FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
                                    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 March 31, 2006, 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 the
close of business onMay 8, 2006 was 5,148,174.

                                       1
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>

                                             INDEX
                                             ------                                                                    PAGE
                                                                                                                       ----

Part I.  FINANCIAL INFORMATION
                  <S>        <C>                                                                                   <C>

                  Item 1 -   Financial Statements
                             Consolidated Statements of Condition
                             March 31, 2006 (unaudited) and December 31, 2005                                             3

                             Consolidated Statements of Income
                             Three-Months Ended March 31, 2006 and 2005 (unaudited)                                       4

                             Consolidated Statements of Cash Flows
                             Three-Months Ended March 31, 2006 and 2005 (unaudited)                                       5

                             Consolidated Statements of Stockholders' Equity
                             Three-Months Ended March 31, 2006 and 2005 (unaudited)                                       6

                             Notes to Consolidated Financial Statements                                                7-10

                  Item 2 -   Management's Discussion and Analysis of
                             Financial Condition and Results of Operations                                            11-24

                  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                                                            26

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

                  Item 5 -    Other Information                                                                          28

                  Item 6 -    Exhibits                                                                                   28

                  Signatures                                                                                             29

                  Index to Exhibits                                                                                      30

                  Exhibits                                                                                               31
</TABLE>

                                       2
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
                          PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                      CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>

 (Dollars in thousands)                                                                   March 31,
                                                                                            2006            December 31,
                                                                                         (unaudited)            2005
                                                                                         -----------        ------------
<S>                                                                                     <C>                  <C>

ASSETS
    Cash and due from banks                                                              $   31,568            $  37,401
    Federal funds sold and other overnight investments                                       44,000               31,000
    Interest bearing deposits in banks                                                          331                  542
                                                                                          ---------             --------

                Total cash and cash equivalents                                              75,899               68,943
                                                                                          ---------             --------

    Investment securities held-to-maturity (fair value of $5
        at March 31, 2006 and $10 at December 31, 2005, respectively)                             5                   10

    Investment securities available-for-sale, at fair value                                  92,313               97,078

    Loans and leases                                                                        685,607              664,276
    Less:  Allowance for loan and lease losses                                               (8,579)              (8,549)
                                                                                          ---------             --------
                Net loans and leases                                                        677,028              655,727

    Premises and equipment                                                                   13,274               13,786
    Other assets                                                                             10,082                9,564
                                                                                          ---------             --------
                Total assets                                                             $  868,601            $ 845,108
                                                                                          =========             ========
LIABILITIES
    Deposits
        Non-interest-bearing                                                             $  160,149            $ 136,082
        Interest-bearing (including certificates of deposit over $100
           of $43,946 and $61,281 - March 31, 2006 and
           December 31, 2005 respectively)                                                  557,841              560,015
                                                                                          ---------             --------

        Total deposits                                                                      717,990              696,097

    Federal Home Loan Bank advances and other borrowings                                     70,882               68,900
    Subordinated Debt                                                                        15,465               15,465
    Other liabilities                                                                         4,461                5,969
                                                                                          ---------             --------

        Total liabilities                                                                $  808,798            $ 786,431
                                                                                          ---------             --------

STOCKHOLDERS' EQUITY
    Common stock, par value $1 - authorized, 10,000,000 shares;
        outstanding, 5,279,815 at March 31, 2006 and December 31, 2005                        5,280                5,280
    Additional paid-in capital                                                               12,330               12,441
    Retained earnings                                                                        47,657               46,503
    Accumulated other comprehensive loss                                                     (2,118)              (1,929)
    Treasury stock, at cost:  141,023 shares and 136,092 shares
       at March 31, 2006 and December 31, 2005, respectively                                 (3,346)              (3,618)
                                                                                          ---------             --------

                Total stockholders' equity                                                   59,803               58,677
                                                                                          ---------             --------

                Total liabilities and stockholders' equity                               $  868,601            $ 845,108
                                                                                          =========             ========


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
                                                                                             ---------------------------
                                                                                                        March 31,
                                                                                                2006               2005
                                                                                              -------            -------
<S>                                                                                        <C>                <C>

INTEREST INCOME
    Loans and leases, including fees                                                        $  10,779          $   8,918
    Investment securities                                                                       1,104              1,237
    Federal funds sold and other overnight investments                                            372                 27
    Deposits in banks                                                                               4                  2
                                                                                             --------           --------
                Total interest income                                                          12,259             10,184
                                                                                             --------           --------
INTEREST EXPENSE
    Deposits                                                                                    3,197              1,752
    Subordinated debt                                                                             298                220
    Federal Home Loan Bank advances and other borrowings                                          640                594
                                                                                             --------           --------

                Total interest expense                                                          4,135              2,566
                                                                                             --------           --------

                Net interest income                                                             8,124              7,618

    Provision for loan and lease losses                                                             3                507
                                                                                             --------           --------

                Net interest income after provision for possible loan losses                    8,121              7,111
                                                                                             --------           --------

NON-INTEREST INCOME
    Trust and Investment Services                                                                 809                869
    Service charges on deposit accounts                                                           453                473
    Investment securities (losses) gains, net                                                     (80)                67
    Operating lease rental income                                                                 268                228
    Gains on the sale of fixed assets and OREO                                                     10                  1
    Gains and fees on the sale of residential mortgages                                            78                 81
    Other                                                                                         580                565
                                                                                             --------           --------

                Total non-interest income                                                       2,118              2,284
                                                                                             --------           --------

NON-INTEREST EXPENSE
    Salaries and employee benefits                                                              4,387              4,092
    Occupancy, equipment and data processing                                                    1,351              1,383
    Depreciation expense on operating leases                                                      232                200
    FDIC Insurance                                                                                 22                 24
    Bank shares tax                                                                               271                173
    Professional services                                                                         464                796
    Other                                                                                         949              1,299
                                                                                             --------           --------
                Total non-interest expense                                                      7,676              7,967
                                                                                             --------           --------

                Income before income taxes                                                      2,563              1,428

INCOME TAXES                                                                                      717                410
                                                                                             --------           --------

NET INCOME                                                                                  $   1,846          $   1,018
                                                                                             ========           ========

PER SHARE DATA
    Basic earnings per common share                                                         $    0.36          $    0.20
                                                                                             ========           ========
    Diluted earnings per common share                                                       $    0.35          $    0.19
                                                                                             ========           ========
    Dividends declared                                                                      $   .1350          $  0.1283
                                                                                             ========           ========

Basic weighted average shares outstanding                                                   5,154,182          5,034,483
                                                                                            =========          =========

Diluted weighted average shares outstanding                                                 5,243,928          5,215,017
                                                                                            =========          =========


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>
                                                                                                 Three Months Ended
 (Dollars in thousands)                                                                                March 31,
                                                                                            ------------------------------
                                                                                               2006                 2005
                                                                                               ----                 ----
<S>                                                                                        <C>                   <C>

OPERATING ACTIVITIES
    Net Income                                                                             $    1,846             $  1,018
    Adjustments to reconcile net income to net cash
           provided by operating activities:
    Depreciation                                                                                  600                  713
    Provision for loan and lease losses                                                             3                  507
    Amortization of investment security premiums
           and accretion of discounts                                                              65                  560
    Amortization of deferred net loan fees                                                        (46)                   2
    Investment securities losses (gains), net                                                      80                  (67)
    (Increase) in other assets                                                                   (707)              (1,818)
    (Decrease) in other liabilities                                                            (1,508)                (349)
                                                                                            ---------              -------

           Net cash provided by operating activities                                       $      333             $    566
                                                                                            ---------              -------

INVESTING ACTIVITIES
    (Increase) in loans                                                                       (21,258)             (23,109)
    Proceeds from sales of investment securities available-for-sale                             3,363               26,099
    Proceeds from maturities of investment securities                                           4,180               51,764
    Proceeds from maturities of investment securities held to maturity                              0                    0
    Purchases of investment securities available-for-sale                                      (2,918)             (48,327)
    Purchase of premises and equipment, net                                                       (88)                (425)
                                                                                            ---------              -------

    Net cash (used in) provided by investing activities                                    $  (16,721)            $  6,002
                                                                                            ----------             -------

FINANCING ACTIVITIES
    Increase in Federal Home Loan advances                                                      1,982                4,335
    (Decrease) increase in deposits                                                            21,893              (20,448)
    (Decrease) increase in securities sold under repurchase agreements                              0                    0
    Cash dividends paid                                                                          (692)                (653)
    Net increase (decrease) in Treasury stock                                                     161                  340
                                                                                            ---------              -------

           Net cash provided by (used in) financing activities                                 23,344              (16,426)
                                                                                            ---------              --------

           NET DECREASE IN CASH AND CASH
               EQUIVALENTS                                                                      6,956               (9,858)

Cash and cash equivalents at beginning of year                                                 68,943               31,610
                                                                                            ---------              -------

Cash and cash equivalents at end of period                                                 $   75,899             $ 21,752
                                                                                            =========              =======


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

Balance at January 1, 2005        4,799,666    $ 4,800     $ 2,052    $53,749     $   (78)    $(5,121)   $ 55,402       $      -

    Net income                            -          -           -      1,018           -           -       1,018          1,018
    Cash dividends declared               -          -           -       (652)          -           -        (652)             -
    Stock dividends declared        480,149        480           -                      -           -           -              -
    Other Comprehensive Income
       Net unrealized gain (loss)
       on investment securities
       available-for-sale                 -          -           -          -      (1,324)          -      (1,324)        (1,324)
    Treasury stock transactions           -          -         61           -           -         279         340              -
                                  ---------     ------      ------     ------      ------      ------     -------        -------
    Comprehensive Income                                                                                                $   (306)
                                                                                                                         =======

Balance at March 31, 2005         5,279,815    $ 5,280     $ 2,113    $54,115     $(1,402)    $(4,842)   $ 54,784

Balance at January 1, 2006        5,279,815    $ 5,280     $12,441    $46,503     $(1,929)    $(3,618)   $ 58,677

    Net income                            -          -           -      1,846           -           -       1,846          1,846
    Cash dividends declared               -          -           -       (692)          -           -        (692)             -
    Stock dividends declared              -          -           -                      -           -           -              -
    Other Comprehensive Income
       Net unrealized gain (loss)
       on investment securities
       available-for-sale                 -          -           -          -        (189)          -        (189)          (189)
    Treasury stock transactions           -          -        (111)         -           -         272         161              -
                                  ---------     ------      ------     ------      ------      ------     -------        -------
    Comprehensive Income                                                                                                $  1,657
                                                                                                                         =======

Balance at March 31, 2006         5,279,815    $ 5,280     $12,330    $47,657     $(2,118)    $(3,346)   $ 59,803
                                  =========     ======      ======     ======      ======      ======     =======

</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 fiscal year ended December 31, 2005.

     The results of operations for the  three-month  period ended March 31, 2006
     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 Annual Report on Form 10-K for the period ended  December
     31, 2005.

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

           Three Months ended March 31, 2006
           ---------------------------------

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

           Basic earnings per share
           Net income available to common stockholders                  $1,846              5,154,182                $ 0.36
           Effect of Dilutive Securities
           Options to purchase common stock                                  0                 89,746                 (0.01)
                                                                         -----              ---------                 -----
           Diluted earnings per share
           Net income available to common stockholders                  $1,846              5,243,928                $ 0.35
                                                                         =====              =========                 =====
</TABLE>

<TABLE>
<CAPTION>

           Three Months ended March 31, 2005
           ---------------------------------

                                                                       Income
                                                                     (thousands)              Shares                Per Share
                                                                     (numerator)          (denominator)               Amount
                                                                     -----------          -------------             ---------
           <S>                                                          <C>                <C>                      <C>
           Basic earnings per share
           Net income available to common stockholders                  $1,018              5,034,483                $ 0.20
           Effect of Dilutive Securities
           Options to purchase common stock                                  0                180,534                  (.01)
                                                                         -----              ---------                 -----
           Diluted earnings per share
           Net income available to common stockholders                  $1,018              5,215,017                $ 0.19
                                                                         =====              =========                 =====
</TABLE>

                                       7
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                   (UNAUDITED)

3.   COMPREHENSIVE INCOME
     --------------------

     Components of comprehensive income are presented in the following chart:
<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                         March 31,
                                                                 ------------------------
                                                                   2006            2005
                                                                 -------         --------
          <S>                                                   <C>             <C>
           Unrealized gains on securities:
           Unrealized gains (losses) arising in period           $  (172)        $  1,707
           Reclassification adjustment:
           Net unrealized gains (losses)                             (80)              67
                                                                  ------          -------
           Other comprehensive income before taxes                  (252)           1,774
           Income tax expense                                         64             (450)
                                                                  ------          -------
           Other comprehensive income                               (188)           1,324
                                                                  -------         -------
           Comprehensive income (losses)                         $ 1,658         $  2,342
                                                                  ======          =======
</TABLE>

4.   SUBORDINATED DEBT
     -----------------

     Management has determined that First Chester County Corporation Trust I and
     Trust II (Trust I and Trust II, collectively, the "Trusts") each qualify as
     variable interest entities under FASB  Interpretation 46 (FIN 46R). Each of
     the Trusts issued  mandatory  redeemable  preferred  stock to investors and
     loaned the proceeds to the  Corporation.  Each of the Trusts holds,  as its
     sole asset, subordinated debentures issued by the Corporation.

     In accordance with FIN46R, the Corporation deconsolidated the Trusts at the
     end of the first quarter of 2004. In March 2005, the Federal  Reserve Board
     adopted  a final  rule  that  continues  to allow  the  inclusion  of trust
     preferred  securities  in Tier I Capital,  but with  stricter  quantitative
     limits.  Under the final rule,  after a five-year  transition  period,  the
     aggregate  amount of trust  preferred  securities and certain other capital
     elements  would  be  limited  to 25% of  Tier I  Capital  elements,  net of
     goodwill.  The  amount of trust  preferred  securities  and  certain  other
     elements  in excess  of the limit  could be  included  in Tier II  Capital,
     subject to certain  restrictions.  Based on the final rule, the Corporation
     expects to be able to continue to include all of the $15.0 million in trust
     preferred securities in Tier I Capital.

5.   SHARE-BASED COMPENSATION
     ------------------------

     Prior to January 1, 2006, the Corporation's stock option plan was accounted
     for under the recognition and measurement  provisions of APB Opinion No. 25
     (Opinion  25),  Accounting  for Stock  Issued  to  Employees,  and  related
     Interpretations,  as permitted by FASB  Statement No. 123,  Accounting  for
     Stock-Based  Compensation  (as  amended  by SFAS No.  148,  Accounting  for
     Stock-Based  Compensation  Transition and  Disclosure)  (collectively  SFAS
     123).  No  stock-based  employee  compensation  cost was  recognized in the
     Corporation's  Consolidated Statements of Income through December 31, 2005,
     as all options  granted  under the plan had an exercise  price equal to the
     market value of the underlying common stock on the date of grant.

     Effective  January  1,  2006,  the  Corporation   adopted  the  fair  value
     recognition  provisions of FASB  Statement No. 123(R)  Share-Based  Payment
     (SFAS 123R), using the  modified-prospective-transition  method. Under that
     transition  method,  compensation  cost  recognized in 2006  includes:  (a)
     compensation  cost for all share-based  payments  granted prior to, but not
     yet  vested as of  January  1,  2006,  based on the grant  date fair  value
     calculated in accordance with the original  provisions of SFAS 123, and (b)
     compensation  cost  for all  stock-based  payments  granted  subsequent  to
     December  31,  2005,  based on the  grant  date  fair  value  estimated  in
     accordance with the provisions of SFAS 123(R).  The  Corporation  currently
     uses the Black-Scholes  option pricing model to determine the fair value of
     stock options and other share-based compensation and anticipates continuing
     to use the Black-Scholes  model going forward.  Management will utilize the
     methodologies  under SFAS 123(R) to value future grants. As of December 31,
     2005, all stock options were fully vested.  The  Corporation  did not grant
     any stock options during the period ended March 31, 2006.

                                       8
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     The Corporation's  earnings before income taxes for the three-months  ended
     March 31, 2006 were not  affected by the  adoption  of  SFAS123(R),  as the
     Corporation did not have any unvested  options as of January 1, 2006, or at
     any time through  March 31, 2006.  The  Corporation  did not have  proforma
     stock based compensation  expense for the three months ended March 31, 2005
     under Opinion 25 as there were no unvested options during this period.

     For periods prior to the adoption of FAS 123(R),  the Corporation  presents
     any tax benefits of deductions resulting from the exercise of stock options
     as operating cash flows in the statement of cash flows. SFAS123(R) requires
     that  the  cash  flows  resulting  from  tax  benefits  resulting  from tax
     deductions in excess of the compensation  cost recognized for those options
     (excess tax benefits) be classified as financing cash flows. The excess tax
     benefits for the three months ended March 31, 2006 was not material.

6.   RECENT ACCOUNTING PRONOUNCEMENTS
     --------------------------------

     In March  2006,  the FASB issued SFAS No.  156,  "Amending  Accounting  for
     Separately  Recognized  Servicing  Assets and  Servicing  Liabilities,"  to
     simplify  accounting  for  separately   recognized   servicing  assets  and
     servicing  liabilities.  SFAS No. 156 amends SFAS No. 140, " Accounting for
     Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
     Liabilities,"  to require 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.  Additionally,  SFAS No. 156
     permits  an entity to choose  either  the  amortization  method or the fair
     value measurement method for measuring each class of separately  recognized
     servicing  assets and  servicing  liabilities.  SFAS No. 156 also permits a
     servicer  that uses  derivative  financial  instruments  to offset risks on
     servicing to use fair value  measurement when reporting both the derivative
     financial  instrument and related  servicing  asset or liability.  SFAS 156
     applies to all  separately  recognized  servicing  assets  and  liabilities
     acquired or issued  after the  beginning  of an  entity's  fiscal year that
     begins after September 15, 2006, although early adoption is permitted.  The
     Corporation  is in the process of  assessing  the impact of the adoption of
     this statement on the Corporation's financial results.

     In February  2006,  the FASB issued SFAS No. 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"  to  permit  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.  Prior to fair
     value  measurement,  interests  in  securitized  financial  assets  must be
     evaluated to identify interests containing embedded  derivatives  requiring
     bifurcation.  The  amendments to SFAS 133 also clarify which  interest-only
     and principal-only  strips are not subject to the requirements of SFAS 133,
     and that concentrations of credit risk in the form of subordination are not
     embedded  derivatives.  SFAS 155 amends SFAS No. 140,  "Accounting  for the
     Impairment  or  Disposal  of  Long-Lived  Assets,"  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 No. 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. FAS 155 is not
     expected  to  have a  material  impact  on  the  Corporation's  results  of
     operations or financial condition.

     In November  2005,  the FASB  issued FSP FAS Nos.  115-1 and FAS 124-1 "The
     Meaning of  Other-Than-Temporary  Impairment and Its Application to Certain
     Investments,"  to give guidance on determining  when investments in certain
     debt and equity securities are considered impaired, whether that impairment
     is other than temporary,  and on measuring such  impairment  loss. This FSP
     nullifies  certain  requirements  of  EITF  Issue  03-1,  "The  Meaning  of
     Other-Than-Temporary Impairment and Its Application to Certain Investments"
     and supersedes EITF Topic No. D-44,  "Recognition  of  Other-Than-Temporary
     Impairment  upon the Planned  Sale of a Security  Whose Cost  Exceeds  Fair
     Value." This FSP nullifies the  requirements  of paragraphs  10-18 of Issue
     03-1,  carries forward the requirements of paragraphs 8 and 9 of Issue 03-1

                                       9
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     with respect to  cost-method  investments,  carries  forward the disclosure
     requirements  included  in  paragraphs  21 and 22 of Issue 03-1 and related
     examples,  and references  existing  "other-than-temporary"  guidance.  The
     guidance  in this  FSP will  apply to  reporting  periods  beginning  after
     December 15, 2005. The adoption of this FSP did not have a material  impact
     on the Corporation's results of operations or financial condition.

     In  November  2005,  the FASB  issued  FSP FIN 45-3,  "Application  of FASB
     Interpretation  No. 45 to Minimum Revenue  Guarantees Granted to a Business
     or Its Owners."  The  guidance in this FSP amends FIN No. 45,  "Guarantor's
     Accounting and Disclosure  Requirements for Guarantees,  Including Indirect
     Guarantees  of  Indebtedness  of  Others"  to  explicitly  state  that  the
     recognition, measurement and disclosure provisions of FIN No. 45 apply to a
     minimum  revenue  guarantee.  A minimum  revenue  guarantee  is a guarantee
     granted to a business or its owners that the revenue of the  business  will
     be at least a specified  minimum amount for a specified period of time. FSP
     FIN 45-3 is effective for new minimum revenue guarantees issued or modified
     on or after the beginning of the first fiscal  quarter  following  November
     10, 2005 (the date posted to the FASB website). The disclosure requirements
     are to be applied to all minimum revenue guarantees in financial statements
     of interim or annual periods ending after the beginning of the first fiscal
     quarter  following  November  10, 2005,  although  earlier  application  is
     permitted. FSP FIN 45-3 did not have a material impact on the Corporation's
     financial position or results of operations.

     In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error
     Corrections"  (SFAS 154). SFAS 154 replaces APB Opinion No. 20, "Accounting
     Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial
     Statements." SFAS 154 requires retrospective  application to prior periods'
     financial  statements of every  voluntary  change in  accounting  principle
     unless it is  impracticable.  APB Opinion No. 20  previously  required that
     most voluntary  changes in accounting  principle be recognized by including
     in net income of the period of the change the cumulative effect of changing
     to the new  accounting  principle.  SFAS 154 also requires that a change in
     depreciation, amortization, or depletion method for long-lived nonfinancial
     assets be accounted  for as a change in accounting  estimate  effected by a
     change in accounting principle. SFAS 154 carries forward without change the
     guidance in APB Opinion No. 20 for reporting the  correction of an error in
     previously  issued  financial  statements  or a  change  in  an  accounting
     estimate. SFAS 154 carries forward the provisions of SFAS No. 3 that govern
     reporting accounting changes in interim financial  statements.  SFAS 154 is
     effective for accounting  changes and  corrections of errors made in fiscal
     years beginning after December 15, 2005,  although  earlier  application is
     permitted  for  changes  and  corrections  of errors  made in fiscal  years
     beginning  after  June 1,  2005.  SFAS 154 did not have any  impact  on the
     Corporation's financial position or results of operations.


                                       10
<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, and First Chester County Capital
Trust II,  (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  fiscal  year  ended
December 31, 2005.  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 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.

                                       11
<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  March 31,  2006 was $1.8  million,  an
increase of $828,000 or 81.3% from $1.0 million for the same period in 2005. The
increase  in net income for the  three-month  period  ended  March 31,  2006 was
primarily  the result of increases in net interest  income and  decreases in the
provision for loan losses and  non-interest  expense.  These  improvements  were
offset by a  decrease  in  non-interest  income  and an  increase  in income tax
expenses.  The  decrease in  non-interest  expenses  was related to decreases in
professional service expenses and other expenses. The costs of the Corporation's
new imaging and branding  rollout were included in 2005's results.  Net interest
income benefited from increases in volume and increases in interest rates earned
on the  Corporation's  loan portfolio.  These increases were partially offset by
increases in volume and interest rates paid on interest-bearing liabilities.

Basic  earnings  per share for the three  months  ending March 31, 2006 and 2005
were $0.36 and $0.20 per share, respectively. Cash dividends declared during the
three-month  period  ended March 31, 2006 were  $0.1350 an increase of 5.2% from
$0.1283 per share for the same period in 2005.

                                 SELECTED RATIOS
                                       March 31,                    December 31,
                              -------------------------             ------------
                                2006              2005                  2005
                                ----              ----                  ----
Return on average assets        0.88%             0.51%                 0.79%
Return on average equity       12.32%             7.28%                11.48%
Earnings retained              37.49%            35.95%                59.07%
Dividend payout ratio          62.51%            64.05%                40.93%
Book value per share         $ 11.64          $  10.87               $ 11.41

                               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  March 31,  2006 was $8.2  million,  an increase of 6.2% from $7.8
million for the same period in 2005. The increase in tax equivalent net interest
income  can  be   attributed   to  an  increase   in  the  average   balance  of
interest-earning  assets and an increase in the average interest rates earned on
interest  earning  assets when compared to the same period last year,  partially
offset by an increase in the yields paid on interest-bearing liabilities.

                                       12
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

The net yield on interest-earning  assets, on a tax-equivalent  basis, was 4.10%
for the three-month period ended March 31, 2006,  compared to 4.08% for the same
period in 2005,  an increase of 0.5% or 2 basis points (one basis point is equal
to 1/100 of a percent). The yield on interest-earning  assets increased 13.4% or
73 basis points to 6.16% in 2006  compared to 5.43% in 2005.  The average  yield
paid on interest-bearing liabilities increased 54.8% or 91 basis points to 2.57%
in 2006  compared  to 1.66%  in 2005.  The  increase  was due to the  increasing
interest rates paid on deposit accounts.

Interest  rates and pricing  competition  may  continue  to put  pressure on our
net-interest  margin and may adversely impact net-interest income in future time
periods. Additionally, pressure to raise deposits to fund loan growth has caused
the  Corporation to research and acquire other sources of funds such as brokered
deposits  and  bringing  back onto the balance  sheet  funds that were  formerly
"swept"  off of the  balance  sheet in as  deposits.  The cost of these  funding
sources  continues to  contribute  to the  increased  yield on  interest-bearing
liabilities and impact net-interest income.

Average  interest-earning  assets  increased  5.8% or $44.1  million  to  $803.6
million during the three-month  period ended March 31, 2006,  compared to $759.5
million   during  the  same   period   last  year.   The   increase  in  average
interest-earning assets is attributed to an increase of $49.7 million or 7.9% in
average total loans between the two periods, and an increase of $28.4 million or
572.8% in federal funds sold. Partially offsetting this growth was a decrease of
$33.6  million or 26.1% from $128.8  million to $95.2  million in average  total
investment securities between the two periods.

Average  interest-bearing  liabilities  increased  by 4.1% or $25.6  million  to
$644.2 million during the three-month  period ended March 31, 2006,  compared to
$618.6  million  during the same  period  last  year.  The  increase  in average
interest-bearing  liabilities  was the  result of an  increase  of 4.7% or $25.0
million in  interest-bearing  deposits  to $557.9  million  for the  three-month
period ended March 31, 2006,  compared to $532.9  million for the same period in
2005.  Average  Federal Home Loan Bank  advances and other  borrowings  remained
virtually unchanged between the two periods.


                                       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
                          THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>

        (Dollars in thousands)                                          2006                                2005
                                                           ------------------------------      ----------------------------
                                                            Daily                              Daily
                                                            Average                            Average
          ASSETS                                            Balance    Interest    Rate        Balance    Interest   Rate
                                                            -------    --------    ----        -------    --------   ----
         <S>                                                 <C>      <C>         <C>          <C>        <C>       <C>

          Federal funds sold                                 $ 33,325  $   371     4.45%        $  4,953   $    27   2.18%
          Interest-bearing deposits in banks                      351        4     4.56%             647         2   1.24%
          Investment securities:
               Taxable                                         80,495    1,001     4.97%         104,999     1,061   4.04%
               Tax-exempt(1)                                   14,678      146     3.99%          23,808       256   4.31%
                                                              -------   ------                   -------    ------
               Total investment securities                     95,173    1,147     4.82%         128,807     1,317   4.09%
                                                              -------   ------                   -------    ------
          Loans and leases: (2)
               Taxable                                        659,940   10,623     6.44%         613,709     8,804   5.74%
               Tax-exempt(1)                                   14,826      223     6.01%          11,402       168   5.89%
                                                              -------   ------                   -------    ------
               Total loans and leases                         674,766   10,846     6.43%         625,111     8,972   5.74%
                                                              -------   ------                   -------    ------
          Total interest-earning assets                       803,615   12,368     6.16%         759,518    10,318   5.43%
          Non-interest earning assets:
               Allowance for possible loan losses              (8,554)                            (7,334)
               Cash and due from banks                         23,810                             24,382
               Other assets                                    23,520                             23,283
                                                              -------                            -------
          Total assets                                       $842,391                           $799,849
                                                              =======                            =======

         LIABILITIES AND STOCKHOLDERS' EQUITY
         Savings, NOWS & money market deposits                369,344  $ 1,499     1.62%        $419,925   $ 1,054   1.00%
         Certificates of deposits and other time              188,589    1,698     3.60%         112,996       698   2.47%
                                                              -------   ------                   -------    ------
         Total interest bearing deposits                      557,933    3,197     2.29%         532,921     1,752   1.32%
         Junior subordinated debentures                        15,465      298     7.71%          15,465       220   5.69%
         Federal Home Loan Bank advances and
          other borrowings                                     70,772      640     3.62%          70,217       594   3.38%
                                                              -------   ------                   -------    ------
         Total interest bearing liabilities                   644,170    4,135     2.57%         618,603     2,566   1.66%
                                                              -------   ------                   -------    ------
         Non-interest bearing liabilities:
               Non-interest bearing demand deposits           132,983                            120,188
               Other liabilities                                5,325                              5,128
                                                              -------                            -------
          Total liabilities                                   782,478                            743,919
          Stockholders' equity                                 59,913                             55,930
                                                              -------                            -------
          Total liabilities and stockholders' equity         $842,391                           $799,849
                                                              =======                            =======
          Net interest income                                          $ 8,233                              $7,752
                                                                        ======                               =====
          Net yield on interest earning assets                                     4.10%                             4.08%
                                                                                   ====                              ====
<FN>
          (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 2006 and 2005.
          (2)  Non-accruing loans are included in the average balance.
</FN>
</TABLE>

                                       14
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

      INTEREST INCOME ON FEDERAL FUNDS SOLD AND OTHER OVERNIGHT INVESTMENTS

Interest  income  on  federal  funds  sold,  other  overnight  investments,  and
interest-bearing  deposits in banks for the  three-month  period ended March 31,
2006  increased  $345,000 to $372,000  when  compared to the same period in 2005
when these assets  totaled  $27,000.  This  increase is primarily  the result of
increases in average  balances  outstanding.  In addition,  the average yield on
Federal funds sold and other overnight investments increased by 227 basis points
between the two quarterly periods.  During the same period, the average yield on
interest-bearing deposits in banks increased by 332 basis points.

                    INTEREST INCOME ON INVESTMENT SECURITIES

On a tax equivalent basis, interest income on investment securities decreased by
12.9% or $170,000 to $1.1  million for the  three-month  period  ended March 31,
2006 from $1.3 million for the same period in 2005. The decrease was a result of
the decrease in average total  investment  securities  noted above.  The average
yield on total  investment  securities  actually  increased by 17.9% or 73 basis
points to 4.82% for the  three-month  period ended March 31, 2006 from 4.09% for
the same period in 2005.

                       INTEREST INCOME ON LOANS AND LEASES

Interest  income  on  loans,  on  a  tax  equivalent  basis,  generated  by  the
Corporation's  loan portfolio  increased  20.9% or $1.9 million to $10.8 million
for the three-month period ended March 31, 2006 compared to $9.0 million for the
three  months  ended March 31,  2005.  The  increase in interest  income for the
three-month  period  ended  March 31,  2006 is  primarily  the result of a $49.7
million  or 7.9%  increase  in the  average  balance  of loans  outstanding.  In
addition,  the yield on average loans  outstanding,  on a tax equivalent  basis,
increased by 69 basis points or 12.0% to 6.44% for the three-month  period ended
March 31, 2006 from 5.74% for the same period in 2005.

                      INTEREST EXPENSE ON DEPOSIT ACCOUNTS

Interest expense on deposit accounts  increased by $1.4 million or 82.5% to $3.2
million for the  three-month  period  ended March 31, 2006 from $1.8 million for
the same period in 2005. This increase was due in part to an increase in average
total  interest-bearing  deposits  of  $25.0  million  or 4.7%  between  the two
periods.  In  addition,  the  average  interest  rates  paid on  these  deposits
increased by 73.5% or 97 basis points to 2.29% for the three-month  period ended
March 31, 2006 from 1.32% for the same period in 2005.

Interest rate  increases  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 in a rising rate  environment,  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.

                                       15
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

    INTEREST EXPENSE ON FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

Interest  expense  on  Federal  Home Loan  Bank  ("FHLB")  and other  borrowings
increased by $46,000 or 7.7% to $640,000 for the three-month  period ended March
31, 2006 from  $594,000 for the same period in 2005.  Average  balances of these
funding sources  increased by 0.8% or $555,000 between the two periods while the
average cost of these funds  increased by 24 basis points,  an increase of 7.1%.
FHLB borrowing has been an alternative to deposits to support loan growth.

                   INTEREST EXPENSE ON SUBORDINATED DEBENTURES

Interest expense on subordinated  debentures  increased  $78,000 to $298,000 for
the  three-month  period ended March 31, 2006 from  $220,000 for the same period
last year.  Average balances between the two periods remained unchanged at $15.5
million.

                       PROVISION FOR LOAN AND LEASE LOSSES

During the first quarter of 2006, the  Corporation  recorded a $3,000  provision
for loan and lease  losses  compared to $507,000  for the same period in 2005, a
decrease of $504,000 or 99.4%.  The decrease in the provision for loan and lease
losses is  primarily  attributed  to  improved  asset  quality  and  decrease in
non-performing  assets.  The  allowance for loan losses as a percentage of total
loans was 1.25% as of March 31, 2006,  1.16% as of March 31, 2005,  and 1.29% as
of December 31, 2005.  Management believes that the allowance for loan losses is
adequate based on its current assessment of probable and estimated losses.

                       ALLOWANCE FOR LOAN AND LEASE LOSSES

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 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 our borrower's ability to pay.


                                       16
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

  ANALYSIS OF CHANGES IN THE ALLOWANCE FOR LOAN AND LEASE LOSSES AND COMPARISON
                              OF LOANS OUTSTANDING
<TABLE>
<CAPTION>

                                                                  Three Months Ended                 Year Ended
     (Dollars in thousands)                                             March 31,                    December 31,
                                                                -------------------------            ------------
                                                                   2006          2005                     2005
                                                                -----------   -----------            ------------
    <S>                                                        <C>            <C>                     <C>

     Balance at beginning of period                            $     8,549     $    7,213              $    7,213
                                                                ----------      ---------               ---------

     Provision charged to operating expense                              3            507                   1,382
                                                                ----------      ---------               ---------

     Recoveries of loans previously charged-off                         72             73                     437
     Loans charged-off                                                 (45)          (344)                   (483)
                                                                ----------      ---------               ---------

     Net recoveries (loans charged-off)                                (27)          (271)                    (46)
                                                                ----------      ---------               ----------

     Balance at end of period                                  $     8,579     $    7,449              $    8,549
                                                                ==========      =========               =========

     Period-end loans outstanding                              $   685,607     $  640,841              $  664,276

     Average loans outstanding                                 $   674,767     $  625,111              $  650,938

     Allowance for loan and lease losses as a
        percentage of period-end loans outstanding                   1.25%          1.16%                   1.29%

     Net charge-offs (recoveries) to average loans
        outstanding                                                  0.00%          0.04%                   0.01%
</TABLE>


Non-performing  loans include loans on non-accrual  status and loans past due 90
days or more and still accruing.  The Corporation's  policy is to write down all
non-performing loans to net realizable value based on current assessments of the
value of  collateral  securing such loans and leases.  Non-performing  loans are
primarily collateralized by real estate and are in the process of collection. As
of March 31, 2006, the level of non-performing assets has decreased $2.0 million
from March 31,  2005,  and  non-performing  assets  decreased  $1.0 million from
December  31,  2005.  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.  Non-performing  loans and leases reduce the Corporation's
earnings  because  interest  income  is not  earned on such  assets.  Management
continues to focus on controlling  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

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

             (Dollars in thousands)                                       March 31,                    December 31,
                                                                 -------------------------             ------------
                                                                     2006          2005                     2005
                                                                 -----------   -----------             ------------
            <S>                                                  <C>             <C>                    <C>

             Past due over 90 days and still accruing             $      0        $   213                $      0

             Non-accrual loans and leases                            7,298          8,373                   8,358
                                                                   -------         ------                 -------

             Total non-performing loans and leases                   7,298          8,586                   8,358

             Other real estate owned                                     0            689                       0
                                                                   -------         ------                 -------

             Total non-performing assets                          $  7,298        $ 9,275                $  8,358
                                                                   =======         ======                 =======

             Non-performing loans and leases as a percentage
             of total loans and leases                               1.06%          1.34%                   1.26%

             Allowance for loan and lease losses as a percentage
             of non-performing loans and leases                    117.55%         86.76%                 102.29%

             Non-performing assets as a percentage of
             total loans and other real estate owned                 1.06%          1.45%                   1.26%

             Allowance for loan and lease losses as a
             percentage of non-performing assets                   117.55%         80.31%                 102.29%
</TABLE>

Other real estate owned ("OREO")  represents  residential  and  commercial  real
estate  that had secured  non-performing  loans that the Bank  acquired  through
foreclosure or other collection  efforts and that is held for sale. The value of
OREO has been written down to realizable value (net of estimated disposal costs)
based on  professional  appraisals.  Subsequent to March 31, 2005,  the property
that  represents  the OREO  portion  of  non-performing  assets  was  sold.  The
Corporation holds no other OREO at this time.

                                 LOAN IMPAIRMENT

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 $7.3
million,  $8.4 million,  and $9.3 million at March 31, 2006,  December 31, 2005,
and March 31, 2005,  respectively.  The associated  allowance for impaired loans
was $791,000,  $897,000,  and $932,000 at March 31, 2006, December 31, 2005, and
March 31, 2005, 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  months  ended  March 31,  2006,  activity  in the  allowance  for
impaired loan losses included principal payments of $106,000, and charge offs of
$1,000.  There  were  no  recoveries.  Contractual  interest  amounted  to  $148
thousand.  Total cash collected on non-accrual loans for the three-month  period
ended March 31, 2006 was $1.1 million which was all applied to principal.

For the three months ended March 31, 2005 activity in the allowance for impaired
loan losses included a provision of $204,000, principal payments of $41,000, and
charge offs of $113,000. There were no recoveries. Contractual interest amounted
to  $148,000.  Total cash  collected on loans for the  three-month  period ended
March 31, 2005 was $412,000 which was all applied to principal.

                               NON-INTEREST INCOME

Total  non-interest  income  decreased  7.3% or $166,000 to $2.1 million for the
three months ended March 31, 2006,  compared to $2.3 million for the same period
in 2005. The various components of non-interest income are discussed below.

The largest  component of non-interest  income is Trust and Investment  Services
revenue,  which decreased $60,000 or 6.9% to $809,000 for the three-months ended
March 31,  2006  compared  with the same  period in 2005.  Trust and  Investment
Services  income  is  based  primarily  on the  market  value  of  assets  under
management.  The market value of assets under  management  at March 31, 2006 was
$556.5  million  which was $21.1  million or 3.9% higher than the value at March
31, 2005.

Service charges on deposit  accounts  decreased  $20,000 or 4.2% to $453,000 for
the  three-month  period ended March 31, 2006  compared to $473,000 for the same
period in 2005.  The decline in service  charges is a result of a reduced amount
of overdraft  charges on retail and  commercial  demand  deposit  accounts and a
decrease in the service charges for these accounts.  The introduction of a "Free
Checking"  product  during  the first  quarter of 2006 also  contributed  to the
decrease in service charges.

The  corporation  recognized  a net  loss of  $80,000  on  sales  of  investment
securities  during the  three-month  period ended March 31, 2006 compared with a
net gain of $67,000  during the same period in 2005.  The losses were taken as a
result of normal portfolio management.

The  Corporation  has operating lease  agreements  with several  customers.  The
income on these  leases is  classified  as  "Rental  Income".  Rental  Income on
operating  lease  agreements  for the  three-month  period  ended March 31, 2006
increased  $40,000 or 17.5% to  $268,000  from  $228,000  for the same period in
2005.

Gains on the sale of premises and other real estate owned  ("OREO") were $10,000
for the  three-months  ended  March 31,  2006 as  compared  to $600 for the same
period in 2005.  OREO balances  decreased  from $689,000 as of March 31, 2005 to
zero at March 31,  2006 as our Credit  Administration  Department  continues  to
reduce non-performing loans.

Gains and fee income  generated  on the sale of  residential  mortgages  for the
three-month period ended March 31, 2006 decreased $3,000 or 3.7% to $78,000 from
$81,000 for the same period in 2005.  The decrease is  primarily  due to a lower
volume  of  originations   and  sales  of  residential   mortgages   during  the
three-months ended March 31, 2006 as compared to the same period in 2005.

                                       19
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

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. Other
non-interest  income increased 2.7% or $15,000 for the three-month  period ended
March 31, 2006 when compared to the same period in 2005.

                              NON-INTEREST EXPENSE

Total  non-interest  expense  for the first  quarter of 2006  decreased  3.7% or
$291,000  to $7.7  million  compared  to the same  period in 2005.  The  various
components of non-interest expense are discussed below.

Salaries and employee  benefits  increased  7.2% or $295,000 to $4.4 million for
the three-month period ended March 31, 2006 compared to the same period in 2005.
The  increase in salaries and benefit  expense is primarily  the result of costs
associated with the implementation of a new performance based incentive plan and
the accrual of expenses associated with that plan which are based on assumptions
that targeted goals are attained.

Net  occupancy,  equipment and data  processing  expense  decreased 2.3% to $1.4
million for the  three-month  period  ended March 31, 2006  compared to the same
period in 2005.  The decrease can be attributed to higher costs during the first
quarter of 2005 associated with  infrastructure  improvements  necessary for new
branch sites. The Corporation  currently has a variety of branch improvement and
expansion projects planned throughout the remainder of 2006 and into 2007.

Depreciation on operating leases increased 16.0% to $232,000 for the three-month
period  ended  March 31, 2006 when  compared at the same period last year.  This
depreciation expense is the result of operating lease agreements the Corporation
has with several of our customers.  The income  associated  with these operating
leases is classified as Rental Income.

Expenses for professional  services  decreased $332,000 or 41.7% to $464,000 for
the three-month period ended March 31, 2006 compared to the same period in 2005.
The  decrease  is largely  the result of  charges  recognized  in 2005 for other
consulting fees for real estate management,  benefit plans,  management planning
and the cost of complying with Sarbanes-Oxley legislation.

Total other non-interest expense decreased 26.9% or $350,000 to $949,000 for the
three  months  ended March 31, 2006  compared to the same period in 2005.  Other
non-interest  expense includes marketing  expenses,  annual meeting and reports,
trust processing, postage, directors' costs, telephone, travel and entertainment
and operating  supplies.  The decrease is largely the result of expenses related
to the development and introduction of the new corporate marketing program,  the
costs of which were substantially incurred in 2005.

                                       20
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

                                  INCOME TAXES

Income tax expense for the three-month period ended March 31, 2006 was $717,000,
compared to $410,000 in the same period last year.  This represents an effective
tax rate of 28.0% for the first quarter of 2006 compared with 28.7% for the same
period in 2005.

               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:

                                DEPOSIT ANALYSIS
<TABLE>
<CAPTION>
                                         For the Quarter Ended                         For the Year Ended
(Dollars in thousands)                       March 31, 2006                             December 31, 2005
                                        --------------------------                ----------------------------
                                         Average        Effective                     Average        Effective
Deposit Type                             Balance          Yield                       Balance           Yield
------------                             -------        ---------                     -------        ---------
<S>                                     <C>             <C>                          <C>             <C>

NOW Accounts                             $117,982        1.20%                        $125,755         1.20%
Money Market                               70,111        3.21%                          53,946         1.17%
Statement Savings                          53,724        0.79%                          56,653         0.80%
Other Savings                               1,051        0.38%                             932         0.75%
CD's Less than $100,000                   141,448        3.50%                         129,058         2.63%
                                          -------                                      -------

Total Core Deposits                       384,316        2.36%                         366,344         1.64%

Non-Interest Bearing
     Demand Deposit Accounts              132,983          -                           128,404           -
                                          -------                                      -------

Total Core and Non-Interest
     Bearing Deposits                     517,299        1.75%                         494,748         1.21%
                                          -------                                      -------

Tiered Savings                            126,476        1.50%                         133,158         1.58%
CD's Greater than $100,000                 47,141        3.90%                          78,684         2.41%
                                          -------                                      -------

Total Deposits                           $690,916        1.85%                        $706,590         1.42%
                                          =======                                      =======
</TABLE>


                                       21
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

The Bank, as a member of the FHLB,  maintains several credit facilities.  During
the first  quarter  of 2006,  average  FHLB  advances  were  $70.8  million  and
consisted of term advances with a variety of  maturities.  The average  interest
rate on these  advances was 3.62%.  The Bank  currently has a maximum  borrowing
capacity  with the FHLB of  approximately  $142.5  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  repricing in a future time period.  The  Corporation's  net
interest rate  sensitivity  gap within one year is a negative  $122.2 million or
14.1% of total assets at March 31, 2006 compared with a negative  $122.6 million
or 14.5% of total assets at December 31, 2005. 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 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.


                                       22
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

                          INTEREST SENSITIVITY ANALYSIS
                              AS OF MARCH 31, 2006
<TABLE>
<CAPTION>

                                                                 One              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                        $  44,000         $       0        $       0       $        0       $  44,000
   Investment securities                        23,314            40,961           28,043                0          92,318
   Interest bearing deposits in banks              331                 0                0                0             331
   Net loans and leases                        254,533           318,005          113,069           (8,579)        677,028
   Cash and due from banks                           0                 0                0           31,568          31,568
   Premises and equipment                            0                 0                0           13,274          13,274
   Other assets                                      0                 0                0           10,082          10,082
                                              --------          --------         --------        ---------        --------
   Total assets                              $ 322,178         $ 358,966        $ 141,112       $   46,345       $ 868,601
                                              ========          ========         ========        =========        ========

LIABILITIES AND CAPITAL
   Non-interest bearing deposits             $       0         $       0        $       0       $  160,149       $ 160,149
   Interest bearing deposits                   412,583           40,712           104,546                0         557,841
   FHLB advances and other                      16,133           52,338             2,411                0          70,882
   Junior subordinated debentures               15,465                0                 0                0          15,465
   Other liabilities                               242                0             4,219                0           4,461
   Capital                                           0                0                 0           59,803          59,803
                                              --------          --------         --------        ---------        ---------
   Total liabilities & capital               $ 444,423         $ 93,050         $ 111,176       $  219,952       $ 868,601
                                              ========          ========         ========        =========        ========

   Net interest rate
    sensitivity gap                          $(122,245)        $ 265,916        $  29,936       $ (173,607)
                                              ========          ========         ========        =========
   Cumulative interest rate
    sensitivity gap                          $(122,245)        $ 143,671        $ 173,607       $        0
                                              ========          ========         ========        =========
   Cumulative interest rate
    sensitivity gap divided
    by total assets                             (14.1%)            16.5%           20.0%
                                              ========          ========         =======
</TABLE>


                                       23
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

                        BRANCHING AND TECHNOLOGY PROJECTS

The  Corporation  intends to open a series of new  branches  throughout  Chester
County  over the next five  years.  A new  customer-focused  branch  design  was
introduced  when  construction  was  finished on the branch  building in Oxford,
Pennsylvania.  The new  "signature  look" will be rolled out to new and  certain
current  locations  over  the  next  five  years.  Technological   improvements,
including secure electronic delivery of customer checking and savings statements
and an improvement  of customer  service  issues,  are expected over the next 18
months  as the  Bank  utilizes  the  power  of  its  new  customer  relationship
management  system ("CRM").  Management  hopes to utilize the CRM along with the
Answer  Center to identify  service  issues and  customer  trends on a proactive
basis resulting in a higher degree of customer satisfaction.

                                CAPITAL ADEQUACY

The  Corporation  is subject to  Risk-Based  Capital  Guidelines  adopted by the
Federal  Reserve Board ("FRB") 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 March  31,  2006,  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 March 31,            As of December 31,
RISK-BASED                                --------------------------      ------------------          "Well Capitalized"
CAPITAL RATIOS                              2006             2005                 2005                    Requirements
--------------                            ----------      ----------              ----                ------------------
<S>                                      <C>              <C>                  <C>                        <C>

     Corporation
Leverage Ratio                              9.13%            8.89%                8.80%                       N/A
Tier I Capital Ratio                       10.85%           10.55%               10.94%                       N/A
Total Risk-Based Capital Ratio             12.06%           11.65%               12.19%                       N/A
     Bank
Leverage Ratio                              8.44%            8.07%                8.14%
Tier I Capital Ratio                        9.98%            9.55%               10.08%                      6.00%
Total Risk-Based Capital Ratio             11.20%           10.66%               11.32%                     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 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 2005 Annual  Report,
filed with the SEC via EDGAR as an exhibit to its Form 10-K for the fiscal  year
ended  December  31,  2005.  Please refer to the  "Management's  Discussion  and
Analysis"  section on pages 17-36 of the  Corporation's  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  two  certifications  (the  "Section  302
Certifications"),  one by each of our Chief Executive Officer, President and our
Chief  Financial  Officer (our  principal  executive,  operating  and  financial
officers, 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 Securities and Exchange  Commission  (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,  the  Corporation's
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,  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) the  Corporation's
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 first
quarter of 2006, 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,  2005.  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
                  -----------------------------------------------------------

                      ISSUER PURCHASES OF EQUITY SECURITIES
<TABLE>
<CAPTION>

                                          Total Number     Average     Total Number of Shares      Maximum Number (or Approximate
            Period                         of Shares      Price Paid  (or Units) Purchased as     Dollar Value) of Shares (or Units)
                                           (or Units)     per Share  Part of Publicly Announced      that May Yet Be Purchased
                                           Purchased      (or Unit)      Plans or Programs          Under the Plans or Programs
                                          ------------    ---------  --------------------------   ----------------------------------
<S>                                          <C>            <C>               <C>                     <C>

January 1 to January 31, 2006                 --             --                --                      $10,000,000
February 1 to February 28, 2006               --             --                --                      $10,000,000
March 1 to March 31, 2006                     --             --                --                      $10,000,000
Total                                         --             --                --                      $10,000,000*

<FN>

* 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.
</FN>
</TABLE>

Item 3.           Defaults upon Senior Securities
                  -------------------------------

                  None

                                       26
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                     PART II - OTHER INFORMATION - CONTINUED

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

                  The Annual Meeting of Shareholders of the Corporation was held
                  on April 18, 2006 (the  "Meeting").  Notice of the Meeting was
                  mailed to  shareholders  of record on or about March 17, 2006,
                  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 four Class I directors.

                  There was no solicitation in opposition to the nominees of the
                  Board of Directors for election to the Board of Directors. All
                  four 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
                  -------                         ---                   --------

                 John J. Ciccarone             3,999,927                 176,322

                 Clifford E. DeBaptiste        3,994,081                 182,168

                 John B. Waldron               3,997,959                 178,290

                 Lynn Marie Johnson-Porter     3,989,837                 186,442


                  The  names of the  other  directors  whose  terms of office as
                  directors  continued  after the  meeting  are as  follows:  M.
                  Robert  Clarke,  David  L.  Peirce,  Kevin C.  Quinn,  John A.
                  Featherman,  III, John 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.

                                       27
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                     PART II - OTHER INFORMATION - CONTINUED

Item 5.           Other Information
                  -----------------

                  None

Item 6.           Exhibits

                  (a)      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  Executive   Compensation  Plan  (cp)* Portions  of  this
                        exhibit  have  been   redacted  and  are  subject  to  a
                        confidential  treatment request filed with the Secretary
                        of the  Securities and Exchange  Commission  pursuant to
                        Rule 24b-2 under the Securities Exchange Act of 1934, as
                        amended.

                  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 Assistant Treasurer*

                  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 Assistant Treasurer*


                                       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
                                                     ---------------------------
              May 8, 2006                            John A. Featherman
                                                     Chief Executive Officer




              May 8, 2006                            /s/ John E. Balzarini
                                                     ---------------------------
                                                     John E. Balzarini
                                                     Chief Financial Officer
                                                     (Principal Financial and
                                                      Accounting Officer)


                                       29
<PAGE>
               FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                                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  Executive  Compensation  Plan  (cp)* Portions  of this  exhibit  have been
      redacted and are subject to a  confidential  treatment  request filed with
      the Secretary of the Securities and Exchange  Commission  pursuant to Rule
      24b-2 under the Securities Exchange Act of 1934, as amended.

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 Assistant Treasurer*

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 Assistant Treasurer*

                                       30