August 1, 1997

OFIS Filer Support
SEC Operations Center
6432 General Green Way
Alexandria, VA 22312

                                                 FIRST WEST CHESTER CORPORATION
                                                 Commission File Number 0-12870
                                                 ------------------------------

Gentlemen:

Pursuant to the reporting  requirements  of the  Securities  and Exchange Act of
1934, we are filing herewith the above listed Registrant's Form 10-Q/A Amendment
#1 for the period ended March 31, 1997.

This form is being filed to reflect the  reclassification  of $600 thousand from
additional  paid-in capital to capital stock in the March 31, 1997  Consolidated
Statement of Condition. This reclassification is the result of a "4-for-3" stock
split in the form of a 33 1/3% stock  dividend  declared on February 20, 1997 to
shareholders  of  record  on March  21,  1997 and paid on April  21,  1997.  The
presentation of shares issued and treasury shares held has also been modified.

Note: Weighted average shares outstanding and earnings per share already reflect
      this stock split.


                                                  Very truly yours,


                                                  J. Duncan Smith, Treasurer
                                                  (Principal Accounting
                                                   and Financial Officer)
JDS/jd
Enclosures


cc:      Patricia  A.  Gritzan,   Esquire,   Saul,   Ewing,   Remick  and  Saul,
         Philadelphia, PA

         James J. Welsh, CPA, Grant Thornton, Philadelphia, PA

   
<PAGE>


                                  UNITED STATES

                                    FORM 10-Q/A

                       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 March 31, 1997, 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 WEST CHESTER 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)


                                 (610) 692-1423
                                 --------------
              (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
                                      ---

The number of shares  outstanding of Common Stock of the Registrant as of May 1,
1997 was  2,287,921  (after the effect of a stock split in the form of a 33 1/3%
stock dividend paid on April 21, 1997).

<PAGE>
                                                 August 1, 1997


                                     10-Q/A

                              REASON FOR AMENDMENT:
                              ---------------------


To 10-Q Readers:

Pursuant to the reporting  requirements  of the  Securities  and Exchange Act of
1934, we are filing herewith the above listed Registrant's Form 10-Q/A Amendment
#1 for the period ended March 31, 1997.

This form is being filed to reflect the  reclassification  of $600 thousand from
additional  paid-in capital to capital stock in the March 31, 1997  Consolidated
Statement of Condition. This reclassification is the result of a "4-for-3" stock
split in the form of a 33 1/3% stock  dividend  declared on February 20, 1997 to
shareholders  of  record  on March  21,  1997 and paid on April  21,  1997.  The
presentation of shares issued and treasury shares held has also been modified.

Note: Weighted average shares outstanding and earnings per share already reflect
      this stock split.

Note: Attached is an amended Part I - Financial Information.



                                                  Very truly yours,


                                                  J. Duncan Smith, Treasurer
                                                  (Principal Accounting
                                                   and Financial Officer)
<PAGE>
                 FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>

                                                                                      Unaudited
(Dollars in thousands)                                                                 March 31,       December 31,
                                                                                          1997              1996
                                                                                          ----              ----
<S>                                                                               <C>                 <C>
ASSETS
    Cash and due from banks                                                           $   18,398        $   21,956
    Federal funds sold                                                                     6,500             3,800

                Total cash and cash equivalents                                           24,898            25,756
                                                                                        --------          --------

    Interest-bearing deposits with banks                                                       -             1,000

    Investment securities held-to-maturity (market value of $14,394 and
        $16,749 at March 31, 1997 and December 31, 1996, respectively)                    14,504            15,667

    Investment securities available-for-sale, at fair value                               70,167            82,008

    Loans                                                                                290,100           264,582
    Less:   Allowance for possible loan losses                                            (5,387)           (5,218)
                                                                                        --------          --------

                Net loans                                                                284,713           259,364

    Premises and equipment                                                                 6,831             6,752
    Other assets                                                                           6,689             7,137
                                                                                        --------          --------

                Total assets                                                           $ 407,802         $ 397,684
                                                                                        ========          ========

LIABILITIES
    Deposits
        Noninterest-bearing                                                           $   55,658        $   63,591
        Interest-bearing                                                                 299,271           287,675
                                                                                        --------          --------

                Total deposits                                                           354,929           351,266

    Securities sold under repurchase agreements                                            7,453             7,943
    Federal Home Loan Bank Advances                                                        6,450                 -
    Other liabilities                                                                      5,640             5,300
                                                                                        --------          --------

                Total liabilities                                                        374,472           364,509
                                                                                        --------          --------

STOCKHOLDERS' EQUITY
    Common  stock,  par  value  $1.00;  authorized,  5,000,000  shares;  Issued,
        2,399,921  and  1,799,941  at March  31,  1997 and  December  31,  1996,
        respectively;                                                                      2,400             1,800 
    Additional paid-in capital                                                             2,705             3,305
    Retained earnings                                                                     30,804            30,133
    Net unrealized loss on securities available-for-sale                                    (758)             (242)
    Treasury stock, at cost:  112,000 shares and 84,000 shares at March 31, 1997
        and December 31, 1996, respectively;                                              (1,821)           (1,821)
                                                                                        --------          --------
                Total stockholders' equity                                                33,330            33,175
                                                                                        --------          --------

                Total liabilities and stockholders' equity                             $ 407,802         $ 397,684
                                                                                        ========          ========
</TABLE>

The accompanying notes are an integral part of these statements.
 
                                      3
<PAGE>
                 FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

                                   (UNAUDITED)
<TABLE>
(Dollars in thousands - except per share)                                                 Three Months Ended
<CAPTION>
                                                                                                March 31,
                                                                                                ---------
                                                                                            1997           1996
                                                                                            ----           ----
<S>                                                                                   <C>            <C>  
INTEREST INCOME
    Loans, including fees                                                               $   6,153      $   5,556
    Investment securities                                                                   1,475          1,438
    Federal funds sold                                                                         24            221
    Deposits in banks                                                                          12              3
                                                                                        ---------      ---------

                Total interest income                                                       7,664          7,218
                                                                                        ---------      ---------

INTEREST EXPENSE
    Deposits                                                                                2,978          2,959
    Securities sold under repurchase agreements                                                64             83
    Federal Home Loan Bank advances                                                            59             --
    Other borrowings                                                                            5             --
                                                                                        ---------      ---------

                Total interest expense                                                      3,106          3,042
                                                                                        ---------      ---------

                Net interest income                                                         4,558          4,176

    Provision for loan losses                                                                 210            276
                                                                                        ---------      ---------

                Net interest income after provision
                   for possible loan losses                                                 4,348          3,900
                                                                                        ---------      ---------

NON-INTEREST INCOME
    Financial Management Services                                                             500            453
    Service charges on deposit accounts                                                       231            201
    Other                                                                                     169            179
                                                                                        ---------      ---------

                Total non-interest income                                                     900            833
                                                                                        ---------      ---------

NON-INTEREST EXPENSE
    Salaries and employee benefits                                                          2,036          1,902
    Net occupancy and  equipment                                                              771            569
    FDIC Bank insurance fund assessments                                                       10              1
    Bank shares tax                                                                            85             77
    Other                                                                                     721            710
                                                                                        ---------      ---------

                Total non-interest expense                                                  3,623          3,259
                                                                                        ---------      ---------

                Income before income taxes                                                  1,625          1,474

INCOME TAXES                                                                                  525            474
                                                                                        ---------      ---------

                NET INCOME                                                             $    1,100     $    1,000
                                                                                        =========      =========

PER SHARE DATA
    Net income                                                                         $     0.48     $     0.44
                                                                                        =========      =========
    Dividends declared                                                                 $     0.19     $     0.17
                                                                                        =========      =========

Weighted average shares outstanding                                                     2,298,407      2,284,872
                                                                                        =========      =========
</TABLE>

The accompanying notes are an integral part of these statements.

                                        4

<PAGE>



                 FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                   (UNAUDITED)

<TABLE>
<CAPTION>
(Dollars in thousands)                                                                1997              1996
                                                                                  -----------        ----------
<S>                                                                               <C>               <C> 

Balance at January 1,                                                               $ 33,175          $ 30,692

    Net  income to date                                                                1,100             1,000
    Cash dividends declared                                                             (429)             (394)
    Net unrealized gain (loss) on securities available-for-sale                         (516)             (379)
                                                                                     -------           -------

Balance at March 31,                                                                $ 33,330          $ 30,919
                                                                                     =======           =======

</TABLE>






























The accompanying notes are an integral part of these statements.

                                        5

<PAGE>



                 FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                       March 31,
                                                                                            ------------------------------
(Dollars in thousands)                                                                          1997                1996
                                                                                            -----------         ----------
<S>                                                                                         <C>               <C> 

OPERATING ACTIVITIES
    Net Income                                                                                $   1,100         $   1,000
    Adjustments to reconcile net income to net cash
           provided by operating activities:
        Depreciation                                                                                246               160
        Provision for loan losses                                                                   210               276
        Amortization of investment security premiums
           and accretion of discounts                                                                10                66
        Amortization of deferred fees on loans                                                       29                 9
        Investment securities (gains) losses, net                                                    (5)                -
        (Decrease) increase in other assets                                                         714              (483)
        Increase in other liabilities                                                               340               447
                                                                                               --------          --------

           Net cash provided by operating activities                                              2,644             1,475
                                                                                               --------          --------

INVESTING ACTIVITIES
    (Increase) decrease in interest bearing deposits in banks                                     1,000            (1,000)
    Increase in loans                                                                           (25,588)           (4,361)
    Proceeds from sale of investment securities available-for-sale                               15,191                 -
    Proceeds from sale of investment securities held-to-maturity                                      -                 -
    Proceeds from maturities of investment securities available-for-sale                          4,088             3,824
    Proceeds from maturities of investment securities held-to-maturity                            1,186             3,231
    Purchases of investment securities available-for-sale                                        (8,247)          (10,012)
    Purchase of premises and equipment, net                                                        (326)             (548)
                                                                                               --------          --------

           Net cash used in investing activities                                                (12,696)           (8,866)
                                                                                               --------          --------

FINANCING ACTIVITIES
    Increase in Federal Home Loan Bank advances                                                   6,450                 -
    Increase (decrease) in deposits                                                               3,663            (5,321)
    Increase (decrease) in securities sold under repurchase agreements                             (490)            2,220
    Cash dividends                                                                                 (429)             (445)
                                                                                               --------          --------

           Net cash provided by (used in) financing activities                                    9,194            (3,546)
                                                                                               --------          --------

                      NET DECREASE IN CASH AND CASH
                         EQUIVALENTS                                                               (858)          (10,937)

Cash and cash equivalents at beginning of year                                                   25,756            44,644
                                                                                               --------          --------

Cash and cash equivalents at end of period                                                    $  24,898         $  33,707
                                                                                               ========          ========
</TABLE>

The accompanying notes are an integral part of these statements.

                                        6

<PAGE>



                 FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                   (UNAUDITED)


1.         The 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.  For
           further information,  refer to the consolidated  financial statements
           and footnotes thereto included in First West Chester  Corporation and
           Subsidiaries' (the "Corporation")  Annual Report on Form 10-K for the
           year ended December 31, 1996.

2.         The results of operations for the three-month  period ended March 31,
           1997 are not necessarily indicative of the results to be expected for
           the full year.

3.         Per share data is based on the weighted  average  number of shares of
           common  stock  outstanding  during the period.  All per share data in
           this report has been  restated to reflect the stock split in the form
           of a 33  1/3%  stock  dividend,  declared  on  February  20,  1997 to
           shareholders of record on March 21, 1997 and paid on April 21, 1997.

4.         The Financial Accounting Standards Board issued a new standard,  SFAS
           128,   "Earnings  per  Share",   which  is  effective  for  financial
           statements  issued after December 15, 1997. Early adoption of the new
           standard is not permitted.  The new standard  eliminates  primary and
           fully diluted  earnings per share and requires  presentation of basic
           and diluted  earnings per share  together with  disclosure of how the
           per share amounts were  computed.  Basic  earnings per share excludes
           dilution  and is  computed  by dividing  income  available  to common
           shareholders by the  weighted-average  common shares  outstanding for
           the  period.  Diluted  earnings  per  share  reflects  the  potential
           dilution that could occur if  securities or other  contracts to issue
           common  stock were  exercised  and  converted  into  common  stock or
           resulted  in the  issuance  of common  stock that then  shared in the
           earnings of the  entity.  The  adoption  of this new  standard is not
           expected to have a material  impact on the disclosure of earnings per
           share in the financial statements.

                                        7

<PAGE>


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

                              RESULTS OF OPERATIONS
                              ---------------------

                                EARNINGS SUMMARY

        Net income for the three months  ended March 31, 1997 was $1.1  million,
an  increase of $100  thousand  or 10% from $1.0  million for the same period in
1996,  primarily  the result of an increase in interest  and fee income on loans
and a lower provision for loan losses,  partially offset by increased  operating
expenses.  Earnings  per share for the three  months  ending March 31, 1997 were
$0.48 per share,  a $0.04 or 9.1%  increase  over the same period in 1996.  Cash
dividends  declared  during  the first  quarter of 1997  increased  to $0.19 per
share,  a 11.8%  increase  compared  to $0.17 per share in the first  quarter of
1996.  Over the past ten years,  the  Corporation's  practice  has been to pay a
dividend of at least 35.0% of net income.

    The "Consolidated Average Balance Sheet" on page 11 may assist the reader in
following this discussion.
<TABLE>
<CAPTION>

                                                             March                          December
                                               ------------------------------               --------
                                                   1997              1996                     1996
                                                   ----              ----                   --------
     <S>                                      <C>                <C>                      <C>
        SELECTED RATIOS
       Return on average assets                    1.11%             1.05%                    1.12%
       Return on average equity                   13.17%            12.99%                   13.59%
       Earnings retained                          61.00%            60.60%                   60.19%
       Dividend payout ratio                      39.00%            39.40%                   39.81%
       Book value per share                      $14.57            $13.54                   $14.50
</TABLE>

                               NET INTEREST INCOME

       Net interest income is the difference  between interest income on earning
assets and interest expense on interest-bearing liabilities. Net interest income
for the three-month  period ended March 31, 1997, on a tax equivalent basis, was
$4.6 million, compared to $4.2 million for the same period in 1996. Net yield on
interest earning assets, on a tax equivalent basis was 4.98% for the three-month
period  ended  March 31,  1997  compared  to 4.75% for the same  period in 1996.
Average interest earning assets increased  approximately $14.6 million to $371.0
million  during the twelve month period ending March 31, 1997 compared to $356.4
million  during the same period  last year.  The  increase  in average  earnings
assets was a direct result of strong  commercial  and consumer loan demand which
started  during the fourth quarter of 1996. The increase in earning asset yields
was a result of changes in the  earning  asset  mix.  Although  the net yield on
interest  earning assets increased during the three month period ended March 31,
1997  over the  same  period  in 1996,  the  Corporation  anticipates  continued
pressure on net yields on interest  earning assets as  competition  for new loan
business  remains very strong and  incremental  deposit  growth is becoming more
expensive.


                                        8

<PAGE>


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

               AVERAGE INTEREST RATES (ON A TAX EQUIVALENT BASIS)

                                                             Three-Months
                                                            Ended March 31,
                                                        -----------------------
       YIELD ON                                          1997             1996
       --------                                         ------           ------
Interest Earning Assets                                  8.33%            8.17%
Interest Bearing Liabilities                             4.11%            4.18%
                                                         ----             ----
Net Interest Spread                                      4.22%            3.99%
Contribution of Interest Free Funds                      0.76%            0.76%
                                                         ----             ----
Net Yield on Interest Earning Assets                     4.98%            4.75%
                                                         ====             ====

                      INTEREST INCOME ON FEDERAL FUNDS SOLD

         Interest income on federal funds sold for the three-month  period ended
March 31, 1997 decreased $197 thousand to $24 thousand when compared to the same
period in 1996. The decrease in 1997's first quarter federal funds sold interest
income is primarily the result of a $14.4 million  decrease in average  balances
and a  23-basis  point (a basis  point  equals  one  hundredth  of one  percent)
decrease in rates  compared to the same period in 1996.  The decrease in average
balances is due to strong loan demand during the first quarter of 1997.

                    INTEREST INCOME ON INVESTMENT SECURITIES

         On a tax equivalent  basis,  interest  income on investment  securities
increased $37 thousand or 2.6% for the  three-month  period ended March 31, 1997
to approximately  $1.5 million compared to the same period in 1996. The increase
was a result of a 40-basis  point  increase in the yield  earned on  securities,
partially  offset by a  decrease  in  average  balances  of  approximately  $3.6
million. Proceeds from net investment securities' sales and maturities were used
to fund loan growth in 1996 and first quarter 1997.

                            INTEREST INCOME ON LOANS

         Loan  interest  income,  on a tax  equivalent  basis,  generated by the
Corporation's  loan  portfolio  increased $599 thousand or 10.7% to $6.2 million
for the  three-month  period ended March 31, 1997,  compared to $5.6 million for
the three-month period ended March 31, 1996. The increase in interest income for
the  three-month  period ended March 31, 1997 is attributable to a $32.0 million
or 13.1% increase in average loans  outstanding,  partially offset by a decrease
in the rates earned of 20-basis points. This is a direct result of the increased
competition for new and existing loan  relationships  which has been very strong
throughout  1996 and 1997.  There has been a noticeable  increase in pricing and
fee  competition on large (over $500,000) loans (new and renewals) over the last
year.  It is  anticipated  that this pricing  pressure  will  continue to reduce
overall  loan  yields and net  interest  margins.  Fee  reductions  will  affect
non-interest income.

                      INTEREST EXPENSE ON DEPOSIT ACCOUNTS

         Interest expense on deposit accounts increased $19 thousand or 0.6% for
the  three-month  period  ended March 31, 1997 to  approximately  $3.0  million,
compared to the same period in 1996.  The increase is primarily the result of an
increase in average interest-bearing deposits of $8.6 million compared to the

                                        9

<PAGE>


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

same  period in 1996.  The  Corporation's  effective  rate on  interest  bearing
deposits decreased from 4.21% in the first quarter of 1996 to 4.11% in the first
quarter of 1997. Competition for deposits from non-banking  institutions such as
mutual  fund  companies  continues  to grow.  The slow  growth  rate in interest
bearing  deposits  of 3.1% and  non-interest  bearing  deposits  of 4.5% for the
quarter is expected to continue for the next twelve months.  In order to attract
additional low cost funds, the Bank is considering opening new branches.

         INTEREST EXPENSE ON SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

         Interest  expense  on  securities  sold  under  repurchase   agreements
decreased  $19 thousand to $64 thousand for the  three-month  period ended March
31, 1997 compared to the  three-month  period ended March 31, 1996. The decrease
is  attributable  to a $2.1 million  decrease in average  securities  sold under
repurchase agreements outstanding, and a 6-basis point decrease in rates paid on
securities sold under repurchase agreements.

                         INTEREST EXPENSE ON BORROWINGS

         Interest  expense on  borrowings  was $64 thousand for the  three-month
period  ended March 31, 1997.  The average  balance of  borrowings  in the first
quarter of 1997 was $4.5 million.  There were no borrowings  outstanding  during
the first quarter of 1996. The need for borrowings was the result of strong loan
demand outpacing the increases in deposits. Borrowings consists of overnight Fed
Funds purchased, FHLB Flex Line, and FHLB term advances.

                       PROVISION FOR POSSIBLE LOAN LOSSES

         During  the first  quarter  of 1997,  the  Corporation  recorded a $210
thousand  provision for possible loan losses  compared to $276 thousand in 1996.
The  allowance for possible loan losses as a percentage of total loans was 1.86%
as of March 31,  1997  compared to 1.89% as of March 31,  1996.  See the section
titled "Allowance For Possible Loan Losses" for additional discussion.

                               NON-INTEREST INCOME

         Total  non-interest  income  increased  $67  thousand  or  8.0% to $900
thousand for the three months  ended March 31, 1997,  compared to $833  thousand
for the same period in 1996.  The primary  component of  non-interest  income is
Financial Management Services revenue,  which increased $47 thousand or 10.4% to
$500  thousand for the three months ended March 31, 1997  compared with the same
period in 1996.  Market  value of  Financial  Management  Services  assets under
management  grew $26.2 million or 10.1% from $258.3 million at March 31, 1996 to
$284.5 million at March 31, 1997. The increase in Financial  Management Services
revenue and growth in assets under  management is primarily the result of market
appreciation and new account relationships.




                                       10

<PAGE>


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

                       CONSOLIDATED AVERAGE BALANCE SHEET
             AND TAXABLE EQUIVALENT INCOME/EXPENSE AND RATES FOR THE
                          THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>

(Dollars in thousands)                                              1997                                  1996
                                                      -------------------------------        -----------------------------
                                                       Daily                                 Daily
                                                       Average                              Average
ASSETS                                                 Balance   Interest       Rate        Balance     Interest     Rate
                                                       -------   --------       ----        -------     --------     ----
<S>                                                  <C>         <C>           <C>        <C>          <C>           <C>
    Federal funds sold                                $  1,846    $    24       5.20%      $ 16,271     $  221       5.43%
    Interest bearing deposits in banks                     800         12       6.00%           187          3       6.42%
    Investment securities
        Taxable                                         89,120      1,443       6.48%        92,564      1,405       6.07%
        Tax-exempt(1)                                    2,500         44       7.04%         2,637         45       6.83%
                                                       -------      -----                   -------      -----
           Total investment securities                  91,620      1,487       6.49%        95,201      1,450       6.09%
                                                       -------      -----                   -------      -----
    Loans(2)
        Taxable                                        268,537      6,027       8.98%       238,009      5,432       9.13%
        Tax-exempt(1)                                    8,206        174       8.48%         6,728        170      10.11%
                                                       -------      -----                   -------      -----
           Total loans                                 276,743      6,201       8.96%       244,737      5,602       9.16%
                                                       -------      -----                   -------      -----
           Total interest earning assets               371,009      7,724       8.33%       356,396      7,276       8.17%
    Non-interest earning assets
        Allowance for possible loan losses              (5,275)                              (4,607)
        Cash and due from banks                         17,611                               16,155
        Other assets                                    13,709                               12,630
                                                       -------                              -------
           Total assets                               $397,054                             $380,574
                                                       =======                              =======

LIABILITIES AND STOCKHOLDERS' EQUITY
    Savings, NOWS & money market deposits             $171,588     $1,324       3.09%      $163,710     $1,277       3.12%
    Certificates of deposits and other time            118,281      1,654       5.59%       117,531      1,682       5.72%
                                                       -------      -----                   -------      -----
        Total interest bearing deposits                289,869      2,978       4.11%       281,241      2,959       4.21%
    Securities sold under repurchase agreements          7,911         64       3.24%        10,057         83       3.30%
    Federal Home Loan Bank Advances                      4,073         59       5.79%            --         --         --
    Other borrowings                                       378          5       5.29%            --         --         --
                                                       -------      -----                   -------      -----
        Total interest bearing liabilities             302,231      3,106       4.11%       291,298      3,042       4.18%
                                                       -------      -----                   -------      -----
    Non-interest bearing liabilities
        Non-interest bearing demand deposits            55,483                               53,119
        Other liabilities                                5,927                                5,371
                                                       -------                              -------
           Total liabilities                           363,641                              349,788
    Stockholders' equity                                33,413                               30,786
                                                       -------                              -------      
           Total liabilities and stockholders' equity $397,054                             $380,574
                                                       =======                              =======
    Net interest income                                            $4,618                               $4,234
                                                                    =====                                =====
    Net yield on interest earning assets                                        4.98%                                4.75%
                                                                                ====                                 ====
</TABLE>
(1) The indicated  income and annual rate are presented on a taxable  equivalent
    basis using the  effective  tax rate of 32%  adjusted  for the 20%  interest
    expense disallowance for 1997 and 1996.
(2) Non-accruing loans are included in the average balance.

                                       11

<PAGE>


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


        Service charges on deposit  accounts  increased $30 thousand or 14.9% to
$231  thousand for the three months ended March 31, 1997 from $201  thousand for
the same period in 1996. This increase relates to more effective  enforcement of
policies.  Other  non-interest  income  decreased  $10  thousand or 5.6% to $169
thousand for the three months ended March 31, 1997 compared to $179 thousand for
the same period in 1996.

                              NON-INTEREST EXPENSE

        Total  non-interest  expense  for the  first  quarter  of 1997  was $3.6
million,  an  increase of $364  thousand or 11.2% from $3.3  million in the same
period in 1996.  The various  components  of  non-interest  expense  changes are
discussed below.

        First  quarter  1997  salaries  and  employee  benefits  increased  $134
thousand or 7.0% to $2.0 million compared to $1.9 million in first quarter 1996.
Annual  employee  raises and a staff  increase  from 181  full-time  equivalents
(FTE's) employees in the first quarter of 1996 to 193 FTE's in the first quarter
of 1997 are  responsible  for the increase.  These  staffing  increases  reflect
additions to the  Corporation's  sales and marketing staff. The Corporation also
experienced proportionate increases in employee benefits.

        Net occupancy,  equipment and data processing  expense was $771 thousand
for the three-month period ended March 31, 1997, an increase of $202 thousand or
35.5% over the same period last year.  The increase in the first quarter 1997 is
the direct  result of  increased  costs  associated  with the opening of our new
mortgage center and the  depreciation  associated with the new teller online and
document imaging systems.

        The FDIC's Bank Insurance Fund ("BIF")  insurance  assessment was $0 for
the three-month  period ended March 31, 1997, a decrease from $1 thousand during
the same period last year.  Effective  January 1, 1997, in  accordance  with the
Deposit  Insurance  Act of  1996  an  additional  assessment  by  the  Financing
Corporation  ("FICO") will become applicable to all insured  institutions.  This
assessment is not tied to the FDIC risk classification.  The BIF FICO assessment
will be 1.296 basis points per $100 in deposits for 1997.  For the first quarter
of 1997, the Bank's  assessments  for BIF and BIF FICO were $0 and $10 thousand,
respectively.

        Bank shares tax  increased  $8 thousand or 10.4% to $85 thousand for the
three months ended March 31, 1997  compared to $77 thousand for the three months
ended  March 31,  1996.  The  Pennsylvania  Bank  Shares  Tax is  calculated  on
quarter-end Bank stockholders' equity and paid annually.

        Total other non-interest  expense increased $11 thousand or 1.5% to $721
thousand for the three months ended March 31, 1997 compared to $710 thousand for
the same period in 1996.  This  increase is the result of  additional  operating
expenses associated with the increases in staff and premises.

                                  INCOME TAXES

        Income tax expense for the  three-month  period ended March 31, 1997 was
$525  thousand,  compared to $474  thousand  in the same period last year.  This
represents  an effective  tax rate of 32.3% and 32.2% for both the first quarter
of 1997 and 1996,  respectively.  Average  tax-exempt  assets as a percentage of
total  average   assets  were  2.7%  and  2.5%  at  March  31,  1997  and  1996,
respectively.

                                       12

<PAGE>


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

               LIQUIDITY MANAGEMENT AND INTEREST RATE SENSITIVITY

        The objective of liquidity  management is to ensure the  availability of
sufficient  cash flows to meet all  financial  commitments  and to capitalize on
opportunities  for  business  expansion.   Liquidity  management  addresses  the
Corporation's  ability  to meet  deposit  withdrawals  either  on  demand  or at
contractual  maturity,  to repay borrowings as they mature and to make new loans
and investments as  opportunities  arise.  Liquidity is managed on a daily basis
enabling  Senior  Management to effectively  monitor changes in liquidity and to
react  accordingly to fluctuations in market  conditions.  The primary source of
liquidity  for the  Corporation  is its  available-for-sale  portfolio of liquid
investment grade securities. Funding sources include NOW, money-market,  savings
and smaller  denomination  certificates  of deposit  accounts.  The  Corporation
considers funds from such sources to comprise its "core" deposit base because of
the historical stability of such sources of funds. Additional funding comes from
the  Corporation's  non-interest  bearing  demand  deposit  accounts  and credit
facilities.  Other deposit  sources  include a three-tiered  savings product and
certificates  of  deposit  in  excess of  $100,000.  Details  of core  deposits,
non-interest  bearing  demand  deposit  accounts and other  deposit  sources are
highlighted in the following table:

                                DEPOSIT ANALYSIS
<TABLE>
<CAPTION>

(Dollars in thousands)                          March 31, 1997           December 31, 1996         Average     Balance
                                           -----------------------      -------------------       --------------------
                                            Average       Effective      Average      Effective    Dollar     Percentage
Deposit Type                                Balance         Yield        Balance         Yield    Variance     Variance
------------                                -------       ----------     --------     ----------  --------    ----------
<S>                                       <C>              <C>         <C>             <C>      <C>         <C>
NOW Accounts                               $ 51,729         2.20%       $ 47,984         2.20%    $ 3,745       7.80%
Money Market                                 29,098         3.11          28,974         3.09         124       0.43
Statement Savings                            48,919         3.26          48,834         3.24          85       0.43
Other Savings                                 3,163         2.66           4,222         2.75      (1,059)    -25.08
CD's Less than $100,000                     104,244         5.66         102,566         5.76       1,678       1.64
                                            -------                      -------                   ------

Total Core Deposits                         237,153         4.05         232,580         4.11       4,573       1.97

Non-Interest Bearing
    Demand Deposit Accounts                  55,483            -          55,018            -         465       0.85
                                           --------                      -------                   ------

Total Core and Non-Interest
    Bearing Deposits                        292,636            -         287,598            -       5,038       1.75
                                            -------                      -------                   ------

Tiered Savings                               38,679         4.07          38,514         4.11         165       0.43
CD's Greater than $100,000                   14,037         5.16          12,677         5.36       1,360      10.73
                                           --------                                                ------

Total Deposits                             $345,352                     $338,789            -     $ 6,563       1.94
                                            =======                      =======                   ======
</TABLE>
       The Bank,  as a member  of the  Federal  Home  Loan  Bank  (the  "FHLB"),
maintains a line of credit secured by the Bank's mortgage-related  assets. As of
March 31, 1997, this line of credit was approximately $8.0 million.  The line of
credit at the FHLB at December 31, 1996 was  approximately $8 million.  The line
of credit  available does not reflect the Bank's overall  borrowing  capacity at
the FHLB which is approximately $90.0 million. During the first quarter of 1997,
average advances under this line of credit

                                       13

<PAGE>


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

were approximately $2.2 million compared to no borrowing first quarter 1996. The
goal of  interest  rate  sensitivity  management  is to  avoid  fluctuating  net
interest  margins,  and to  enhance  consistent  growth of net  interest  income
through periods of changing  interest rates. Such sensitivity is measured as the
difference  in the volume of assets and  liabilities  in the existing  portfolio
that are subject to  repricing in a future time period.  The  Corporation's  net
interest rate  sensitivity  gap within one year is a negative  $116.9 million or
28.7% of total assets at March 31, 1997 compared with a negative  $109.5 million
or 27.5% of total assets at December 31, 1996. The Corporation's gap position is
one factor used to evaluate interest rate risk and the stability of net interest
margins.  Other factors include computer simulations of what might happen to net
interest income under various interest rate forecasts and scenarios.  Management
monitors  interest  rate  risk as a  regular  part of bank  operations  with the
intention of maintaining a stable net interest margin.

                          INTEREST SENSITIVITY ANALYSIS
                              AS OF MARCH 31, 1997
<TABLE>
<CAPTION>

                                                                   One                Over
(Dollars in thousands)                         Within            through              five         Non-rate
                                              one year          five years            years        sensitive           Total
                                              --------          ----------            -----        ---------           -----
<S>                                        <C>               <C>               <C>            <C>   

ASSETS
    Federal funds sold                         $   6,500          $      --          $     --      $      --        $    6,500
    Investment securities                         18,256             39,357            27,058             --            84,671
    Interest bearing deposits in banks                --                 --                --             --                --
    Loans and leases                             128,899            143,741            17,460         (5,387)          284,713
    Cash and cash equivalents                         --                 --                --         18,398            18,398
    Premises and equipment                            --                 --                --          6,831             6,831
    Other assets                                      --                 --                --          6,689             6,689
                                                --------           --------           -------       --------           -------
    Total assets                               $ 153,655          $ 183,098          $ 44,518      $  26,531        $  407,802
                                                ========           ========           =======       ========           =======

LIABILITIES AND CAPITAL
    Interest bearing deposits                  $ 259,162          $  40,109          $     --      $      --        $  299,271
    Non-interest bearing deposits                     --                 --                --         55,658            55,658
    Securities sold under repurchase
      agreements                                   7,453                 --                --             --             7,453
    FHLB Advances                                  3,950                 --             2,500             --             6,450
    Other liabilities                                 --                 --                --          5,640             5,640
    Capital                                           --                 --                --         33,330            33,330
                                                --------           --------           -------       --------           -------
    Total liabilities & capital                $ 270,565          $  40,109          $  2,500      $  94,628        $  407,802
                                                ========           ========           =======       ========           =======

    Net interest rate
      sensitivity gap                          $(116,910)         $ 142,989          $ 42,018      $ (68,097)       $       --
                                                ========           ========           =======       ========         =========

    Cumulative interest rate
      sensitivity gap                          $(116,910)         $  26,079          $ 68,097      $      --        $       --
                                                ========           ========           =======       ========         =========
    Cumulative interest rate
      sensitivity gap divided
      by total assets                             (28.7%)             6.4%            16.7%
                                                  =====               ===             ====
</TABLE>


                                       14

<PAGE>


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

                       ALLOWANCE FOR POSSIBLE LOAN LOSSES

         The  allowance  for possible  loan losses is an amount that  management
believes will be adequate to absorb  possible loan losses on existing loans that
may become  uncollectible  based on evaluations of the  collectibility of loans.
The 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 the borrower's ability to pay.


          ANALYSIS OF CHANGES IN THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
                       AND COMPARISON OF LOANS OUTSTANDING

<TABLE>
<CAPTION>

(Dollars in thousands)                                                      March 31,                  December 31,
                                                                 -----------------------------         ------------
                                                                     1997            1996                      1996
                                                                 -----------      ----------           ------------
<S>                                                              <C>             <C>                     <C>    

Balance at beginning of period                                    $    5,218      $    4,506              $    4,506
                                                                   ---------       ---------               ---------

Provision charged to operating expense                                   210             276                   1,079
                                                                   ---------       ---------               ---------

    Recoveries of loans previously charged-off                            26              34                      44
    Loans charged-off                                                    (67)           (149)                   (411)
                                                                   ---------       ---------               ---------

Net loans charged-off                                                    (41)           (115)                   (367)
                                                                   ---------       ---------               ---------

Balance at end of period                                          $    5,387      $    4,667              $    5,218
                                                                   =========       =========               =========

Period-end loans outstanding                                      $  290,100      $  246,824              $  264,582

Average loans outstanding                                         $  276,743      $  244,737              $  249,697

Allowance for possible loan losses as a
    percentage of period-end loans outstanding                         1.86%           1.89%                    1.97%

Ratio of net charge-offs to average loans
    outstanding                                                        0.06%           0.19%                    0.15%
</TABLE>

         Non-performing loans include loans on non-accrual status and loans past
due 90 days or more and still  accruing.  The  Bank's  policy to write  down all
non-performing  loans  to net  realizable  value  based on  updated  appraisals.
Non-performing loans are generally  collateralized by real estate and are in the
process of  collection.  Management  is not aware of any loans  other than those
included in the following table 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. At March 31, 1997 there were no  concentrations  of loans
exceeding 10% of total loans which are not otherwise disclosed.


                                       15

<PAGE>


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


                         NON-PERFORMING LOANS AND ASSETS
<TABLE>
<CAPTION>

(Dollars in thousands)                                                March 31,                     December 31,
                                                             ---------------------------           --------------
                                                                 1997            1996                    1996
                                                                -----            ----                    ----
<S>                                                          <C>               <C>                    <C>   

Past due over 90 days and still accruing                       $   536          $   261                $ 2,772

Non-accrual loans                                                  997              808                    713
                                                                ------           ------                 ------

Total non-performing loans                                       1,533            1,069                  3,485

Other real estate owned                                            851            1,447                  1,274
                                                                ------           ------                 ------

Total non-performing assets                                    $ 2,384          $ 2,516                $ 4,759
                                                                ======           ======                 ======

Non-performing loans as a percentage
     of total loans                                              0.53%            0.43%                  1.32%

Allowance for possible loan losses as a
   percentage of non-performing loans                          351.40%          436.58%                 149.7%

Non-performing assets as a percentage of
   total loans and other real estate owned                       0.82%            1.01%                  1.79%

Allowance for possible loan losses as a
  percentage of non-performing assets                          225.96%          185.49%                 109.6%

</TABLE>

         The   allowance   for  possible   loan  losses  as  a   percentage   of
non-performing  loans  indicates  that the allowance for possible loan losses is
sufficient  to cover the  principal of all  non-performing  loans at March 1997.
Other real estate owned ("OREO")  represents  residential  and  commercial  real
estate written down to realizable value (net of estimated  disposal costs) based
on  professional  appraisals.  Management  intends to liquidate OREO in the most
expedient and cost-effective  manner.  This process could take up to twenty-four
months, although swifter disposition is anticipated.

                                 LOAN IMPAIRMENT

         In accordance with FAS 114, the Bank identifies a loan as impaired when
it is probable that interest and  principal  will not be collected  according to
the  contractual  terms  of the loan  agreement.  The  accrual  of  interest  is
discontinued  in such  loans  and no  income is  recognized  until all  recorded
amounts of  interest  and  principal  are  recovered  in full.  These  loans are
included in the non-accrual loans total in the above analysis.

         Loan  impairment  is measured by  estimating  the expected  future cash
flows and  discounting  them at the  respective  effective  interest  rate or by
valuing the underlying collateral. The recorded investment in

                                       16

<PAGE>


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

these loans and the valuation for credit losses  related to loan  impairment are
as follows:
<TABLE>

(Dollars in thousands)                             March 31, 1997           March 31, 1996            December 31, 1996
                                                   --------------           --------------            -----------------
<S>                                                    <C>                      <C>                       <C>

Principal amount of impaired loans                       $ 725                    $ 500                      $ 443
Less valuation allowance                                   454                      380                        419
                                                          ----                     ----                       ----
                                                         $ 271                    $ 120                      $  24
                                                          ====                     ====                       ====
</TABLE>

The activity in the valuation allowance for the quarters ending March 31, are as
follows:
<TABLE>
<CAPTION>
                                                                           1997                         1996
                                                                          ------                       ------
<S>                                                                      <C>                          <C>
Valuation allowance at beginning of period                                 $ 419                       $ 433
Provision for loan impairment                                                 50                           -
Direct charge-offs                                                           (15)                        (84)
Recoveries                                                                   -                            31
                                                                            ----                        ----
Valuation allowance at end of period                                       $ 454                       $ 380
                                                                            ====                        ====
</TABLE>
         Total cash  collected on impaired  loans during the quarter ended March
31, 1997 was $206 thousand, $170 thousand of which was credited to the principal
balance  outstanding  on such loans and $36 thousand was  recognized as interest
income.  Interest  that would have been  accrued on  impaired  loans  during the
quarter ended March 31, 1997 was $10 thousand. Interest income recognized during
the quarter ended March 31, 1997 was $36 thousand.

         Total cash  collected on impaired  loans during the quarter ended March
31, 1996 was $5  thousand,  all of which was credited to the  principal  balance
outstanding on such loans and none was recognized as interest  income.  Interest
that would have been accrued on impaired  loans  during the quarter  ended March
31, 1996 was $12 thousand.  No interest income was recognized during the quarter
ended March 31, 1996.

                  BUILDING IMPROVEMENTS AND TECHNOLOGY PROJECTS

Renovations to the former  Commonwealth  Bank  building,  which was purchased in
1995, are now complete.  Improvements  to the property cost  approximately  $580
thousand. The building was occupied during the fourth quarter of 1996 and houses
our new Mortgage Center.

         The Branch teller automation project is still in process.  Depreciation
on the project started in 1996 at approximately $6 thousand per month.

         Management is in the process of reviewing the adequacy of its mainframe
computer and software for possible replacement of some or all of its components.
The cost  associated  with such a project could be  significant.  An estimate of
costs has not yet been determined.

                                CAPITAL ADEQUACY

         The Corporation is subject to Risk-Based  Capital Guidelines adopted by
the Federal Reserve Board for bank holding  companies.  The Bank is also subject
to similar capital  requirements adopted by the 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 March 31,
1997, both the Corporation's

                                       17

<PAGE>


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

and the Bank's capital exceeded all minimum  regulatory  requirements,  and were
considered "well  capitalized" as defined in the regulations  issued pursuant to
the FDIC Improvement Act of 1992. The Corporation's  Risk-Based  Capital Ratios,
shown  below,  have been  computed  in  accordance  with  regulatory  accounting
policies.
<TABLE>
<CAPTION>

                                         March 31,                  December 31,      
RISK-BASED                         --------------------             ------------       "Well Capitalized"
CAPITAL RATIOS                     1997             1996                 1996             Requirements
--------------                     ----             ----                 ----           ---------------
<S>                              <C>              <C>                 <C>                 <C>    

Leverage Ratio                     8.57%            8.19%                8.58%               5.00%
Tier I Capital Ratio              11.57%           11.70%               12.05%               6.00%
Total Risk-Based Capital Ratio    12.82%           12.95%               13.31%              10.00%
</TABLE>

         The Bank is not under any agreement with the regulatory authorities nor
is it aware of any current  recommendations by the regulatory authorities which,
if they were to be  implemented,  would  have a  material  affect on  liquidity,
capital resources or operations of the Corporation.  The internal capital growth
for the  Corporation  was 1.87% and 9.84% for the three  months  ended March 31,
1997 and 1996,  respectively.  The growth rate is computed  by  annualizing  the
change in equity  during the last period and dividing it by total  stockholder's
equity at December 31, 1996 and 1995, respectively.




                                       18

<PAGE>


                                   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 WEST CHESTER CORPORATION


                                            Charles E. Swope



                                            ---------------- 
DATE:  August 1, 1997                       Charles E. Swope
                                            President



                                            J. Duncan Smith


                                            --------------
                                            J. Duncan Smith
                                            Treasurer
                                            (Principal Accounting
                                             and Financial Officer)



                                       19