Spending Account                October 1, 2005       o  Employee may contribute $3,500 annual maximum

Dependent Care Spending Account         October 1, 2005       o  Employee may contribute $5,000 annual maximum

                                       1
<PAGE>

INSURANCE
---------

Medical Insurance                       October 1, 2005       o  Choice of 3 Plans under Independence Blue Cross
                                                                 Keystone HMO, Keystone POS and Personal Choice
                                                              o  Bank contributes same dollar amount for each tier of
                                                                 coverage for all three plans

Dental Insurance                        October 1, 2005       o  Delta Dental
                                                              o  Bank pays 70% of premium

Group Term Life Insurance               Immediately           o  3x base salary up to a maximum of $345,000
                                                              o  Bank pays 100% of premium

Accidental Death and Dismemberment      Immediately           o  3x base salary up to a maximum of $345,000
Insurance                                                     o  Bank pays 100% of premium

Voluntary Life Insurance                October 1, 2005       o  Elective benefit paid for by employee

Short Term Disability (STD)             September 20, 2005    o  Self-insured program paid for by Bank

Long Term Disability (LTD)              Immediately           o  Bank pays 100% of premium

EDUCATION
---------

Professional Development Network        Immediately           o  100% of cost paid for by Bank

Tuition Reimbursement                   December 27, 2005     o  75-90% reimbursement (up to $4,500 annually for
                                                                 graduate courses)
                                                              o  Reimbursement percent based on final grade

OTHER
-----

Bank Paid Holidays                      As each occurs        o  10 days (2005 Holiday Schedule attached.)

As an Executive Vice President, you will also be entitled to the additional
benefits listed below:

                                        ELIGIBILITY
                 BENEFIT                   DATE                         DESCRIPTION
                 -------                   ----                         -----------

OFFICER

Vacation                                September 27, 2005    o  Prorated for 2005 - 102 hours
                                                                 5 weeks (200 hours) annually
Auto Allowance                          Immediately           o  $700/month over 26 pays or $323.08 bi-weekly

Supplemental Benefit Retirement Plan    Immediately           o  Non-qualified Plan
(SBRP)                                                        o  Bank contributes 3% of annual salary plus
                                                                 interest
                                                              o  Officer may also defer part of salary and/or
                                                                 bonus
Cell Phone                              Immediately           o  Bank pays for phone and minutes

<FN>

*First  National Bank of Chester  County policy states there is no paid time off
in the first 90 days of employment.
</FN>
</TABLE>


As an employee of First National Bank of Chester County, you are entitled to one
free bank account.  If you do not  currently  bank with us, you will be given an
opportunity  to open an account by the end of your  first day of  employment  so
that you may take advantage of our direct deposit payroll program.

                                       2
<PAGE>

On your first day,  please  report at 8:00 a.m.  to the  Administrative  Center,
located at 887 South Matlack Street,  West Chester,  PA. Jackie Trotta will meet
with you to complete the required forms and documents for your employment.  When
you report to the Administrative  Center,  please bring with you either one form
of identification  from List A, or two forms of identification,  one from List B
and one from List C, as required by the Immigration Act. Please see the attached
I-9 form for more information.

If the  arrangements  outlined above are  satisfactory  to you, please sign both
copies of the letter, and return one original to me.

John  Featherman,  Kevin Quinn,  and the  executive  team of EVPs very much look
forward to your joining First National.  If you have any questions,  please feel
free to contact me at (484)-881-4404.

Sincerely,


/s/ Deborach R. Pierce
------------------------------
Deborah R. Pierce
Executive Vice President Human Resources

cc:      John A. Featherman III, CEO

         Kevin C. Quinn, President


Your  employment is for no set term and may be  terminated at any time,  for any
reason by either you or First National Bank. This letter, along with your signed
Application  for  Employment,  and Change of  Control/Non-Compete/Non-Disclosure
Agreement constitutes our entire agreement regarding the terms and conditions of
employment.  There are no other agreements,  oral or written, between us. If you
agree to the above terms and conditions,  please sign this letter and return it.
The attached copy may be retained for your files.

Accepted:  /s/ John Balzarini                       Date:
          ----------------------------                    ------------------

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