FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007, OR
                               -------------

( ) 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                               23-2288763
             ------------                               ----------
    (State or other jurisdiction of                   (IRS Employer
     incorporation or organization)                    Identification No.)

   9 North High Street, West Chester, Pennsylvania              19380
   -----------------------------------------------              -----
       (Address of principal executive office)               (Zip code)

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

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 X No __

Indicate by check mark whether the Registrant is a large  accelerated  filer, an
accelerated   filer,  or  a   non-accelerated   filer.  See  the  definition  of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act.   (Check  one):   Large   accelerated   filer  ___   Accelerated   filer  X
Non-accelerated filer __

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

The number of shares  outstanding of Common Stock of the Registrant as of August
8, 2007 was 5,171,526.


                                       1
<PAGE>

                                      INDEX
                                                                            PAGE

Part I.  FINANCIAL INFORMATION

   Item 1 - Financial Statements
            Consolidated Balance Sheet
            June 30, 2007 (unaudited) and December 31, 2006                    3

            Consolidated Statements of Income
            Three and Six months Ended June 30, 2007 and 2006 (unaudited)      4

            Consolidated Statements of Cash Flows
            Six Months Ended June 30, 2007 and 2006 (unaudited)                5

            Consolidated  Statements of Stockholders' Equity Six Months Ended
            June 30, 2007 and 2006 (unaudited)                                 6

            Notes to Consolidated Financial Statements                       7-9

   Item 2 - Management's Discussion and Analysis of
            Financial Condition and Results of Operations                  10-24

   Item 3 - Quantitative and Qualitative Disclosures About Market Risk        25

   Item 4 - Controls & Procedures                                             25

Part II. OTHER INFORMATION
   Item 1 - Legal Proceedings                                                 26

   Item 1A - Risk Factors                                                     26

   Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds       26

   Item 3 - Defaults Upon Senior Securities                                   27

   Item 4 - Submission of Matters to a Vote of Security Holders               27

   Item 5 - Other Information                                                 27

   Item 6 - Exhibits                                                          28

   Signatures                                                                 29

   Index to Exhibits                                                          30

   Exhibits                                                                31-36


                                       2
<PAGE>


                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                          PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>

 (Dollars in thousands)                                                                    June 30,
                                                                                            2007             December 31,
                                                                                         (unaudited)            2006
                                                                                        ------------         ------------
<S>                                                                                     <C>                  <C>

ASSETS
    Cash and due from banks                                                             $     30,198          $    27,556
    Federal funds sold and other overnight investments                                        86,478               44,500
    Interest bearing deposits                                                                    324                  285
                                                                                        ------------          -----------

                Total cash and cash equivalents                                             117,000                72,341
                                                                                        -----------           -----------

    Investment securities held-to-maturity (fair value of $0
        at June 30, 2007 and $5 at December 31, 2006, respectively)                               -                    5

    Investment securities available-for-sale, at fair value                                  92,690               88,709

    Loans and leases                                                                        720,530              694,343
    Less:  allowance for loan and lease losses                                               (8,059)             (8,186)
                                                                                        -----------           ----------
                Net loans and leases                                                        712,471              686,157

    Premises and equipment, net                                                              17,532               13,988
    Other assets                                                                             11,931               10,894
                                                                                        -----------           ----------
                Total assets                                                            $   951,624           $  872,094
                                                                                        ===========           ==========
LIABILITIES
    Deposits
        Non-interest-bearing                                                            $   176,975           $  129,911
        Interest-bearing (including certificates of deposit over $100
           of $47,862 and $43,825 at June 30, 2007 and
           December 31, 2006, respectively)                                                 617,231              594,757
                                                                                        -----------           ----------

        Total deposits                                                                      794,206              724,668

    Federal Home Loan Bank advances and other borrowings                                     65,450               61,596
    Subordinated debt                                                                        20,620               15,465
    Other liabilities                                                                         7,631                7,103
                                                                                        -----------           ----------

        Total liabilities                                                               $   887,907           $  808,832
                                                                                        -----------           ----------

STOCKHOLDERS' EQUITY
    Common stock, par value $1.00; authorized 10,000,000 shares;
        outstanding, 5,279,815 at June 30, 2007 and December 31, 2006                         5,280                5,280
    Additional paid-in capital                                                               11,036               11,939
    Retained earnings                                                                        52,249               50,486
    Accumulated other comprehensive loss                                                     (2,472)              (1,473)
    Treasury stock, at cost:  104,189 shares and 128,075 shares
       at June 30, 2007 and December 31, 2006, respectively                                  (2,376)              (2,970)
                                                                                        -----------           ----------

                Total stockholders' equity                                                   63,717               63,262
                                                                                        -----------           ----------

                Total liabilities and stockholders' equity                              $   951,624           $  872,094
                                                                                        ===========           ==========

The accompanying notes are an integral part of these statements.
</TABLE>


                                       3
<PAGE>


                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<TABLE>
<CAPTION>

(Dollars in thousands - except per share)                                  Three Months Ended                 Six Months Ended
                                                                                 June 30,                          June 30,
                                                                      ---------------------------       ---------------------------
<S>                                                                   <C>             <C>               <C>               <C>
                                                                            2007             2006              2007            2006
                                                                            ----             ----              ----            ----
INTEREST INCOME
 Loans and leases, including fees                                     $   12,647      $    11,511        $   24,551       $  22,290
 Investment securities                                                     1,028            1,053             2,050           2,157
 Federal funds sold and deposits in banks                                    648              500             1,245             875
                                                                      ----------      -----------        ----------       ---------

 Total interest income                                                    14,323           13,064            27,846          25,322
                                                                      ----------      -----------        ----------       ---------

INTEREST EXPENSE
    Deposits                                                               5,246            3,937            10,140           7,134
    Subordinated debt                                                        499              319               834             617
    Federal Home Loan Bank advances and other borrowings                     624              635             1,218           1,274
                                                                      ----------      -----------        ----------       ---------

                Total interest expense                                     6,369            4,891            12,192           9,025
                                                                      ----------      -----------        ----------       ---------

                Net interest income                                        7,954            8,173            15,654          16,297

    Provision for loan and lease losses                                        0                0                 0               3
                                                                      ----------      -----------        ----------       ---------

                Net interest income after provision
                for possible loan and lease losses                         7,954            8,173            15,654          16,294
                                                                      ----------      -----------        ----------       ---------

NON-INTEREST INCOME
    Wealth Management                                                        961              900             1,848           1,710
    Service charges on deposit accounts                                      569              507             1,107             960
    Investment securities gains (losses), net                                  0                0                 2             (80)
    Operating lease rental income                                            316              278               623             546
    Gains on the sale of fixed assets                                          0                9                 0              19
    Gains and fees on the sale of loans                                      351               87               414             165
    Other                                                                    638              644             1,196           1,223
                                                                      ----------      -----------        ----------       ---------
                Total non-interest income                                  2,835            2,425             5,190           4,543
                                                                      ----------      -----------        ----------       ---------

NON-INTEREST EXPENSE
    Salaries and employee benefits                                         4,893            4,139             9,593           8,526
    Occupancy, equipment and data processing                               1,278            1,409             2,632           2,760
    Depreciation on operating leases                                         261              242               519             473
    Bank shares tax                                                          160              155               320             429
    Professional services                                                    482              439               996             903
    Marketing                                                                291              269               529             371
    Other                                                                    936            1,031             1,843           1,899
                                                                      ----------      -----------        ----------       ---------
                Total non-interest expense                                 8,301            7,684            16,432          15,361
                                                                      ----------      -----------        ----------       ---------

                Income before income taxes                                 2,488            2,914             4,412           5,476

INCOME TAXES                                                                 709              833             1,258           1,549
                                                                      ----------      -----------        ----------       ---------

NET INCOME                                                            $    1,779      $     2,081        $    3,154       $   3,927
                                                                      ==========      ===========        ==========       =========

PER SHARE DATA
    Basic earnings per common share                                   $     0.34      $      0.40        $     0.61       $    0.76
                                                                      ==========      ===========        ==========       =========
    Diluted earnings per common share                                 $     0.34      $      0.40        $     0.60       $    0.75
                                                                      ==========      ===========        ==========       =========
    Dividends declared                                                $   0.1350      $    0.1350        $   0.2700       $  0.2700
                                                                      ==========      ===========        ==========       =========

Basic weighted average shares outstanding                              5,170,123        5,151,932         5,156,886       5,141,410
                                                                      ==========      ===========        ==========       =========

Diluted weighted average shares outstanding                            5,230,283        5,252,470         5,222,362       5,235,972
                                                                      ==========      ===========        ==========       =========

The accompanying notes are an integral part of these statements.
</TABLE>

                                       4
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                          Six Months Ended
(Dollars in thousands)                                                                                         June 30,
                                                                                                -----------------------------------
<S>                                                                                             <C>                <C>
                                                                                                      2007               2006
                                                                                                      ----               ----
OPERATING ACTIVITIES
    Net Income                                                                                  $    3,154         $    3,927
    Adjustments to reconcile net income to net cash
           provided by operating activities:
    Depreciation                                                                                     1,296              1,426
    Provision for loan and lease losses                                                                  0                  3
    Amortization of investment security premiums
           and accretion of discounts, net                                                              97                132
    Amortization of deferred loan fees                                                                 (31)               (95)
    Investment securities (gains) and losses, net                                                       (2)                80
    (Increase) in other assets                                                                        (520)              (390)
    Increase (decrease) in other liabilities                                                           528               (524)
                                                                                                ----------         ----------

           Net cash provided by operating activities                                            $    4,522         $    4,559
                                                                                                ----------         ----------

INVESTING ACTIVITIES
    Net increase in loans                                                                          (26,284)           (21,891)
    Proceeds from sales of investment securities available-for-sale                                  4,583              3,899
    Proceeds from maturities of investment securities available-for-sale                             3,716              3,944
    Proceeds from maturities of investment securities held-to-maturity                                   5                  5
    Purchases of investment securities available-for-sale                                          (13,888)            (5,264)
    Purchase of premises and equipment, net of sales                                                (4,840)            (1,101)
                                                                                                ----------         ----------

           Net cash used in investing activities                                                $  (36,708)        $  (20,408)
                                                                                                ----------         ----------

FINANCING ACTIVITIES
    (Decrease) in Federal Home Loan Bank Advances
      and other short term borrowings                                                               (5,266)            (2,873)
    Increase in Federal Home Loan Bank borrowings                                                   15,000                  0
    Decrease in Federal Home Loan Bank borrowings                                                   (5,882)            (4,405)
    Net increase in deposits                                                                        69,538             35,022
    Cash dividends paid                                                                             (1,391)            (1,388)
    Proceeds from issuance of guaranteed preferred beneficial interest in
         Corporations subordinated debentures                                                        5,155                  0
    Net increase (decrease) in treasury stock transactions                                            (309)               516
                                                                                                ----------         ----------

           Net cash provided by financing activities                                                76,845             26,872
                                                                                                ----------         ----------

           NET INCREASE IN CASH AND CASH EQUIVALENTS                                                44,659             11,023

Cash and cash equivalents at beginning of period                                                    72,341             68,943
                                                                                                ----------         ----------

Cash and cash equivalents at end of period                                                      $  117,000         $   79,966
                                                                                                ==========         ==========


The accompanying notes are an integral part of these statements.
</TABLE>

                                       5
<PAGE>


                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                              Accumulated
                                      Common Stock      Additional               Other                    Total
                                   ------------------    Paid-in    Retained  Comprehensive  Treasury  Stockholders'  Comprehensive
(Dollars in thousands)             Shares   Par Value    Capital    Earnings  Income/(loss)   Stock       Equity         Income
                                   ------   ----------  ----------  --------  -------------  --------  -------------  -------------
<S>                             <C>         <C>         <C>         <C>       <C>            <C>        <C>           <C>

Balance December 31, 2005       5,279,815   $    5,280  $   12,441  $ 46,503  $     (1,929)  $(3,618)   $    58,677

Cumulative effect under
SAB No. 108 adjustments                                                 (565)                                  (565)

Balance January 1, 2006         5,279,815   $    5,280  $   12,441  $ 45,938  $     (1,929)  $(3,618)   $    58,112

 Net income                             -            -          -      3,927              -        -          3,927     $     3,927
 Cash dividends declared                -            -          -     (1,388)             -        -         (1,388)              -
 Other comprehensive income
 Net unrealized gains (losses)
  on investment securities
  available-for-sale                    -            -          -          -           (717)       -           (717)           (717)
 Treasury stock transactions            -            -       (403)         -              -      919            516               -
                                ---------   ----------  ---------   --------  -------------  -------   ------------     -----------
  Total Comprehensive Income                                                                                                 $3,210
                                                                                                                        ===========

Balance June 30, 2006          5,279,815     $  5,280  $   12,038   $ 48,477  $     (2,646)   $(2,699)   $ 60,450
                               =========     ========  ==========   ========  ============    =======    ========


Balance January 1, 2007        5,279,815     $  5,280  $   11,939   $ 50,486  $     (1,473)   $(2,970)   $ 63,262

 Net income                            -            -           -      3,154             -          -       3,154            $3,154
 Cash dividends declared               -            -           -     (1,391)            -          -      (1,391)
 Other Comprehensive Income
  Net unrealized gains (losses)
  on investment securities
  available-for-sale                   -            -           -          -          (999)         -        (999)             (999)
Treasury stock transactions            -            -        (903)         -             -        594        (309)                -
                               ---------     --------  ----------   --------  ------------    -------    --------       -----------
 Total Comprehensive Income                                                                                                  $2,155
                                                                                                                             ======

Balance June 30, 2007           5,279,815   $  5,280    $ 11,036   $ 52,249   $  (2,472)    $(2,376)   $  63,717
                                =========   ========    ========   ========   ==========    ========   =========

The accompanying notes are an integral part of these statements.
</TABLE>

                                       6
<PAGE>



                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION
     ---------------------

     The  foregoing  unaudited  financial   statements  have  been  prepared  in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial  information.  In the  opinion  of  Management,  all  adjustments
     (consisting  only of normal  recurring  adjustments)  necessary  for a fair
     presentation  of the financial  position and the results of operations  for
     the interim period  presented have been included.  These interim  financial
     statements  should be read in conjunction with the  consolidated  financial
     statements and footnotes thereto included in our Annual Report on Form 10-K
     for the year ended December 31, 2006 (our "2006 Annual Report").

     The results of  operations  for the three and six month  periods ended June
     30, 2007 are not  necessarily  indicative of the results to be expected for
     the full year.  Information  regarding risks and  uncertainties  that could
     cause actual results to vary materially  from our prior  performance may be
     found in Part I, Item 1A of our 2006 Annual Report.

2.   EARNINGS PER SHARE
     ------------------
<TABLE>
<CAPTION>

       Three Months ended June 30, 2007
       --------------------------------


                                                         Income
                                                       (thousands)     Shares        Per Share
                                                       (numerator)  (denominator)      Amount
                                                        ---------    -----------     ---------
<S>                                                    <C>          <C>              <C>

       Basic earnings per share
        Net income available to common stockholders     $   1,779     5,170,123      $    0.34
       Effect of Dilutive Securities
        Options to purchase common stock                        -        60,160              -
                                                        ---------     ---------      ---------
       Diluted earnings per share
        Net income available to common stockholders     $   1,779     5,230,283      $    0.34
                                                        =========     =========      =========

13,115  anti-dilutive  weighted shares have been excluded from this  computation
because the option  exercise  price was greater than the average market price of
the common shares.
</TABLE>

<TABLE>
<CAPTION>

       Six Months ended June 30, 2007
       ------------------------------

                                                         Income        Shares        Per Share
                                                       (numerator)  (denominator)      Amount
                                                        ---------    -----------     ---------
<S>                                                    <C>          <C>              <C>

       Basic earnings per share
        Net income available to common stockholders     $   3,154     5,156,886      $    0.61
       Effect of Dilutive Securities
        Options to purchase common stock                        -        65,476          (0.01)
                                                        ---------     ---------      ---------
       Diluted earnings per share
        Net income available to common stockholders     $   3,154     5,222,362      $    0.60
                                                        =========     =========      =========

13,674  anti-dilutive  weighted shares have been excluded from this  computation
because the option  exercise  price was greater than the average market price of
the common shares.
</TABLE>

<TABLE>
       Three Months ended June 30, 2006
       --------------------------------

                                                         Income        Shares        Per Share
                                                       (numerator)  (denominator)      Amount
                                                        ---------    -----------     ---------
<S>                                                    <C>          <C>              <C>

       Basic earnings per share
        Net income available to common stockholders     $   2,081      5,151,932     $    0.40
       Effect of Dilutive Securities
        Options to purchase common stock                        -        100,538             -
                                                        ---------    -----------     ---------
       Diluted earnings per share
        Net income available to common stockholders     $   2,081      5,252,470     $    0.40
                                                        =========      =========     =========

17,047  anti-dilutive  weighted shares have been excluded from this  computation
because the option  exercise  price was greater than the average market price of
the common shares.
</TABLE>

                                       7
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

<TABLE>
<CAPTION>

       Six Months ended June 30, 2006
       ------------------------------
                                                        Income         Shares        Per Share
                                                      (numerator)   (denominator)      Amount
                                                       ---------     -----------     ---------
<S>                                                   <C>           <C>             <C>
       Basic earnings per share
        Net income available to common stockholders    $    3,927      5,141,410     $    0.76
       Effect of Dilutive Securities
        Options to purchase common stock                        -         94,562          (.01)
                                                       ----------    -----------     ---------
       Diluted earnings per share
        Net income available to common stockholders    $    3,927      5,235,972        $ 0.75
                                                       ==========    ===========     =========

17,338  anti-dilutive  weighted shares have been excluded from this  computation
because the option  exercise  price was greater than the average market price of
the common shares.

</TABLE>

3.   COMPREHENSIVE INCOME
     --------------------
     Components of comprehensive income are presented in the following chart:
<TABLE>
<CAPTION>


                                                Three Months Ended     Six Months Ended
                                                      June 30,             June 30,
                                                -------------------     -----------------
                                                   2007      2006         2007      2006
                                                -------------------     -----------------
<S>                                             <C>        <C>          <C>       <C>

    Unrealized losses on securities:
       Unrealized losses arising in period      $  (1,467) $   (803)     $ (1,516)$(1,007)
       Reclassification adjustment                      -         -             2     (80)
                                                ---------   -------     --------- -------
       Net unrealized losses                       (1,467)     (803)       (1,514) (1,087)
                                                ---------   -------     --------- -------
    Other comprehensive income before taxes        (1,467)     (803)       (1,514) (1,087)
    Income tax benefit (expense)                     499        273           515     370
                                                ---------   -------     --------- -------
    Other comprehensive loss                        (968)      (530)         (999)   (717)
    Net income                                     1,779      2,081         3,154   3,927
                                                ---------   -------     --------- -------
    Total comprehensive income                  $     811   $ 1,551     $   2,155 $ 3,210
                                                =========   =======     ========= =======
</TABLE>


4.   RECENT ACCOUNTING PRONOUNCEMENTS
     --------------------------------

     In September 2006, FASB issued Statement No.~157 ("SFAS 157"),  "Fair Value
     Measurements," which is effective for fiscal years beginning after November
     15, 2007 and for interim periods within those years. This Statement defines
     fair value,  establishes a framework  for measuring  fair value and expands
     the  related   disclosure   requirements.   The  Corporation  is  currently
     evaluating  the impact  that the  adoption of SFAS No. 157 will have on our
     consolidated financial statements.

     In September 2006, FASB issued Statement No.~158 ("SFAS 158"),  "Employers'
     Accounting for Defined Benefit Pension and Other  Postretirement Plans - an
     amendment  of FASB  Statements  No.  87, 88,  106,  and  132(R)".  SFAS 158
     requires an employer to recognize the over-funded or under-funded status of
     a defined benefit  postretirement plan (other than a multiemployer plan) as
     an asset  or  liability  in its  statement  of  financial  position  and to
     recognize  changes in that  funded  status in the year in which the changes
     occur through  comprehensive income. The Corporation adopted SFAS 158 as of
     December  31,  2006,  but because the  Corporation  does not have a defined
     benefit  plan,  the  adoption  of SFAS  158 did not have an  effect  on our
     consolidated financial statements.

     In  June  2006,  FASB  issued  FASB   Interpretation  No.  48  ("FIN  48"),
     "Accounting  for  Uncertainty in Income Taxes - an  interpretation  of FASB
     Statement  No. 109." FIN 48 clarifies the  accounting  for  uncertainty  in
     income  taxes  recognized  in  an  enterprise's   financial  statements  in
     accordance  with  SFAS No.  109,  "Accounting  for  Income  Taxes."  FIN 48
     prescribes  a  recognition  threshold  and  measurement  attribute  for the
     financial statement  recognition and measurement of a tax position taken or
     expected  to be taken in a tax  return.  FIN 48 also  provides  guidance on
     de-recognition,  classification,  interest  and  penalties,  accounting  in
     interim periods, disclosure, and transition. FIN 48 will apply to fiscal

                                       8
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     years ending after December 15, 2006. The Corporation  adopted FIN 48 as of
     January 1, 2007 and the  adoption of FIN 48 did not have a material  effect
     on our consolidated financial statements.

     In March 2006, FASB issued SFAS No. 156 ("SFAS 156"),  "Amending Accounting
     for Separately Recognized Servicing Assets and Servicing Liabilities." This
     statement  amends  SFAS No.  140 and  requires  an entity to 1)  separately
     recognize  financial assets as servicing  assets or servicing  liabilities,
     each time it  undertakes  an  obligation  to service a  financial  asset by
     entering into certain kinds of servicing  contracts,  2) initially  measure
     all separately  recognized  servicing  assets and servicing  liabilities at
     fair value, if practicable and 3) separately  present  servicing assets and
     servicing liabilities  subsequently measured at fair value in the statement
     of  financial  position  and  additional  disclosures  for  all  separately
     recognized  servicing  assets and servicing  liabilities.  The  Corporation
     adopted SFAS 156 effective  January 1, 2006. The adoption of this statement
     did not have a material impact on our consolidated financial statements.


     In February  2006,  the FASB issued SFAS No. 155 ("SFAS 155"),  "Accounting
     for Certain Hybrid Financial  Instruments--an  amendment of FASB Statements
     No. 133 and 140," to simplify and make more  consistent  the accounting for
     certain financial  instruments.  SFAS 155 amends SFAS No. 133,  "Accounting
     for Derivative Instruments and Hedging Activities" ("SFAS 133") and permits
     fair value  re-measurement  for any  hybrid  financial  instrument  with an
     embedded derivative that otherwise would require bifurcation, provided that
     the whole  instrument  is  accounted  for on a fair value  basis.  SFAS 155
     amends  SFAS 140 to allow a  qualifying  special-purpose  entity  to hold a
     derivative  financial  instrument  that  pertains to a beneficial  interest
     other than another derivative financial instrument. SFAS 155 applies to all
     financial instruments acquired or issued after the beginning of an entity's
     first  fiscal year that begins  after  September  15,  2006,  with  earlier
     application allowed. The adoption of this statement did not have a material
     impact on our consolidated financial statements.


                                       9
<PAGE>



                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     This  discussion  is  intended  to  further  your   understanding   of  the
     consolidated financial condition and results of operations of First Chester
     County Corporation and its direct and indirect  wholly-owned  subsidiaries,
     First  National  Bank  of  Chester   County  (the  "Bank"),   FNB  Property
     Management,  LLC,  First  National  Insurance  Services,  LLC,  Turks  Head
     Properties, Inc., Turks Head II, LLC, First Chester County Capital Trust I,
     First Chester  County  Capital Trust II, and First Chester  County  Capital
     Trust  III,  (collectively,  the  "Corporation").  It  should  be  read  in
     conjunction with the  consolidated  financial  statements  included in this
     report.

     In  addition  to  historical  information,  this  discussion  and  analysis
     contains  statements relating to future results of the Corporation that are
     considered  "forward-looking  statements" within the meaning of the Private
     Securities  Litigation  Reform Act of 1995.  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, and that
     these risks and  uncertainties  are all  difficult  to predict and most are
     beyond the control of the Corporation's  Management.  Information about the
     primary risks and uncertainties  that could cause the Corporation's  actual
     future  results  to differ  materially  from our  historic  results  or the
     results  described  in  forward-looking  statements  made in this report or
     presented elsewhere by Management from time to time are included in Part I,
     Item 1A of our Annual  Report on Form 10-K for the year ended  December 31,
     2006 (our "2006 Annual  Report").  Material  changes to such "risk factors"
     may be reported in  subsequent  Quarterly  Reports on Form 10-Q in Part II,
     Item 1A. There have been no such changes from the risk factors set forth in
     our 2006 Annual Report.

     The Corporation  undertakes no obligation to publicly release any revisions
     to any forward-looking  statements to reflect events or circumstances after
     the date of this Report.

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

     The accounting and reporting  policies of the Corporation  conform with the
     accounting  principles  generally  accepted in the United States of America
     and  general  practices  within  the  financial  services   industry.   The
     preparation  of the  financial  statements in  conformity  with  accounting
     principles  generally  accepted  in the United  States of America  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.

ALLOWANCE FOR LOAN AND LEASE LOSSES

     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 losses is determined  based on  Management's  review and evaluation of
     the loan and lease 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.

                                       10
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - Continued

INCOME TAXES

     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.

EARNINGS AND DIVIDEND SUMMARY

     Net income for the three  months ended June 30, 2007 was $1.78  million,  a
     decrease of $302  thousand or 14.5% from $2.08  million for the same period
     in 2006.  Net income for the six month period ended June 30, 2007 was $3.15
     million,  a decrease of $773  thousand or 19.7% from $3.93  million for the
     same  period  in 2006.  Diluted  earnings  per  share for the three and six
     months ended June 30, 2007 were $0.34 and $0.60  respectively,  compared to
     $0.40 and $0.75 for the same periods in 2006.  Cash dividends  declared for
     the three and six month  periods ended June 30, 2007 were $0.135 and $0.270
     per share  compared  to $0.135  and  $0.270 per share for the three and six
     month periods ended June 30, 2006.

     The decrease in net income for the three and six months ended June 30, 2007
     compared  to the same  periods  in 2006,  was  primarily  the  result  of a
     decrease in net interest  income  combined with an increase in non-interest
     expense, offset in part by an increase in non-interest income. In addition,
     two significant  events  occurred during the second quarter of 2007,  which
     include  the  sale of a loan  that  had  been  on  non-accrual  status  and
     accelerated  amortization of issuance costs related to the early redemption
     of debentures.

                                            SELECTED RATIOS

                                Three Months Ended     Six Months Ended
                                      June 30,             June 30,
                                2007          2006    2007          2006
                                ------------------    ------------------
Return on Average Assets        0.79%        0.97%    0.71%        0.92%
Return on Average Equity       11.14%       13.70%    9.94%       13.02%
Dividend Payout Ratio          39.07%       33.40%   44.12%       35.35%
Book Value Per Share          $12.31       $11.81   $12.31        $11.81


                                       11
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS - Continued

NET INTEREST INCOME

     Net interest  income is the difference  between  interest  income earned on
     interest-earning  assets  and  interest  expense  paid on  interest-bearing
     liabilities.  Net interest  income on a tax equivalent  basis for the three
     month period ended June 30, 2007 was $8.1 million,  a decrease of 2.6% from
     $8.3  million for the same  period in 2006.  Net  interest  income on a tax
     equivalent  basis for the six month  period  ended June 30,  2007 was $15.9
     million, a decrease of 4.0% from $16.5 million for the same period in 2006.
     The decrease in tax  equivalent  net interest  income for the three and six
     months  ended June 30, 2007 is due to an increase in interest  expense that
     was partially offset by an increase in interest income.

     The net yield on  interest-earning  assets, on a tax-equivalent  basis, was
     6.79% for the three month period ended June 30, 2007, compared to 6.45% for
     the same period in 2006, an increase of 34 basis  points,  (one basis point
     is equal to 1/100 of a percent).  For the six month  period  ended June 30,
     2007, the net yield on interest earning assets increased 35 basis points to
     6.70% from 6.35% during the same period in 2006.

     A flattened  and  sometimes  inverted  yield curve,  increased  competitive
     pricing and stronger  consumer demand for higher  interest-bearing  deposit
     accounts put pressure on our net interest margin and adversely impacted net
     interest  income.  Additionally,  pressure  to raise  deposits to fund loan
     growth has caused the  Corporation to acquire other sources of funds,  such
     as brokered  deposits,  and to introduce  products to retain  deposits that
     were  formerly  "swept" off the balance  sheet.  Deposits  obtained in this
     manner are higher cost funds and contribute to the increased  yield paid on
     interest-bearing liabilities and reduce net interest income.

     Average  interest-earning  assets increased  approximately $34.0 million or
     4.1% to $853.7 million for the three months ended June 30, 2007 from $819.7
     million in the same  period  last year.  For the six months  ended June 30,
     2007, average interest-earning assets increased approximately $32.4 million
     or 4.0% to $844.1  million from $811.7  million in the same period in 2006.
     The increase in average  interest-earning assets for the three month period
     ended June 30, 2007 was the result of a 4.4% or $30.0  million  increase in
     average  total  loans  combined  with a 21.0% or $8.5  million  increase in
     average Federal funds sold and interest  bearing deposits in banks balance.
     These increases were partially offset by a $4.5 million or 4.7% decrease in
     average  investment  securities.  For the six month  period  ended June 30,
     2007,  the increase was the result of a 4.0% or $27.0  million  increase in
     average total loans,  combined  with a 27.7% or $10.2  million  increase in
     average federal funds sold. These increases were partially offset by a $4.8
     million or 5.1% decrease in average investment securities.

     Average interest-bearing  liabilities increased approximately $35.7 million
     or 5.3% to $703.5  million for the three months  ended June 30, 2007,  from
     $667.8 million in the same period in 2006. For the six month ended June 30,
     2007, average interest-bearing  liabilities increased $38.4 million or 5.9%
     to $694.5  million  from  $656.0  million in the same  period in 2006.  The
     increase in average interest-bearing liabilities for the three month period
     was   primarily  the  result  of  a  $33.0  million  or  5.6%  increase  in
     interest-bearing  deposits  and a $2.6  million  or 4.1%  increase  in FHLB
     advances and other  borrowings.  The  increase in average  interest-bearing
     liabilities  for the six month period was  primarily  the result of a $41.6
     million or 7.2% increase in interest-bearing deposits,  partially offset by
     a $3.2  million or 4.8%  decrease in FHLB  advances  and other  borrowings.
     Period end deposits benefited from a $45 million deposit from one depositor
     that was withdrawn on the first business day of July 2007.

                                       12
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - Continued

                       CONSOLIDATED AVERAGE BALANCE SHEET
             AND TAXABLE EQUIVALENT INCOME/EXPENSE AND RATES FOR THE
                           THREE MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>

        (Dollars in thousands)                                          2007                                2006
                                                           ------------------------------      -----------------------------
<S>                                                        <C>         <C>       <C>           <C>         <C>       <C>

                                                            Average              Average       Average               Average
          ASSETS                                            Balance    Interest    Rate        Balance     Interest    Rate
                                                            -------    --------  --------      -------     --------    ----
          Federal funds sold and interest
                bearing deposits in banks                  $ 48,629    $    648     5.34%     $ 40,182      $   500   4.99%
          Investment securities:
               Taxable                                       79,424         945     4.77%       79,955          951   4.77%
               Tax-exempt(1)                                 10,760         118     4.39%       14,679          146   3.99%
                                                            -------     -------     -----      -------      -------   -----

               Total investment securities                   90,184       1,063     4.73%       94,634        1,097   4.65%

          Loans and leases: (2)
               Taxable                                      700,310     12,464(3)   7.14%      670,384       11,355   6.79%
               Tax-exempt(1)                                 14,541        267      7.36%       14,494          228   6.31%
                                                            -------     -------     -----      -------      -------   -----

               Total loans and leases                       714,851     12,731      7.14%      684,878       11,583   6.78%
                                                            -------    -------      -----      -------       ------   -----

          Total interest-earning assets                     853,664     14,442      6.79%      819,694       13,180   6.45%
          Non-interest earning assets:
               Allowance for loan
               and lease losses                              (8,110)                           (8,579)
               Cash and due from banks                       24,171                             23,334
               Other assets                                  28,521                             23,884
                                                            -------                            -------

          Total assets                                     $898,246                           $858,333
                                                            =======                            =======

         LIABILITIES AND STOCKHOLDERS' EQUITY

         Savings, NOWS & money market deposits             $363,365    $ 2,213     2.44%        $375,868   $ 1,800   1.92%
         CD and other time deposits                         258,339      3,033     4.71%         212,875     2,137   4.03%
                                                            -------     ------     -----         -------    ------   -----

         Total interest bearing deposits                    621,704      5,246     3.38%         588,743     3,937   2.68%
         Subordinated debentures                             15,578        499(4) 12.85%          15,465       319   8.27%
         Federal Home Loan Bank advances and
          other borrowings                                   66,174        624     3.78%          63,543       635   4.01%
                                                             ------     ------    ------        --------     -----

         Total interest bearing liabilities                 703,456      6,369     3.63%         667,751     4,891   2.94%
                                                            -------     ------     -----         -------     -----

         Non-interest bearing liabilities:
               Non-interest bearing demand deposits         123,926                            125,117
               Other liabilities                              6,959                              4,704
                                                            -------                            -------

          Total liabilities                                 834,341                            797,572
          Stockholders' equity                               63,905                             60,761
                                                            -------                            -------

          Total liabilities and stockholders' equity       $898,246                           $858,333
                                                            =======                            =======

          Net interest income                                          $ 8,073                              $8,289
                                                                        ======                               =====

          Net yield on interest earning assets                                     3.79%                             4.06%
                                                                                   ====                              ====

(1)  The indicated income and annual rate are presented on a taxable  equivalent
     basis using the federal  marginal  rate of 34%  adjusted  for the TEFRA 20%
     interest expense disallowance for 2007 and 2006.
(2)  Non-accruing loans are included in the average balance.
(3)  Includes $282 thousand of income related to the sale of a $5.9 million loan
     that had been on non-accrual status.
(4)  Includes $161 thousand of expense for accelerated  amortization of issuance
     costs related to early redemption of debentures.
</TABLE>


                                       13
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - Continued

                       CONSOLIDATED AVERAGE BALANCE SHEET
             AND TAXABLE EQUIVALENT INCOME/EXPENSE AND RATES FOR THE
                            SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>

        (Dollars in thousands)                                          2007                                2006
                                                           ------------------------------     -----------------------------
<S>                                                        <C>         <C>       <C>          <C>         <C>       <C>
                                                            Average              Average       Average              Average
          ASSETS                                            Balance    Interest    Rate        Balance    Interest    Rate
                                                            -------    --------    ----        -------    --------    ----
          Federal funds sold and interest
                bearing deposits in banks                  $ 47,179    $ 1,245     5.32%      $  36,947   $    875   4.78%
          Investment securities:
               Taxable                                       79,867      1,895     4.79%         80,224      1,951   4.90%
               Tax-exempt(1)                                 10,215        220     4.35%         14,678        296   4.07%
                                                            -------     ------     -----        -------      -----   -----

               Total investment securities                   90,082      2,115     4.74%         94,902      2,247   4.77%

          Loans and leases: (2)
               Taxable                                      692,969     24,224(3)  7.05%        665,192     21,978   6.66%
               Tax-exempt(1)                                 13,844        476     6.93%         14,658        457   6.28%
                                                            -------     ------     -----       --------     ------   -----

               Total loans and leases                       706,813     24,700     7.05%        679,850     22,435   6.65%
                                                            -------     ------     -----      ---------     ------   -----

          Total interest-earning assets                     844,074     28,060     6.70%        811,699     25,557   6.35%
          Non-interest earning assets:
               Allowance for loan
               and lease losses                              (8,133)                              (8,567)
               Cash and due from banks                       23,996                               23,571
               Other assets                                  26,553                               23,703
                                                             ------                              -------

          Total assets                                     $886,490                             $850,406
                                                            =======                              =======

         LIABILITIES AND STOCKHOLDERS' EQUITY

         Savings, NOWS & money market deposits               $361,641  $ 4,278     2.39%        $372,624   $ 3,299   1.79%
         CD and other time deposits                           253,353    5,862     4.67%         200,799     3,835   3.85%
                                                              -------   ------     -----         -------   -------   -----

         Total interest bearing deposits                      614,994   10,140     3.32%         573,423     7,134   2.51%
         Subordinated debentures                               15,522      834(4) 10.84%          15,465       617   8.05%
         Federal Home Loan Bank advances and
          other borrowings                                     63,941    1,218     3.84%          67,137     1,274   3.83%
                                                              -------  -------     -----         -------   -------   -----

         Total interest bearing liabilities                   694,457   12,192     3.54%         656,025     9,025   2.77%
                                                              -------  -------     -----         -------     -----   -----

         Non-interest bearing liabilities:
               Non-interest bearing demand deposits           121,356                            129,028
               Other liabilities                                7,198                              5,013
                                                              -------                            -------

          Total liabilities                                   823,011                            790,066
          Stockholders' equity                                 63,479                             60,340
                                                              -------                            -------

          Total liabilities and stockholders' equity         $886,490                           $850,406
                                                              -------                            =======

          Net interest income                                          $ 15,868                             $16,532
                                                                        =======                              ======

          Net yield on interest earning assets                                     3.79%                             4.11%
                                                                                   ====                              ====

(1)  The indicated income and annual rate are presented on a taxable  equivalent
     basis using the federal  marginal  rate of 34%  adjusted  for the TEFRA 20%
     interest expense disallowance for 2007 and 2006.
(2)  Non-accruing loans are included in the average balance.
(3)  Includes $282 thousand of income related to the sale of a $5.9 million loan
     that had been on non-accrual status.
(4)  Includes $161 thousand of expense for accelerated  amortization of issuance
     costs related to early redemption of debentures.
</TABLE>


                                       14
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                        RESULTS OF OPERATIONS - Continued

INTEREST INCOME

Interest  income on Federal Funds sold and other  overnight  investments for the
three and six month  periods  ended June 30, 2007,  increased  $148 thousand and
$370 thousand to $648 thousand and $1.2 million, respectively,  when compared to
the same periods in 2006. The increase in interest  income on Federal Funds sold
and other overnight  investments for the three month period is the direct result
of a 21.0% or $8.4 million  increase in the average federal funds sold and other
overnight investments balance and a 35 basis point increase on the rates earned.
The increase for the six month period is the direct  result of a 27.7%  increase
or $10.2 million  increase in the average federal funds sold and other overnight
investments balance and a 54 basis point increase in the rates earned.

On a tax equivalent basis,  interest income on investment  securities  decreased
3.1% or $34  thousand to $1.1  million for the three month period ended June 30,
2007 when  compared to the same period in 2006.  For the six month  period ended
June 30, 2007, interest income on investment  securities  decreased 5.9% or $132
thousand to $2.1 million  from $2.2 million when  compared to the same period in
2006.  The  decrease for the three month period is due to a 4.7% or $4.5 million
decrease of the average balance of investment securities, partially offset by an
8 basis point  increase  earned on these  investments.  The decrease for the six
month  period  ended  June  30,  2007 is the  result  of a 5.1% or $4.8  million
decrease of the average  balance of  investment  securities  and a decrease of 3
basis points on the rate earned on these investments.

Interest  income  on  loans,  on  a  tax  equivalent  basis,  generated  by  the
Corporation's loan portfolio increased $1.1 million or 9.9% to $12.7 million for
the three  months  ended June 30,  2007,  compared  to the same  period in 2006.
Interest  income on loans  increased  $2.3 million or 10.1% to $24.7 million for
the six months  ended June 30,  2007,  compared to the same period in 2006.  The
increase in interest  income for the three month  period  ended June 30, 2007 is
the direct result of a $30.0 million or 4.4% increase in the average  balance of
loans and leases  outstanding  combined  with a 36 basis  point  increase in the
average  interest rate earned on the portfolio.  The increase in interest income
for the six month  period  ended June 30,  2007 is the direct  result of a $27.0
million or 4.0% increase in the average balance of loans and leases  outstanding
combined with a 40 basis point  increase in the average  interest rate earned on
the portfolio.  Interest income for the three and six months ended June 30, 2007
also includes the  recognition  of $282 thousand of income in the second quarter
of 2007 related to the sale of a $5.9 million loan that had been on  non-accrual
status.


INTEREST EXPENSE

Interest  expense on deposit  accounts  increased  $1.3 million or 33.2% to $5.2
million for the three months ended June 30, 2007  compared to the same period in
2006.  Interest expense on deposit  accounts  increased $3.0 million or 42.1% to
$10.1 million for the six months ended June 30, 2007 compared to the same period
in 2006.  This  increase  for the three  months ended June 30, 2007 was due to a
$33.0  million or 5.6%  increase  in  average  total  interest-bearing  deposits
combined with a 70 basis point  increase in the average  interest  rates paid on
these deposits.  This increase for the six months ended June 30, 2007 was due to
a $41.6  million or 7.2%  increase in average  total  interest-bearing  deposits
combined with an 81 basis point  increase in the average  interest rates paid on
these deposits.

                                       15
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - Continued

Market  interest  rate  increases,  increased  competitive  pricing and stronger
consumer demand for higher  interest-bearing  deposit accounts have put pressure
on the pricing of the Corporation's  deposit base and on the cost of raising new
deposits. Competition for deposits from other banks and non-banking institutions
such as credit unions and mutual fund companies  continues to be strong.  As the
Corporation  competes for deposit dollars to fund its growth,  this component of
net interest  income will continue to rise.  Additionally,  alternative  funding
sources continue to be explored. There can be no assurance that such alternative
sources will be acquired on terms and conditions  that are  satisfactory  to the
Corporation.

Interest  expense on  subordinated  debentures  increased  $180 thousand to $499
thousand for the three month  period ended June 30, 2007 from $319  thousand for
the same period in 2006. Interest expense on subordinated  debentures  increased
$217 thousand to $834 thousand for the six month period ended June 30, 2007 from
$617  thousand  when  compared to the same period in 2006.  The increase for the
three and six month periods ended June 30, 2007 was primarily due to an increase
in the average  interest  rate paid on these  debentures  resulting  from market
interest rate increases. The increase in interest expense was also due to a $161
thousand charge to interest  expense recorded in the second quarter of 2007. The
charge was for  accelerated  amortization  of issuance costs related to the July
2007 early  redemption  of $5.2  million of  debentures  that were issued by the
First  Chester  County  Corporation.   The  redemption  of  the  debentures  was
coordinated  with a new $5.2 million 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.

Interest  expense  on  Federal  Home Loan  Bank  ("FHLB")  and other  borrowings
decreased  by $11  thousand or 1.7% to $624  thousand for the three month period
ended  June 30,  2007  from $635  thousand  for the same  period  in 2006.  This
decrease for the three month period ended June 30, 2007 is primarily due to a 23
basis  point  decrease  in the  average  interest  rate paid on these  borrowing
combined with a $2.6 million or 4.1%  decrease in the average  balances of these
funding sources.  Interest expense on FHLB and other borrowings decreased by $56
thousand or 4.4% to $1.2  million for the six month  period  ended June 30, 2007
from $1.3 million for the same period in 2006.  This  decrease for the six month
period ended June 30, 2007 is primarily  due to a $3.2 million or 4.8%  decrease
in the average  balances of these funding  sources.  FHLB  borrowing has been an
alternative to deposits to support loan growth.

PROVISION FOR LOAN AND LEASE LOSSES

During the three and six month  periods  ended June 30,  2007,  the  Corporation
recorded a $0 and a $0 thousand  provision for loan and lease losses compared to
$0 thousand and $3 thousand for the same periods in 2006. The allowance for loan
and lease  losses is an amount  that  Management  believes  will be  adequate to
absorb possible loan losses on existing loans that may become  uncollectible and
is established based on Management's  evaluation of the collectability of loans.
These evaluations take into  consideration such factors as changes in the nature
and  volume  of the loan  portfolio,  overall  portfolio  quality,  adequacy  of
collateral,  review of specific problem loans,  and current economic  conditions
that may affect our borrowers ability to pay.


                                       16
<PAGE>


                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                        RESULTS OF OPERATIONS - Continued

                                                Three Months      Six Months
                                                   Ended            Ended
                                                  June 30,         June 30,
(Dollars in thousands)                      ----------------- ------------------
                                                2007    2006     2007     2006
                                                ----    ----     ----     ----

Balance at beginning of period               $ 8,128 $ 8,579  $ 8,186  $ 8,549
                                              ------  ------   ------   ------

Provision charged to operating expense            --      --       --        3

  Recoveries of loans previously charged-off      51     220       81      292
  Loans charged-off                             (126)    (25)    (240)     (70)
                                              ------  ------   ------   ------
Net loan (charge-offs)/recoveries                (75)    195     (159)     222

Allowance other adjustment (1)                     6    (523)      32     (523)
                                             -------  ------   ------   ------

Balance at end of period                     $ 8,059 $ 8,251  $ 8,059  $ 8,251
                                              ======  ======   ======   ======
Period-end loans outstanding                $720,530 $686,387 $720,530 $686,387
Average loans outstanding                   $714,851 $684,878 $706,813 $679,850
Allowance for loan and lease losses as a
  percentage of period-end loans outstanding   1.12%    1.20%    1.12%    1.20%

Net charge-offs to average loans
    outstanding                                0.01%  (0.03%)    0.02%   (0.03%)

(1) The  "Allowance  other  adjustment"  represents the  reclassification  of an
allowance  for  possible  losses on unfunded  loans and unused  lines of credit.
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 and leases to net realizable value based on
current  assessments  of the value of the  collateral  securing  such  loans and
leases.  Non-performing loans and leases are generally collateralized and are in
the  process  of  collection.   Non-performing   loans  and  leases  reduce  the
Corporation's  earnings because interest income is not earned on such assets. At
June 30,  2007 there are  sixteen  non-accrual  loan  balances  as  compared  to
seventeen non-accrual loans at December 31, 2006. The non-accrual loan and lease
balances  decreased  $6.0  million to $1.2  million  at June 30,  2007 from $7.3
million at December 31, 2006. The decline was mainly due to the sale of the $5.9
million non-accrual loan previously mentioned.  The loan had been on non-accrual
status since November  2004. The percentage of non-accrual  loans to gross loans
was .17% at June 30, 2007 as compared to 1.05% at December 31, 2006 and 1.04% as
of June 30, 2006.  Management continues to take steps to reduce non-accrual loan
and lease  levels and  correct and control  current  and future  credit  quality
issues.   The  following  chart  represents   detailed   information   regarding
non-performing loans and leases:


                                       17
<PAGE>


                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                        RESULTS OF OPERATIONS - Continued

<TABLE>
<CAPTION>
             (Dollars in thousands)                                      June 30,                   December 31,
                                                                -------------------------        ----------------
                                                                   2007          2006                  2006
                                                                -----------   -----------        ----------------
<S>                                                             <C>           <C>                <C>

             Past due over 90 days and still accruing             $  3,580(2 )$       222        $           793
             Non-accrual loans and leases (1)                        1,241          7,136                  7,289
                                                                  --------         ------                 ------
             Total non-performing loans and leases                   4,821          7,358                  8,082

             Other real estate owned                                    78              -                      -
                                                                  --------         ------                  -----
             Total non-performing assets                         $   4,899        $ 7,358                $ 8,082
                                                                  ========         ======                 ======

             Non-performing loans and leases as a
             percentage of total loans and leases                    0.67%          1.07%                  1.16%

             Allowance for loan and lease losses as
             a percentage of non-performing
             loans and leases                                      167.17%        112.14%                101.29%

             Non-performing assets as a percentage of
             total loans and other real estate owned                 0.68%          1.07%                  1.16%

             Allowance for loan and lease losses as a
             percentage of non-performing assets                   164.49%        112.14%                101.29%

          (1)  Generally,  the Bank places a loan or lease 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.

          (2)  Includes one $2.9 million commercial loan that is secured by real
               estate.  Subsequent to June 30, 2007, this balance was collected.
</TABLE>

Management  is not aware of any loans or leases  other  than those  included  in
these  tables  that  would be  considered  potential  problem  loans  and  cause
Management  to have  doubts as to the  borrower's  ability  to comply  with loan
repayment terms.

The  Corporation  held one other real estate owned ("OREO") as of June 30, 2007,
this  represents a $78  thousand  increase  when  compared to the same period in
2006.

The Corporation  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.

FASB 114  "Accounting  by  Creditors  for  Impairment  of  Loans"  requires  the
Corporation  to  examine  commercial  and  non-residential   mortgage  loans  on
non-accrual  status  for  impairment.  The  balance of  impaired  loans was $1.2
million, $7.3 million, and $7.1 million at June 30, 2007, December 31, 2006, and
June 30, 2006, respectively. The associated allowance for impaired loans was $60
thousand,  $840 thousand, and $881 thousand at June 30, 2007, December 31, 2006,
and June 30, 2006, respectively.

                                       18
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - Continued

For the  three  and six month  periods  ended  June 30,  2007,  activity  in the
allowance  allocable to impaired loan  includes  additions of $1 thousand and $1
thousand, respectively.  Charge-offs for the three and six months ended June 30,
2007, were $0 and $1 thousand,  respectively. There were no recoveries in either
the three or six month  periods  ended June 30, 2007.  Contractual  interest was
$100 thousand for the three months ended June 30, 2007 and $273 thousand for the
six months ended June 30, 2007.  Total cash collected on  non-accrual  loans for
the three and six month  periods  ended June 30, 2007 was $5.9  million and $6.1
million,  respectively, all of which was applied to principal. Loans returned to
performing  for the three month and six month periods ended June 30, 2007 was $0
thousand and $0 thousand.

NON-INTEREST INCOME

Total  non-interest  income increased 16.9% or $410 thousand to $2.8 million for
the three months ended June 30, 2007,  when compared to the same period in 2006.
Total  non-interest  income increased 14.3% or $647 thousand to $5.2 million for
the six month period ended June 30,  2007,  when  compared to the same period in
2006. The various components of non-interest income are discussed below.

The largest component of non-interest income is Wealth Management revenue, which
increased $61 thousand or 6.8% to $961 thousand for the three month period ended
June 30,  2007  from  $900  thousand  during  the same  period  in 2006.  Wealth
Management  revenue  increased $138 thousand or 8.1% to $1.8 million for the six
month  period  ended June 30, 2007 from $1.7  million  during the same period in
2006. Wealth Management revenue is based primarily on the market value of assets
under  management.  The market value of assets under management at June 30, 2007
was $566.0 million compared to $527.8 million at June 30, 2006.

Service  charges on deposit  accounts  increased  $62  thousand or 12.2% to $569
thousand  for the three  month  period  ended  June 30,  2007  compared  to $507
thousand  for the same period in 2006.  For the six month  period ended June 30,
2007,  service charges on deposit  accounts  increased $147 thousand or 15.3% to
1.1 million  compared to $960 thousand for the same period in 2006. The increase
in service  charges is  primarily  due to an  increase  in charges on retail and
commercial demand deposit accounts.

The  corporation  recognized  a net gain of $2 thousand  on sales of  investment
securities  during the six month period ended June 30, 2007  compared with a net
loss of $80 thousand during the same period in 2006.  These net gains and losses
were taken as a result of normal portfolio management.

The Corporation has operating lease agreements with one customer.  The income on
these leases is classified as "Rental Income".  Rental Income on operating lease
agreements  increased  $38  thousand or 13.7% to $316  thousand  for the for the
three months ended June 30, 2007 as compared to the same period in 2006.  Rental
Income on operating  lease  agreements  increased  $77 thousand or 14.1% to $623
thousand  for the for the six months ended June 30, 2007 as compared to the same
period in 2006.

Gains on the sale of fixed  assets was $0  thousand  for the three and six month
periods ended June 30, 2007 as compared to gains of $9 thousand and $19 thousand
for the same periods in 2006.

                                       19
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS - Continued

Gains and fees on the sale of loans  increased  $264  thousand or 303.4% for the
three months ended June 30, 2007 and  increased  $249 thousand or 150.9% for the
six months ended June 30, 2007  compared to the same periods in 2006.  The three
and six months ended June 30, 2007 includes a $225 thousand gain recorded in the
second  quarter  of  2007  related  to the  sale  of the  $5.9  million  loan as
previously mentioned.  Excluding this event, gains and fees on the sale of loans
increased $39 thousand or 44.8% from $87 thousand to $126 thousand for the three
months  ended June 30, 2007  compared to the same period in 2006,  and gains and
fees on the sale of loans  increased $24 thousand or 14.5% from $165 thousand to
$189 thousand for the six months ended June 30, 2007 compared to the same period
in 2006.  Theses  increase are primarily due to a higher volume of  originations
and sales of  residential  mortgages  during the three and six months ended June
30, 2007 as compared to the same period in 2006.

Other non-interest income decreased $6 thousand or 0.9% to $638 thousand for the
three  months  ended  June 30,  2007  compared  to same  period  in 2006.  Other
non-interest  income  decreased $27 thousand or 2.2% to $1.2 million for the six
months ended June 30, 2007 compared to same period in 2006.  Other  non-interest
income  includes ATM  surcharge  revenue,  STAR/Visa  Check Card  revenue,  safe
deposit box income,  merchant  services income,  loan fee income,  miscellaneous
loan income, rental income and other miscellaneous income.

NON-INTEREST EXPENSE

Total  non-interest  expense increased $617 thousand or 8.0% to $8.3 million for
the three months ended June 30, 2007,  when compared to the same period in 2006.
Total  non-interest  expense increased $1.1 million or 7.0% to $16.4 million for
the six months  ended June 30, 2007,  when  compared to the same period in 2006.
The various components of non-interest expense are discussed below.

Salaries and employee benefits  increased $754 thousand or 18.2% to $4.9 million
for the three  month  ended June 30,  2007  compared to the same period in 2006.
Salaries and employee  benefits  increased $1.1 million or 12.5% to $9.6 million
for the six month ended June 30, 2007  compared to the same period in 2006.  The
higher  salary and benefits  expense for the three and six months ended June 30,
2007 was primarily due to a higher  average  employee  headcount;  specifically,
staffing for new branches as well as new key employees in the Wealth  Management
Division, commercial lending and leasing areas.

Net occupancy,  equipment and data processing expense decreased $131 thousand or
9.3% to $1.3 million  during the three months ended June 30, 2007 when  compared
to the same period in 2006. Net occupancy, equipment and data processing expense
decreased $128 thousand or 4.6% to $2.6 million during the six months ended June
30, 2007 when  compared to the same period in 2006.  The  decrease for the three
and six  month  periods  ended  June  30,  2007 is  mainly  due to past  capital
expenditures which became fully depreciated in 2007.

Depreciation on operating leases increased $19 thousand or 7.9% to $261 thousand
for the three  months  ended June 30,  2007 when  compared to the same period in
2006.  Depreciation on operating  leases  increased $46 thousand or 9.7% to $519
thousand for the six months ended June 30, 2007 when compared to the same period
in 2006. This  depreciation  expense is the result of operating lease agreements
the Corporation has with one of our customers.  The income associated with these
operating leases is classified as Rental Income.

                                       20
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - Continued

Expenses  for  professional  services  increased  $43  thousand  or 9.8% to $482
thousand  for the three  months  ended June 30,  2007 when  compared to the same
period in 2006. Professional services expense increased $93 thousand or 10.3% to
$996  thousand for the six months ended June 30, 2007 when  compared to the same
period in 2006.

Marketing expense increased $22 thousand, or 8.2% to $291 thousand for the three
months ended June 30, 2007 when  compared to the same period in 2006.  Marketing
expense  increased $158  thousand,  or 42.6% to $529 thousand for the six months
ended June 30, 2007 when  compared to the same period in 2006.  The increase was
primarily  attributable  to higher  expense  from our  continued  investment  in
heightened brand awareness in new markets,  efforts to deepen relationships with
existing clients and attracting new consumer and business clients.

Total other non-interest expense decreased $95 thousand or 9.2% to $936 thousand
for the three  months  ended June 30, 2007  compared to the same period in 2006.
Total other non-interest  expense decreased $56 thousand or 2.9% to $1.8 million
for the six months  ended June 30,  2007  compared  to the same  period in 2006.
Other   non-interest   expense  includes  annual  meeting  and  reports,   trust
processing,  postage,  directors' costs, telephone, travel and entertainment and
operating supplies.

INCOME TAXES

Income tax expense for the three and six month  periods  ended June 30, 2007 was
$709 thousand and $1.3  million,  compared to $833 thousand and $1.5 million for
the same periods in 2006.  This  represents  an effective  tax rate of 28.5% and
28.5% for the three and six month  periods  ended June 30,  2007  compared  with
28.6% and 28.3% for the same periods in 2006.

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  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 deposit growth, FHLB Borrowings, and cash
flow  from  the  investment  and  loan  portfolios.  Deposits  consist  of  NOW,
money-market,  savings,  tiered savings,  large and small dollar certificates of
deposit,  and  non-interest  bearing demand deposit  accounts.  The  Corporation
considers  funds from NOW,  money  market,  savings and  certificates  less than
$100,000 as "core" deposits because of the historical  stability of such sources
of  funds.  Details  of  core  deposits,  non-interest  bearing  demand  deposit
accounts, and other deposit sources are highlighted in the following table:

                                       21
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                        RESULTS OF OPERATIONS - Continued
<TABLE>
<CAPTION>

                                       For the Six Months Ended           For the year ended
(Dollars in thousands)                       June 30, 2007                 December 31, 2006
                                    ----------------------------       ------------------------
<S>                                 <C>               <C>              <C>             <C>

                                      Average         Effective         Average        Effective
DEPOSIT TYPE                          Balance            Yield          Balance           Yield
------------                          -------         ----------       ---------        ---------

NOW Accounts                        $ 153,498              2.21%       $ 134,076          1.76%
Money Market                           91,592              4.19%          80,009          3.84%
Statement Savings                      45,443              0.80%          49,699          0.80%
Other Savings                             550              1.06%             636          0.56%
Tiered Savings                         70,558              1.45%         104,334          1.49%
                                      -------                            -------
Total NOW Savings,                    361,641              2.39%         368,754          2.00%
 and Money Market

CDs less than $100,000                201,461              4.71%         169,630          4.16%
CDs greater than $100,000              51,892              4.50%          44,795          3.99%
                                      -------                            ------
Total CDs                             253,353              4.67%         214,425          4.13%

Total Interest Bearing Deposits       614,994              3.32%         583,179          2.78%

Non-Interest Bearing
  Demand Deposits                     121,356                            126,461
                                      -------                            -------

Total Deposits                      $ 736,350              2.78%        $709,640          2.29%
                                      -------                            -------
</TABLE>

The Bank, as a member of FHLB,  maintains several credit facilities.  During the
three and six month  periods  ended June 30, 2007,  average FHLB  advances  were
$66.2 million and $63.9  million,  respectively,  and consisted of term advances
with a variety of  maturities.  The average  interest rate on these advances was
3.8% and 3.8%, respectively. The Bank currently has a maximum borrowing capacity
with FHLB of approximately $245.5 million. FHLB advances are collateralized by a
pledge on the Bank's portfolio of unencumbered  investment  securities,  certain
mortgage loans, and a lien on the Bank's FHLB stock.

To supplement  the  Corporation's  sources of  liquidity,  the  Corporation  has
initiated the use of alternative  funding sources such as brokered  deposits and
bringing  off-balance  sheet  "swept"  funds onto the balance sheet as deposits.
Management  has set limits for these funding  sources and will manage the impact
that such sources may have on liquidity and interest rate sensitivity.

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 re-pricing in a future time period.  The  Corporation's  net
interest rate  sensitivity  gap within one year is a negative  $270.4 million or
28.4% of total assets at June 30, 2007 compared with a negative  $241.1  million
or 27.6% of total assets at December 31, 2006. The Corporation's gap position is
one tool used to evaluate  interest  rate risk and the stability of net interest
margins.  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 ("ALCO") policy and monitors the results of the simulations
against these limits quarterly. As of the most recent

                                       22
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - Continued

quarter-end,  all results are within  policy  limits and indicate an  acceptable
level of interest rate risk. Management monitors interest rate risk as a regular
part of corporate  operations  with the  intention of  maintaining  a stable net
interest margin. The following table presents our interest  sensitivity analysis
as of June 30, 2007:

<TABLE>
<CAPTION>
                                                     Two            Over
(Dollars in thousands)                 Within      through          five          Non-rate
                                      one year    five years        years         sensitive           Total
                                     ----------  -------------   ----------      -----------       ----------
<S>                                  <C>         <C>             <C>             <C>               <C>
ASSETS
 Federal funds sold                  $  86,478   $           -   $        -      $         -       $  86,478
 Investment securities                  15,735          52,548       24,407                -          92,690
 Interest bearing deposits in banks        324               -            -                -             324
 Net loans and leases                  245,883         372,505      102,142           (8,059)        712,471
 Cash and due from banks                     -               -            -           30,198          30,198
 Premises and equipment                      -               -            -           17,532          17,532
 Other assets                                -               -            -           11,931          11,931
                                       -------    ------------     --------        ---------        --------
 Total assets                        $ 348,420   $     425,053   $  126,549       $   51,602       $ 951,624
                                       =======     ===========     ========        =========        ========

LIABILITIES AND CAPITAL
 Non-interest bearing deposits       $       -   $           -   $        -       $ 176,975        $ 176,975
 Interest bearing deposits             593,889          18,215        5,127               -          617,231
 FHLB advances and other                 4,345          58,692        2,413               -           65,450
 Junior subordinated debentures         20,620               -            -               -           20,620
 Other liabilities                           -               -        7,631               -            7,631
 Capital                                     -               -            -          63,717           63,717
                                       -------    ------------     --------        --------         --------
 Total liabilities & capital         $ 618,854   $      76,907   $   15,171       $ 240,692        $ 951,624
                                       =======    ============     ========        ========         ========

 Net interest rate
  sensitivity gap                    $(270,434)  $     348,146   $  111,378       $(189,090)
                                      ========     ===========     ========        ========
 Cumulative interest rate
  sensitivity gap                    $(270,434)  $      77,712   $  189,090       $       -
                                      ========     ===========     ========        ========
 Cumulative interest rate
  sensitivity gap divided
  by total assets                       (28.4%)           8.2%        19.9%
                                      ========     ===========     ========
</TABLE>


                                       23
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - Continued

BRANCHING, TECHNOLOGY AND CAPITAL PROJECTS

The Corporation  intends to open new branches throughout Chester County over the
next several years.  A new  customer-focused  branch design was introduced  when
construction  was  finished on the branch  building in Oxford,  Pennsylvania  in
2005.  The new  "signature  look" will be rolled out to new and certain  current
locations.  We are currently  constructing a new branch in Kennett  Square,  PA.
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.

CAPITAL ADEQUACY

The  Corporation  is subject to  Risk-Based  Capital  Guidelines  adopted by the
Federal  Reserve  Board for bank  holding  companies.  The  Corporation  is also
subject to similar capital requirements adopted by the Office of the Comptroller
of the Currency.  Under these  requirements,  the  regulatory  agencies have set
minimum  thresholds for Tier I Capital,  Total Capital,  and Leverage ratios. At
June 30,  2007,  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
1992.

<TABLE>
<CAPTION>
                                                As of June 30,            As of December 31,
                                          --------------------------      ------------------     "Well Capitalized"
                                            2007             2006                2006               Requirements
                                          ----------      ----------           -------           ------------------
<S>                                       <C>             <C>             <C>                    <C>
     Corporation
Leverage Ratio                                 8.99%            9.16%            9.34%                         N/A
Tier I Capital Ratio                          10.51%           11.06%           11.26%                         N/A
Total Risk-Based Capital Ratio                11.62%           12.22%           12.49%                         N/A
     Bank
Leverage Ratio                                 8.37%            8.45%            8.58%                       5.00%
Tier I Capital Ratio                           9.78%           10.15%           10.31%                       6.00%
Total Risk-Based Capital Ratio                10.90%           11.32%           11.53%                       0.00%
</TABLE>

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  affect on  liquidity,  capital
resources, or operations of the Corporation.

                                       24
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no  material  changes  in the  Corporation's  assessment  of its
sensitivity  to market risk since its  presentation  in the 2006 Annual  Report.
Please refer to the  "Management's  Discussion  and  Analysis"  section on pages
18-38 of the Corporation's 2006 Annual Report for more information.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure  Controls and  Procedures.  Included  with this  Quarterly  Report as
Exhibits   31.1,   31.2,   and  31.3  are   certifications   (the  "Section  302
Certifications"),  one by each of our Chief  Executive  Officer,  President  and
Chief  Financial  Officer (our  principal  executive,  operating  and  financial
officers,  respectively,  and,  collectively,  the "Principal  Officers").  This
section of the Quarterly Report contains information  concerning the evaluations
of our disclosure  controls and  procedures and 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.

The SEC requires that as of the end of the quarter  covered by this Report,  our
CEO and CFO  evaluate  the  effectiveness  of the  design and  operation  of our
disclosure controls and procedures and report on the effectiveness of the design
and operation of our disclosure controls and procedures.

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

Management's Report on Disclosure  Controls and Procedures.  As required by Rule
13a-15(b), under the Exchange Act, Management, including our 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
on that  evaluation,  the  Principal  Officers  concluded  that  our  disclosure
controls and procedures were  effective,  as of June 30, 2007, at the reasonable
assurance  level, to ensure that  information  required to be disclosed by us in
the reports we file or submit under the Exchange Act is recorded,  processed and
reported within the time periods specified in the SEC rules and regulations.

Changes in internal  control over financial  reporting.  In connection  with the
ongoing review of the  Corporation's  internal control over financial  reporting
(as defined in Rule 13a-15(d),  under the Exchange Act),  Management,  including
the Principal  Officers,  regularly  assesses the adequacy of the  Corporation's
internal  control over  financial  reporting  to  determine  whether any changes
occurred during the period covered by this Report that have materially affected,
or are  reasonably  likely to  materially  affect,  the  Corporation's  internal
control over financial reporting.  During the second quarter of 2007, there were
no such changes.

                                       25
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------
Various actions and proceedings are presently pending to which the Corporation
is a party. These actions and proceedings arise out of routine operations and,
in Management's opinion, will not, either individually or in the aggregate, have
a material adverse effect on the consolidated financial position of the
Corporation and its subsidiaries.

Item 1A. Risk Factors
         ------------
Information regarding risk factors appears in Part 1, Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2006. There have been no
material changes from the risk factors as disclosed in that report.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
         -----------------------------------------------------------
<TABLE>
<CAPTION>
                    ISSUER PURCHASES OF EQUITY SECURITIES (1)



                                  (a)            (b)                 (c)                                      (d)
                           Total Number       Average       Total Number of Share                   Maximum Number (or
         Period             of Shares        Price Paid    (or Units) Purchased as Part          Approximate Dollar Value)
                            (or Units)       per Share    of Publicly Announced Plans        of Shares (or Units) that May Yet Be
                            Purchased        (or Unit)         or Programs (1)             Purchased Under the Plans or Programs (1)
<S>                        <C>               <C>          <C>                              <C>
April 1 to April 30, 2007    16,000 (2)        $21.16              16,000 (2)                          $7,902,483


May 1 to May 31, 2007           --               --                  --                                $7,902,483


June 1 to June 30, 2007         --               --                  --                                $7,902,483


Total                        16,000 (2)        $21.16              16,000 (2)                          $7,902,483
</TABLE>

(1) The Corporation announced on November 15, 2005 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 2005.

(2) All shares described above were acquired in block  transactions  intended to
comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

                                       26
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                     PART II - OTHER INFORMATION - CONTINUED

Item 3.  Defaults upon Senior Securities
         -------------------------------
         None

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

         The Annual  Meeting of  Shareholders  of the  Corporation  was held on
         April 17,  2007 (the  "Meeting").  Notice of the Meeting was mailed to
         shareholders of record on or about March 17, 2007, together with proxy
         solicitation  materials  prepared in accordance  with Section 14(a) of
         the Securities  Exchange Act of 1934, as amended,  and the regulations
         promulgated there under.

         The only matter submitted to a vote of shareholders at the meeting was
         the election of five Class II directors.

         There was no  solicitation  in opposition to the nominees of the Board
         of Directors for election to the Board of  Directors.  All five of the
         nominees  were  elected.  The number of votes cast for or  withheld as
         well as the number of abstentions and broker non-votes for each of the
         nominees for election to the Board of Directors were as follows:

            Nominee                                  For                Withheld
            -------                               ---------            ---------

         Brian K. Campbell                        3,670,313              170,622

         M. Robert Clarke                         3,207,901              633,034

         Matthew S. Naylor                        3,664,808              176,127

         David L. Peirce                          3,207,181              633,754

         Kevin C. Quinn                           3,670,643              170,292


         The names of the other  directors  whose terms of office as  directors
         continued after the meeting are as follow: John J. Ciccarone, Clifford
         E. DeBaptiste,  Lynn Marie  Johnson-Porter,  John B. Waldron,  John A.
         Featherman, III, John S. Halsted, J. Carol Hanson, and Edward A. Leo.

         There was no other  business  that came  before the meeting or matters
         incident to the conduct of the Meeting.

Item 5.  Other Information
         -----------------
         None

                                       27
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                     PART II - OTHER INFORMATION - CONTINUED

Item 6.  Exhibits
         --------
         Exhibits  marked as "(cp)" are  management  contracts or  compensatory
         plans,  contracts  or  arrangements  in which a director or  executive
         officer  participates  or may  participate.  Exhibits  marked  with an
         asterisk are filed with this report.

         3(i). Certificate of Incorporation. Copy of the Corporation's Articles
               ----------------------------
         of Incorporation,  as amended,  is incorporated herein by reference to
         Exhibit 3 (i) to the  Corporation's  Quarterly Report On Form 10-Q for
         the quarter ended March 31, 2004.

         3(ii).Bylaws  of  the   Corporation,   as  amended.   Copy  of  the
               --------------------------------------------
         Corporation's  Bylaws, as amended, is incorporated herein by reference
         to Exhibit 3(ii) to the  Corporation's  Annual Report on Form 10-K for
         the year ended December 31, 2000.

         10.1 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 the Corporation).*

         31.1    Rule 13a-14(a) Certification of Chief Executive Officer*
         31.2    Rule 13a-14(a) Certification of President*
         31.3    Rule 13a-14(a) Certification of Chief Financial Officer*

         32.1     Section 906 Certification of the Chief Executive Officer*
         32.2     Section 906 Certification of the President*
         32.3     Section 906 Certification of the Chief Financial Officer*

                                       28
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                                   SIGNATURES


               Pursuant to the  requirements  of the Securities  Exchange Act of
               1934,  the Registrant has duly caused this report to be signed on
               its behalf by the undersigned thereunto duly authorized.



                        FIRST CHESTER COUNTY CORPORATION





                                    /s/John A. Featherman, III
                                    --------------------------
              August 8, 2007        John A. Featherman, III
                                    Chief Executive Officer




              August 8, 2007        /s/John E. Balzarini
                                    --------------------------
                                    John E. Balzarini
                                    Chief Financial Officer
                                   (Principal Financial and Accounting Officer)

                                       29
<PAGE>




                                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 marked "(cp)" are management contracts or
          compensatory  plans,  contracts or arrangements in which a director or
          executive officer participates or may participate):

          3(i). Certificate~of~Incorporation. Copy of the Corporation's Articles
                ----------------------------
          of Incorporation,  as amended,  is incorporated herein by reference to
          Exhibit 3 (i) to the  Corporation's  Quarterly Report On Form 10-Q for
          the quarter ended March 31, 2004.

          3(ii). Bylaws  of  the   Corporation,   as  amended.     Copy  of  the
                 --------------------------------------------
          Corporation's  Bylaws, as amended, is incorporated herein by reference
          to Exhibit 3(ii) to the  Corporation's  Annual Report on Form 10-K for
          the year ended December 31, 2000.

          10.1 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 the Corporation).*

          31.1     Rule 13a-14(a) Certification of Chief Executive Officer*
          31.2     Rule 13a-14(a) Certification of President *
          31.3     Rule 13a-14(a) Certification of Chief Financial Officer*

          32.1     Section 906 Certification of the Chief Executive Officer*
          32.2     Section 906 Certification of the President*
          32.3     Section 906 Certification of the Chief Financial Officer*

                                       30
<PAGE>

                                  Exhibit 31.1
                                  CERTIFICATION

I, John A. Featherman, III, Chief Executive Officer of the Corporation,  certify
   -----------------------
that:

1. I have reviewed this quarterly report on Form 10-Q for the period ending June
30, 2007 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
reports  (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.

August 8, 2007


/s/ John A. Featherman, III
---------------------------
John A. Featherman, III
Chief Executive Officer


                                       31
<PAGE>


                                  Exhibit 31.2
                                  CERTIFICATION

I, Kevin C. Quinn, President of the Corporation, certify that:
   --------------

1. I have reviewed this quarterly report on Form 10-Q for the period ending June
30, 2007 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
reports  (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.

August 8, 2007

/s/Kevin C. Quinn
-----------------
Kevin C. Quinn
President

                                       32
<PAGE>

                                  Exhibit 31.3
                                  CERTIFICATION

I,  John E. Balzarini, Chief Financial Officer of the Corporation, certify that:
    -----------------

1. I have reviewed this quarterly report on Form 10-Q for the period ending June
30, 2007 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
reports  (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.

August 8, 2007



/s/John E. Balzarini
--------------------
John E. Balzarini
Chief Financial Officer

                                       33
<PAGE>

                                  EXHIBIT 32.1


                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of First Chester County Corporation (the
"Company")  on Form 10-Q for the period  ending  June 30, 2007 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. ss. 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:    August 8, 2007
                                                     /s/John A. Featherman, III
                                                     --------------------------
                                                     John A. Featherman, III
                                                     Chief Executive Officer and
                                                     Chairman of the Board

                                       34
<PAGE>


                                  EXHIBIT 32.2


                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of First Chester County Corporation (the
"Company")  on Form 10-Q for the period  ending  June 30, 2007 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. ss. 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:    August 8, 2007
                                                              /s/Kevin C. Quinn
                                                              -----------------
                                                              Kevin C. Quinn
                                                              President

                                       35
<PAGE>

                                  EXHIBIT 32.3


                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of First Chester County Corporation (the
"Company")  on Form 10-Q for the period  ending  June 30, 2007 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John E.
Balzarini,  Chief  Financial  Officer of the  Company,  certify,  pursuant to 18
U.S.C. ss. 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:    August 8, 2007
                                                         /s/John E. Balzarini
                                                         -----------------------
                                                         John E. Balzarini
                                                         Chief Financial Officer

                                       36
<PAGE>