November 9, 2005
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SEC Operations Center
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                        FIRST CHESTER COUNTY CORPORATION

                         Commission File Number 0-12870

Gentlemen:

Pursuant to the reporting requirements of the Securities and Exchange Act of
1934, we are filing herewith the above listed Registrant's Quarterly Report on
Form 10-Q for the period ended September 30, 2005.



                                           Very truly yours,

                                           /s/ John Balzarini
                                           ------------------
                                           John Balzarini,
                                           Treasurer and Chief Financial Officer






JEB/JAD
Enclosures

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

         David Burns, CPA, Grant Thornton, Philadelphia, PA





<PAGE>






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

                                    FORM 10-Q
(Mark One)

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

For the quarterly period ended September 30, 2005
                               ------------------
                                       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 an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes X  No ___

The number of shares outstanding of Common Stock of the Registrant as of
November 8, 2005 was 5,140,503.



                                       2
<PAGE>



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

                                      INDEX


                                                                                                                       PAGE

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

                  Item 1 -  Financial Statements
                             Consolidated Statements of Condition
                             September 30, 2005 (unaudited) and December 31, 2004                                         4


                             Consolidated Statements of Income
                             Three and Nine-Months Ended September 30, 2005 and 2004 (unaudited)                          5


                             Consolidated Statements of Cash Flows
                             Nine-Months Ended September 30, 2005 and 2004 (unaudited)                                    6

                             Consolidated Statements of Changes in Stockholders' Equity                                   7


                             Notes to Consolidated Financial Statements (unaudited)                                    8-12


                  Item 2 -   Management's Discussion and Analysis of
                             Financial Condition and Results of Operations                                            12-28

                  Item 3 -   Quantitative and Qualitative Disclosures About Market Risk                                  29

                  Item 4 -  Controls and Procedures                                                                      29


Part II. OTHER INFORMATION

                  Item 1 -   Legal Proceedings                                                                           30
                  Item 2 -   Unregistered Sales of Equity Securities and Use of Proceeds                                 30
                  Item 3 -   Defaults upon Senior Securities                                                             30
                  Item 4 -   Submission of Matters to a Vote of Security Holders                                         30
                  Item 5 -   Other Information                                                                           30
                  Item 6 -   Exhibits                                                                                    31

                  Signatures                                                                                             32
                  Exhibit Index                                                                                          33
                  Exhibits                                                                                            34-39


</TABLE>


                                       3
<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>

                                                                                        (Unaudited)
(Dollars in thousands)                                                                 September 30,        December 31,
                                                                                            2005                2004
                                                                                       -------------        ------------
<S>                                                                                      <C>                  <C>

ASSETS
    Cash and due from banks                                                               $  30,810            $  24,656
    Federal funds sold and other overnight investments                                       25,600                6,500
    Interest Bearing Deposits in banks                                                          353                  454
                                                                                           --------             --------

    Total cash and cash equivalents                                                          56,763               31,610
                                                                                           --------             --------
    Investment securities held-to-maturity (fair value of $10 at
    September 30, 2005 and $11 at December 31, 2004, respectively)                               10                   10

    Investment securities available-for-sale, at market value                               101,061              140,019

    Loans                                                                                   664,731              618,005
    Less allowance for possible loan and lease losses                                        (8,488)              (7,213)
                                                                                           --------             --------
    Net loans                                                                               656,243              610,792

    Premises and equipment, net                                                              13,797               14,137
    Other assets                                                                              9,347                8,907
                                                                                           --------             --------

    Total assets                                                                          $ 837,221            $ 805,475
                                                                                           ========             ========
LIABILITIES
    Deposits
    Noninterest-bearing                                                                   $ 127,752            $ 125,452
        Interest-bearing (including certificates of deposit over $100
           of $78,199 and $33,048 - September 30, 2005 and
             December 31, 2004 respectively)                                                561,507              537,566
                                                                                           --------             --------

    Total deposits                                                                          689,259              663,018
    Federal Home Loan Bank advances and other borrowings                                     69,935               66,464
    Junior subordinated debentures                                                           15,465               15,465
    Guaranteed preferred beneficial interest in Corporation's subordinated debentures
    Other liabilities                                                                         5,540                5,126
                                                                                           --------             --------

    Total liabilities                                                                       780,199              750,073
                                                                                           --------             --------

STOCKHOLDERS' EQUITY
    Common stock, par value $1.00; authorized, 10,000,000 shares; Outstanding
        5,279,633 at September 30, 2005 and 4,799,666 at
        December 31, 2004                                                                     5,280                4,800
    Additional paid-in capital                                                               12,494                2,052
    Retained earnings                                                                        44,615               53,747
    Accumulated other comprehensive loss                                                     (1,642)                 (78)
    Treasury stock, at cost: September 30, 2005 - 140,505 and
        December 31, 2004 - 237,441                                                          (3,725)              (5,121)
                                                                                           --------             --------

    Total stockholders' equity                                                               57,022               55,402
                                                                                           --------             --------

    Total liabilities and stockholders' equity                                            $ 837,221            $ 805,475
                                                                                           ========             ========


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

                                       4
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

                                   (UNAUDITED)
<TABLE>
<CAPTION>


(Dollars in thousands - except per share data)                             Three Months Ended                Nine Months Ended
                                                                              September 30,                     September 30,
                                                                        -------------------------         -----------------------
                                                                         2005             2004             2005          2004
                                                                         ----             ----             ----          ----
<S>                                                                   <C>              <C>               <C>           <C>

INTEREST INCOME
    Loans, including fees                                              $  10,257        $   8,487         $  28,812     $  23,515
    Investment securities                                                  1,062            1,265             3,340         3,900
    Federal funds sold and other overnight investments                       272               83               346           113
    Deposits in Banks                                                          1                -                 4             1
                                                                        --------         --------          --------      --------

                Total interest income                                     11,592            9,835            32,502        27,529
                                                                        --------         --------          --------      --------

INTEREST EXPENSE
    Deposits                                                               2,853            1,381             6,821         3,757
    Interest on Trust-Preferred Securities                                   264              187               728           524
    Federal Home Loan Bank advances and other borrowings                     639              489             1,873         1,310
                                                                        --------         --------          --------      --------

                Total interest expense                                     3,756            2,057             9,422         5,591
                                                                        --------         --------          --------      --------

                Net interest income                                        7,836            7,778            23,080        21,938

    Provision for loan and lease losses                                      311              454             1,322           810
                                                                        --------         --------          --------      --------

                Net interest income after provision
                  for loan and lease losses                                7,525            7,324            21,758        21,128
                                                                        --------         --------          --------      --------

NON-INTEREST INCOME
    Trust and Investment Services                                            844              834             2,428         2,655
    Service charges on deposit accounts                                      483              546             1,434         1,585
    Investment securities gains, net                                          (2)              17                58            70
    Operating lease rental income                                            257              227               729           610
    Losses on sale of premises and other real-estate owned                     -             (149)               (7)         (101)
    Gains and fees on the sale of residential mortgages                      118               93               312           283
    Gain on the sale of credit card portfolio                                  -                -                 -            34
    Other                                                                    585              530             1,768         1,669
                                                                        --------         --------          --------      --------
                Total non-interest income                                  2,285            2,098             6,722         6,805
                                                                        --------         --------          --------      --------

NON-INTEREST EXPENSE
    Salaries and employee benefits                                         3,756            4,040            11,937        11,900
    Net occupancy, equipment and date processing                           1,397            1,332             4,188         3,995
    Depreciation expense on operating leases                                 226              199               638           534
    FDIC deposit insurance                                                    21               22                68            65
    Bank shares tax                                                           82              131               402           388
    Professional services                                                    629              494             1,990         1,114
    Other                                                                  1,302            1,249             3,931         3,682
                                                                        --------         --------          --------      --------
                Total non-interest expense                                 7,413            7,467            23,154        21,678
                                                                        --------         --------          --------      --------

                Income before income taxes and cumulative effect
                of change in accounting for income taxes                   2,397            1,955             5,326         6,255

INCOME TAXES                                                                 554              525             1,393         1,814
                                                                        --------         --------          --------      --------

NET INCOME                                                             $   1,843        $   1,430         $   3,933     $   4,441
                                                                        ========         ========          ========      ========

PER SHARE DATA
    Basic earnings per common share                                    $    0.36        $    0.29         $    0.77     $    0.89
                                                                        ========         ========          ========      ========
    Diluted earnings per common share                                  $    0.35        $    0.28         $    0.75     $    0.86
                                                                        ========         ========          ========      ========
    Dividends declared                                                 $  0.1300        $  0.1238         $  0.4025     $  0.4130
                                                                        ========         ========          ========      ========

Basic weighted average shares outstanding                              5,114,517        4,957,752         5,083,311     4,970,455
                                                                       =========        =========         =========     =========
Diluted weighted average shares outstanding                            5,209,347        5,144,869         5,226,232     5,164,609
                                                                       =========        =========         =========     =========
The accompanying notes are an integral part of these statements.

</TABLE>
                                       5
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                       Nine Months Ended
                                                                                                          September 30,
                                                                                                    -----------------------

(Dollars in thousands)                                                                              2005               2004
                                                                                                    ----               ----
<S>                                                                                            <C>               <C>

OPERATING ACTIVITIES
    Net Income                                                                                   $   3,933         $    4,441
    Adjustments to reconcile net income to net cash
           provided by operating activities:
       Depreciation                                                                                  1,979              1,726
       Provision for possible loan and lease losses                                                  1,322                810
    Amortization of investment security premiums
           and accretion of discounts                                                                  184                560
    Amortization of deferred fees on loans                                                              (4)                56
    Investment securities gains, net                                                                   (58)               (70)
    Increase in other assets                                                                        (2,005)            (1,414)
    Increase in other liabilities                                                                      414                972
                                                                                                  --------          ---------

           Net cash provided by operating activities                                                 5,765              7,081
                                                                                                  --------          ---------

INVESTING ACTIVITIES
    Increase in loans                                                                              (46,769)           (92,422)
    Proceeds from sales of investment securities available-for-sale                                 60,068             30,744
    Proceeds from maturities of investment securities available-for-sale                            53,322             23,302
    Purchases of investment securities available-for-sale                                          (74,558)           (68,591)
    Purchase of premises and equipment, net                                                         (1,639)            (1,940)
                                                                                                  --------          ---------
      Net cash (used in) investing activities                                                       (9,576)          (108,907)
                                                                                                  --------          ---------

FINANCING ACTIVITIES
    Increase in Federal Home Loan Bank advances                                                      3,471             21,391
    Increase in deposits                                                                            26,241            114,903
    Cash dividends paid                                                                             (1,973)            (1,877)
    Net increase (decrease) in treasury stock                                                        1,225               (638)
                                                                                                  --------          ---------

           Net cash provided by financing activities                                                28,964            133,779
                                                                                                  --------          ---------

           NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     25,153             31,953

Cash and cash equivalents at beginning of period                                                    31,610             31,383
                                                                                                  --------          ---------

Cash and cash equivalents at end of period                                                       $  56,763         $   63,336
                                                                                                  ========          =========

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

                                       6
<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, 2004          4,799,666   $  4,800    $  1,877   $ 50,117   $     306     $(5,350)   $      -       $ 51,750

    Net income                              -          -           -      4,441           -           -       4,441          4,441
    Cash dividends declared                 -          -           -     (1,878)                      -           -         (1,878)
    Other Comprehensive Income
       Net unrealized gains
         (loss) on investment
         securities
         available-for-sale                 -          -           -          -        (259)          -        (259)          (259)
    Treasury stock transactions             -          -        (398)         -           -        (240)         -            (638)
                                    ---------    -------  -  -------    -------    --------   -  ------     -------        -------
    Comprehensive Income                                                                                   $  4,182              -
                                                                                                            =======

Balance at September 30, 2004       4,799,666   $  4,800    $  1,479   $ 52,680   $      47     $(5,590)   $      -       $ 53,416

Balance at January 1, 2005          4,799,666   $  4,800    $  2,053   $ 53,747   $     (77)    $(5,121)   $      -       $ 55,402

    Net income                              -          -           -      3,933           -           -       3,933          3,933
    Cash dividends declared                 -          -           -     (1,973)          -           -           -         (1,973)
    Stock dividends declared          480,149        480      10,612    (11,092)                                                 -
    Other Comprehensive Income
       Net unrealized gain (loss)
       on investment securities
       available-for-sale                   -          -           -          -      (1,565)          -      (1,565)        (1,565)
    Treasury stock transactions             -          -        (171)         -           -       1,396           -          1,225
                                    ---------    -------  -  -------    -------    --------      ------     -------        -------
    Comprehensive Income                                                                                   $  2,369
                                                                                                            =======

Balance at September 30, 2005       5,279,815   $  5,280    $ 12,494   $ 44,615   $  (1,642)    $(3,725)                  $ 57,022
                                    =========    =======     =======    =======    ========      ======                    =======

</TABLE>

                                       7
<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, 2004.

         The results of operations  for the three and  nine-month  periods ended
September 30, 2005 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  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations in Part I, Item 2 of our Quarterly Report on Form 10-Q for the period
ending September 30, 2005.

2.       EARNINGS PER SHARE
<TABLE>
<CAPTION>

Three Months ended September 30, 2005
-------------------------------------
                                                                        Income              Shares                 Per Share
                                                                     (numerator)        (denominator)                Amount
                                                                     -----------        -------------              ---------

<S>                                                                   <C>                  <C>                      <C>

Basic earnings per share
       Net income available to common stockholders                      $1,843              5,114,517                $ 0.36
Effect of Dilutive Securities
       Options to purchase common stock                                     --                 94,830                 (0.01)
                                                                         -----              ---------                 -----
Diluted earnings per share
       Net income available to common stockholders                      $1,843              5,209,347                $ 0.35
                                                                         =====              =========                 =====
</TABLE>

17,866 anti-dilutive weighted shares have been excluded from this computation
because the option exercise price was greater than the average market price of
the common shares.

<TABLE>
<CAPTION>

Year to Date September 30, 2005
-------------------------------
                                                                       Income               Shares                   Per Share
                                                                     (numerator)        (denominator)                 Amount
                                                                     -----------        -------------                ---------
<S>                                                                    <C>                 <C>                      <C>

Basic earnings per share
       Net income available to common stockholders                      $3,933              5,083,311                $ 0.77
Effect of Dilutive Securities
       Options to purchase common stock                                     --                142,921                 (0.02)
                                                                         -----              ---------                 -----
Diluted earnings per share
       Net income available to common stockholders                      $3,933              5,226,232                $ 0.75
                                                                         =====              =========                 =====
</TABLE>

17,755 anti-dilutive weighted shares have been excluded from this computation
because the option exercise price was greater than the average market price of
the common shares.

                                       8
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                                   (UNAUDITED)
<TABLE>
<CAPTION>

Three Months ended September 30, 2004
-------------------------------------
                                                                       Income               Shares                 Per Share
                                                                     (numerator)        (denominator)                Amount
                                                                     -----------        -------------              ---------
<S>                                                                    <C>                 <C>                      <C>

Basic earnings per share
       Net income available to common stockholders                      $1,430              4,957,752                $ 0.29
Effect of Dilutive Securities
       Options to purchase common stock                                     --                187,117                 (0.01)
                                                                         -----              ---------                 -----
Diluted earnings per share
       Net income available to common stockholders                      $1,430              5,144,869                $ 0.28
                                                                         =====              =========                 =====

There were no anti-dilutive weighted shares excluded from this computation
because the average market price of common shares was greater than the option
exercise price.
</TABLE>

<TABLE>
<CAPTION>

Year to Date September 30, 2004
-------------------------------
                                                                       Income              Shares                 Per Share
                                                                     (numerator)        (denominator)               Amount
                                                                     -----------        -------------             ----------
<S>                                                                    <C>                 <C>                      <C>
Basic earnings per share
       Net income available to common stockholders                      $4,441              4,970,455                $ 0.89
Effect of Dilutive Securities
       Options to purchase common stock                                     --                194,154                 (0.03)
                                                                         -----              ---------                 -----
Diluted earnings per share
       Net income available to common stockholders                      $4,441              5,164,609                $ 0.86
                                                                         =====              =========                 =====

There were no anti-dilutive weighted shares excluded from this computation
because the average market price of common shares was greater than the option
exercise price.
</TABLE>

3.       COMPREHENSIVE INCOME

     Components of comprehensive income are presented in the following chart:

<TABLE>
<CAPTION>

                                                                    Three Months Ended               Nine Months Ended
                                                                        September 30,                    September 30,
                                                                -------------------------          -----------------------
                                                                   2005            2004               2005           2004
                                                                ---------        --------          ---------       -------
<S>                                                            <C>               <C>              <C>             <C>

Unrealized gains on securities:
       Unrealized gains (losses) arising in period               $  (991)         $ 1,558           $ (2,038)      $   417
       Net unrealized gains (losses)                                   2               17                (58)           70
                                                                  ------           ------            --------       ------
Other comprehensive income before taxes                             (989)           1,575             (2,096)          487
Income tax expense                                                   251              400                532            88
                                                                  ------           ------            -------        ------
Other comprehensive income (losses)                                 (738)           1,975             (1,564)          575
Net Income                                                         1,843            1,430              3,933         4,441
                                                                  ------           ------            -------        ------
Comprehensive income                                             $ 1,105          $ 3,405           $  2,369       $ 5,016
                                                                  ======           ======            =======        ======
</TABLE>

4.       SUBORDINATED DEBENTURES

         Management has  determined  that First Chester County Capital Trust I &
II qualify as  variable  interest  entities  under  FASB  Interpretation  Number
("FIN")  46(R),  as revised.  During 2002 and 2003  respectively,  First Chester
County Capital Trust I & II issued mandatorily  redeemable  preferred securities
to investors and loaned the proceeds

                                       9
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                                   (UNAUDITED)

to the  Corporation.  First Chester  County Capital Trust I & II are included in
the Corporation's  consolidated balance sheet and statements of income as of and
for the year ended December 31, 2003, in accordance  with FIN 46.  Subsequent to
the   issuance  of  FIN  46  in  January   2003,   the  FASB  issued  a  revised
interpretation,  FIN 46(R)  "Consolidation of Variable  Interest  Entities," the
provisions  of which were  required to be applied to certain  variable  interest
entities by March 31, 2004. The  Corporation  adopted the  provisions  under the
revised  interpretation  in the first quarter of 2004 and  deconsolidated  First
Chester  County  Capital  Trust I and II. The  deconsolidation  resulted  in the
Corporation's  investment  in the  common  securities  of First  Chester  County
Capital Trust I & II being included in other assets and a corresponding increase
in outstanding  debt of $465 thousand.  In addition,  the income received on the
Corporation's  common  securities  investment is included in other  income.  The
adoption  of FIN  46(R)  did not have a  material  impact  on the  Corporation's
financial position or results of operations.  In March 2005, the Federal Reserve
Board  adopted a final rule that would  continue to allow the inclusion of trust
preferred securities in Tier 1 capital, but with stricter quantitative limits in
some circumstances.  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 1 capital elements, net of goodwill for
non-internationally  active banks. The amount of trust preferred  securities and
certain  other  elements  in  excess of the limit  could be  included  in Tier 2
capital,  subject to restrictions.  Based on the final rule, the Company expects
that all of its $15.5 million in trust preferred  securities will continue to be
included in Tier 1 capital as it presently is.

5.       STOCK-BASED COMPENSATION

         At September 30, 2005, the  Corporation  had one  stock-based  employee
compensation plan. The Corporation  accounts for that plan under the recognition
and measurement principles of APB 25, "Accounting for Stock Issued to Employees"
and  related  interpretations.  No  stock-based  employee  compensation  cost is
reflected in net income,  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.

         The following table provides the disclosures  required by SFAS No. 148,
"Accounting   for  Stock-Based   Compensation-Transition   and  Disclosure"  and
illustrates  the effect on net income and earnings per share if the  Corporation
had applied the fair value recognition  provisions of SFAS No. 123,  "Accounting
for Stock-Based Compensation" to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                                          Three Months Ended               Nine Months Ended
                                                                             September  30,                   September 30,
                                                                         ---------------------           --------------------
                                                                             2005        2004              2005         2004
                                                                             ----        ----              ----         ----
        <S>                                                                 <C>         <C>               <C>          <C>

         Net income (in thousands)      As reported                         $1,843      $1,430            $3,933       $4,441
         Stock-based compensation costs determined
           under fair value method for all awards                                -         (17)                -          (51)
                                                                             -----       -----             -----        -----
                                            Pro forma net income            $1,843      $1,413            $3,933       $4,390

         Earnings per share (Basic)      As reported                        $ 0.36      $ 0.32            $ 0.77       $ 0.99
                                            Pro forma                       $ 0.36      $ 0.32            $ 0.77       $ 0.98
         Earnings per share (Diluted)   As reported                         $ 0.36      $ 0.31            $ 0.77       $ 0.95
                                            Pro forma                       $ 0.35      $ 0.31            $ 0.75       $ 0.94
</TABLE>

                                       10
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                                   (UNAUDITED)

FASB Statement No. 123 (revised 2004), Share-Based Payment ("(Statement 123(R)")
addresses  the  accounting  for  share-based  payment  transactions  in which an
enterprise  receives employee services in exchange for (a) equity instruments of
the  enterprise  or (b)  liabilities  that are  based  on the fair  value of the
enterprise's  equity  instruments or that may be settled by the issuance of such
equity  instruments.  Statement  123(R)  requires  an  entity to  recognize  the
grant-date  fair-value  of stock  options  and other  equity-based  Compensation
issued to employees in the income statement. Statement 123(R) generally requires
that an entity account for those transactions using the fair-value-based  method
and  eliminates  an  entity's  ability to account for  share-based  compensation
transactions  using the intrinsic  value method of accounting in APB Opinion No.
25,  Accounting  for  Stock  Issued to  Employees,  which  was  permitted  under
Statement  123 as  originally  issued.  Statement  123(R)  requires  entities to
disclose  information about the nature of the share-based  payment  transactions
and the effects of those  transactions  on the financial  statements.  Statement
123(R) is effective for the Company  beginning January 1, 2006. The Company must
use either the modified  prospective  or the modified  retrospective  transition
method.  Early  adoption of Statement  123(R) for interim or annual  periods for
which financial statements or interim reports have not been issued is permitted.
Management is evaluating  Statement  123(R) and has not yet  determined its full
impact on the consolidated financial statements of the Company.

6.       EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

         Earnings per share are  calculated  using the weighted  average  shares
outstanding  during the year. On April 19, 2005, the Board of Directors declared
a 10% stock dividend to  stockholders  of record on May 2, 2005, paid on May 19,
2005. Par value remained at $1.00 per share. The stock dividend  resulted in the
issuance  of  480,149  additional  shares of common  stock from  authorized  but
unissued shares. Accordingly,  earnings per share, cash dividends per share, and
weighted  average  shares of common  stock  outstanding  have been  restated  to
reflect the stock dividend.

7.       NEW ACCOUNTING PRONOUNCEMENTS

         FASB    recently    issued   FSP   FAS   115-1,    "The    Meaning   of
Other-Than-Temporary  Impairment and Its  application  to Certain  Investments,"
that will supersede EITF 03-1, "The Meaning of  Other-Than-Temporary  Impairment
and Its Application to Certain  Investments," and EITF Topic D-44,  "Recognition
of  Other-Than-Temporary  Impairment  upon the Planned Sale of a Security  Whose
Cost Exceeds Fair Value." The final FSP will replace the guidance in  paragraphs
10-18  of EITF  Issue  03-1"  (which  had  been  deferred  by FSP  EITF  03-1-1,
"Effective  Date of  Paragraphs  10-20 of EITF Issue No.  03-1,  'The Meaning of
Other-Than-Temporary  Impairment and Its  Application  to Certain  Investments")
with references to existing  other-than-temporary  impairment guidance,  such as
Statement 115, Accounting for Certain Investments in Debt and Equity Securities,
Staff  Accounting  Bulletin 59,  Accounting  for  Noncurrent  Marketable  Equity
Securities,  and Opinion 18, The Equity Method of Accounting for  Investments in
Common  Stock.  FSP FAS 115-1 will codify the  guidance  set forth in EITF Topic
D-44 and clarify that an investor  should  recognize an impairment loss no later
than when the impairment is considered other than temporary,  even if a decision
to  sell  has  not  been   made.   FSP  FAS   115-1   will  be   effective   for
other-than-temporary  impairment  analyses  conducted in periods beginning after
September  15,  2005.  FASB  approved  the proposed FSP subject to a vote on the
final  draft.  Management  has  evaluated  the effects of this rule and does not
anticipate a material impact.

                                       11
<PAGE>

                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

                                   (UNAUDITED)

         FASB  recently  issued  Statement  154,  "Accounting  Changes and Error
Corrections-a  replacement  of APB Opinion No. 20 and FASB  Statement No. 3", as
part of its short-term  convergence  project with the  International  Accounting
Standards Board. Statement 154 requires that all voluntary changes in accounting
principles and changes  required by a new accounting  pronouncement  that do not
include  specific  transition  provisions  be applied  retrospectively  to prior
periods' financial statements,  unless it is impracticable to do so. Opinion 20,
"Accounting  Changes,"  required  that  most  voluntary  changes  in  accounting
principle be recognized by including  the  cumulative  effect of changing to the
new  accounting  principle  as a  component  of net  income in the period of the
change.  If it is impracticable to determine the  period-specific  effects of an
accounting  change on one or more individual  prior periods  presented,  but the
cumulative  effect to all prior periods can be  determined,  the new  accounting
principle  should  be  applied  to assets  and  liabilities  balances  as of the
beginning  of  the  earliest  period  for  which  retrospective  application  is
practicable.  In  addition,  a  corresponding  adjustment  should be made to the
opening balance of retained  earnings for that period rather than being reported
in an income  statement.  If it is  impracticable  to determine  the  cumulative
effect of applying a change in accounting principle to any prior period, the new
accounting principle should be applied as if it were adopted  prospectively from
the  earliest  date  practicable.  Statement  154  also  differentiates  between
retrospective application and restatement.  Retrospective application is defined
as the  application  of a different  accounting  principle  to prior  accounting
periods  as if that  principle  had  always  been used or as the  adjustment  of
previously  issued  financial  statements  to reflect a change in the  reporting
entity. In contrast, restatement is defined as the revision of previously issued
financial  statements to reflect the  correction  of an error.  Statement 154 is
effective prospectively for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005. Earlier application is permitted
for accounting  changes and corrections of errors made in fiscal years beginning
after the date the  Statement  was issued  (May  2005).  Statement  154 does not
change the  transition  provisions  of any existing  accounting  pronouncements,
including  those that are in a transition  phase as of the effective date of the
Statement.  The Corporation is currently  evaluating the possible impact of this
statement.

                                       12
<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,  The
First  National Bank of Chester  County (the "Bank"),  FNB Property  Management,
LLC,  First  National  Insurance  Services  (trading  as First  National  Wealth
Advisors),  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.

                             RISKS AND UNCERTAINTIES

         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. The risks and uncertainties
noted below, among others,  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.

         These risks and uncertainties include, but are not limited to, the
following:

         o  loan growth  and/or loan  margins may be less than  expected  due to
            competitive  pressures in the banking industry and/or changes in the
            interest rate environment;

         o  general economic conditions in the Corporation's  market area may be
            less  favorable  than expected  resulting in, among other things,  a
            deterioration  in credit  quality  causing  increased  loan  losses,
            increased competition for deposits, and increased cost of deposits;

         o  loans  may grow more  quickly  than  deposit  growth  requiring  the
            Corporation to obtain higher cost sources of funds;

         o  costs   of   the   Corporation's   training   initiatives,   product
            development, investment in building its Management team, initiatives
            to  improve  efficiency  and  accessibility  to  customers,   branch
            expansion, new technology, new marketing initiatives,  and operating
            systems may exceed expectations;

         o  competition  among financial and  non-financial  institutions in the
            Corporation's  market area that may result in customer  turnover and
            lower interest rate margins;

         o  changes in the regulatory environment,  securities markets,  general
            business  conditions and inflation may adversely affect loan demand,
            credit quality,  consumer spending and saving habits,  interest rate
            margins, FDIC assessments and operating expenses;

         o  changes  in  interest  rates may  affect  customer  loan  demand and
            payment habits;

         o  changes in demographics  may affect the benefits and costs of branch
            locations;

         o  changes  in the value of  securities  and  investments  managed  for
            others may affect the growth level of the Corporation's non-interest
            income;

         o  changes  in the  credit-worthiness  of our  borrowers,  the value of
            collateral  securing our loans and leases or other aspects of credit
            quality,  may affect the amount we need to provide for possible loan
            losses; and

         o  our ability to manage the risks involved in the foregoing.

                                       13
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

         These risks and uncertainties are all difficult to predict and most are
beyond the control of the Corporation's Management.

         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.

                                       14
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

              CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

         The accounting and reporting policies of the Corporation conform to the
accounting  principals  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
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.

                                  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

         The Corporation's profitability is highly dependent on its net interest
income.  The components  that drive net interest  income are the average amounts
outstanding of interest-earning  assets and  interest-bearing  liabilities along
with interest rates earned or paid on rate sensitive assets and liabilities. The
Corporation  manages  interest  rate  exposure by  attempting  to balance  asset
maturities  and  liability   maturities  within  parameters   determined  to  by
acceptable by Management.  In addition to managing  interest rate exposure,  the
Corporation  also considers the credit risk,  prepayment risk and extension risk
of certain  assets.  Based on the  current  market  interest  rate  environment,
maturities of assets and liabilities,  demand for new loans and leases, costs of
attracting deposits to fund loan growth, and continued competition for deposits,
loans and leases, Management anticipates continued pressure on the Corporation's
net interest income.

         Net income for the three-month period ended September 30, 2005 was $1.8
million, an increase of $413 thousand or 28.9% from $1.4 million for the same
period in 2004. Net income for the nine-month period ended September 30, 2005
was $3.9 million, a decrease of $508 thousand or 11.4% from $4.4 million for the
same period in 2004. Basic earnings per share was $0.36 and $0.77 for the three
and nine-month periods ended September 30, 2005, respectively, compared to $0.29
and $0.89 for the same periods in 2004. Cash dividends declared during 2005 were
$0.13 and $0.40 per share for the three and nine-month periods compared to $0.12
per share and $0.41 per share for the three and nine-month periods ended
September 30, 2004.

                                       15
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

         The increase in earnings for the  three-month  period can be attributed
primarily to a $187 thousand or 8.9% increase in total  non-interest  income,  a
$143 thousand or 31.5% decrease in the provision for loan losses, a $54 thousand
or 0.72% decrease in non-interest  expense, and a $58 thousand or 0.75% (non-tax
adjusted) increase in net interest income. The decrease in the nine-month period
can be attributed to a $1.5 million or 6.8% increase in non-interest expense, an
$512 thousand  increase in the provision for loan loss,  and a decrease of a $83
thousand in  non-interest  income,  partially  offset by a $1.1  million or 5.2%
(non-tax  adjusted)  increase in net interest income.  The various components of
net income for both periods are discussed in detail below.

The specific components of net interest income, non-interest income and expenses
are discussed in detail on the following pages.

<TABLE>
<CAPTION>

                                                                  Three Months Ended                  Nine Months Ended
                                                                      September 30,                      September 30,
                                                               ---------------------------        --------------------------
                                                                 2005               2004              2005            2004
                                                               -------            --------        ---------         --------
          <S>                                                 <C>                <C>               <C>             <C>
           SELECTED RATIOS
           Return on Average Assets                              0.87%              0.72%             0.64%           0.80%
           Return on Average Equity                             12.96%             10.85%             9.32%          11.22%
           Net Interest Margin                                   4.00%              4.16%             4.05%           4.18%
           Earnings Retained                                    64.08%             56.50%            49.83%          57.73%
           Dividend Payout Ratio                                35.92%             43.50%            50.17%          42.27%
           Book Value Per Share                                $11.10             $10.75            $11.10          $10.75
</TABLE>

         The "Consolidated Average Balance Sheet" on pages 20 and 21 may assist
the reader in understanding the following discussion.

                               NET INTEREST INCOME

         Net  interest  income  is the  difference  between  interest  income on
interest-earning  assets and interest expense on  interest-bearing  liabilities.
Net  interest  income for the  three-months  ended  September  30, 2005 on a tax
equivalent  basis,  increased 0.5% to $8.0 million from $7.9 million in the same
period last year.  For the  nine-months  ended  September 30, 2005, net interest
income  increased  5.2% to $23.5  million from $22.4  million in the same period
last year. The increase in tax  equivalent net interest  income for both periods
is  primarily  due to increases  in average  interest-earning  assets and higher
average  yields earned on  interest-bearing  assets,  offset by increases in the
average  interest  paid on  interest-earning  assets and an  increase in average
interest-bearing liabilities, as discussed more fully below.

         Average  interest-earning  assets increased approximately $48.1 million
or 6.4% to $796.1  million for the  three-months  ended  September 30, 2005 from
$747.9 million in the same period last year. For the nine-months ended September
30, 2005, average  interest-earning assets increased approximately $74.4 million
or 10.6% to $773.7 million from $699.3 million in the same period last year. The
increase in average  interest-earning  assets for the  three-month  period ended
September  30,  2005 was the  result  of a 10.4% or $62.3  million  increase  in
average total loans and a 36.6% or $8.6 million  increase in the average federal
funds sold and other overnight investments, partially offset by a 18.1% or $23.1
million decrease in average  investment  security  balances.  For the nine-month
period ended September 30, 2005, the increase was the result of a 16.4% or $90.9
million  increase in average  total loans and 24.5% or $2.9 million  increase in
average federal funds sold and other overnight investments,  partially offset by
a 14.8% or $19.5 million decrease in average investment securities.


                                       16
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

         Average  interest-bearing  liabilities  increased  approximately  $44.1
million or 7.2% to $654.0 million for the three-months ended September 30, 2005,
from  $610.0  million in the same period last year.  For the  nine-months  ended
September 30, 2005, average interest-bearing liabilities increased $68.4 million
or 12.2% to $630.9 million from $562.5 million in the same period last year. The
increase in average interest-bearing  liabilities for the three-month period was
the result of a $43.0 million or 8.1% increase in interest-bearing  deposits and
a $1.1  million or 1.6%  increase in FHLB  advances  and other  borrowings.  The
increase in average  interest-bearing  liabilities for the nine-month period was
the result of a $58.9 million or 12.1% increase in interest-bearing deposits and
a $9.5 million or 15.7% increase in FHLB advances and other borrowings.

         The average net yield on  interest-earning  assets, on a tax equivalent
basis for the  three-months  ended September 30, 2005 decreased 5.4% or 23 basis
points  (one basis  point is equal to 1/100 of a percent) to 4.00% from 4.23% in
the same period last year. For the nine-month  period ended  September 30, 2005,
net yield on interest  earning assets decreased 4.9% or 21 basis points to 4.05%
from 4.26% in the same  period in 2004.  The average  yield on  interest-earning
assets for the three-month period ended September 30, 2005 increased 10.3% or 55
basis  points  to 5.33%  from  5.26%  in the  same  period  last  year.  For the
nine-month  period ended September 30, 2005,  average yield on  interest-earning
assets increased 6.6% or 35 basis points to 5.68% compared to 5.33% for the same
period in 2004. The average yield paid on  interest-bearing  liabilities for the
three-month  period ended  September 30, 2005 increased 70.4% or 95 basis points
to 2.30%  compared  to 1.35%  for the same  period in 2004.  For the  nine-month
period  ended  September  30,  2005,  average  yield  paid  on  interest-bearing
liabilities  increased  49.6% or 66 basis points to 1.99%  compared to 1.33% for
the  same  period  in  2004.  The  larger  increase  in  average  yield  paid on
interest-bearing  liabilities  as compared to the increase in the average  yield
paid on  interest-earning  assets  is  attributable  to  continuing  competitive
pressures in an  increasing  interest rate  environment  coupled with the mix of
floating and fixed rate  obligations  and  maturities of fixed rate  obligations
comprising our  interest-earning  assets and  interest-bearing  liabilities.  As
discussed more fully under the heading  "Liquidity  Management and Interest Rate
Sensitivity",  Management  monitors and manages the interest rate sensitivity of
our assets and  liabilities  within certain  acceptable  parameters,  but during
periods of rising interest rates,  our net interest income may be squeezed if we
are unable to  increase  the  average  yield on our  interest-earning  assets as
quickly as the average  yield on  interest-bearing  liabilities  increases.  The
foregoing  factors  will  likely  continue to put  pressure on our  net-interest
margin, and may adversely impact net-interest income, in future time periods.

               AVERAGE INTEREST RATES (ON A TAX EQUIVALENT BASIS)
<TABLE>
<CAPTION>

                                                                    Three Months Ended              Nine Months Ended
                                                                        September 30,                  September 30,
                                                                 -----------------------            --------------------
                                                                 2005               2004             2005           2004
                                                                 ----               ----            ------          ----
           YIELD ON
           --------
               <S>                                                   <C>                <C>               <C>           <C>
           Interest-Earning Assets                               5.88%              5.33%             5.68%         5.33%
           Interest Bearing Liabilities                          2.30%              1.35%             1.99%         1.33%
                                                                 ----               ----              ----          ----
           Net Interest Margin                                   3.58%              3.98%             3.69%         4.00%
           Contribution of Interest-Free Funds                   0.42%              0.25%             0.36%         0.26%
                                                                 ----               ----              ----          ----
           Net Yield on Interest-Earning Assets                  4.00%              4.23%             4.05%         4.26%
                                                                 ====               ====              ====          ====
</TABLE>

      INTEREST INCOME ON FEDERAL FUNDS SOLD AND OTHER OVERNIGHT INVESTMENTS

         Interest income on Federal Funds sold and other  overnight  investments
for the three and nine-month  periods ended  September 30, 2005,  increased $189
thousand to $272 thousand and $346 thousand,  respectively, when compared to the
same periods in 2004. For the three-month  period, the increase in Federal Funds
sold and overnight

                                       17
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

investments can be attributed to a 36.6% or $8.6 million increase in the average
balance of  Federal  Funds sold and other  overnight  investments,  as well as a
140.1% or 199 basis point increase on the yield earned on these investments. For
the nine-month  period,  the increase in Federal Funds sold and other  overnight
investments can be attributed to a 24.5% or $2.9 million increase in the average
balance of Federal Funds sold and other overnight investments,  partially offset
by a  147.7%  or  189  basis  point  increase  on  the  yield  earned  on  these
investments.

                    INTEREST INCOME ON INVESTMENT SECURITIES

         On a tax equivalent  basis,  interest  income on investment  securities
decreased 17.7% to $1.1 million for the  three-month  period ended September 30,
2005,  and 15.1% to $3.6 million for the nine-month  period ended  September 30,
2005, respectively,  when compared to the same periods in 2004. The decrease for
the three-month  period is primarily due to a 18.1% or $23.1 million decrease in
average  investment  balances,  partially  offset  by a 0.5%  or 2  basis  point
increase on rates earned on such  investments.  The decrease for the  nine-month
period  ended  September  30,  2005 is the  result  of a 14.8% or $19.5  million
decrease in average investment balances, and a 0.2% or 1 basis point decrease on
rates earned on such investments.

                       INTEREST INCOME ON LOANS AND LEASES

         Interest  income  on  loans  and  leases,  on a tax  equivalent  basis,
generated by the Corporation's loan portfolio increased 21.0% and 22.7% to $10.3
million and $29.0 million for the three and nine-month  periods ended  September
30, 2005,  compared to the same periods in 2004,  respectively.  The increase in
interest  income for the  three-month  period is the direct result of a 10.4% or
$62.3 million  increase in the average balance of loans and leases and a 9.6% or
55 basis point  increase on the rates earned on the  portfolio.  The increase in
interest  income for the  nine-month  period is the direct  result of a 16.4% or
$90.9 million  increase in the average balance of loans and leases and a 5.5% or
31 basis point increase on the rates earned on the portfolio.

                      INTEREST EXPENSE ON DEPOSIT ACCOUNTS

         Interest expense on deposit accounts increased 106.6% and 81.6% for the
three and nine-month  periods ended  September 30, 2005 to $2.9 million and $6.8
million, compared to for the same periods in 2004, respectively. The increase in
the  three-month  period  is the  direct  result  of a 90.5% or 95  basis  point
increase  paid on these  deposits  and a 8.1% or $43.0  million  increase in the
average  balance of interest  bearing  deposits.  The increase in the nine-month
period  is  the  direct  result  of  a  12.1%  or  $58.9  million   increase  in
interest-bearing  deposits and a 62.1% or 64 basis point  increase paid on these
deposits.

             INTEREST EXPENSE ON FHLB ADVANCES AND OTHER BORROWINGS

         Interest expense on borrowings increased $150 thousand to $639 thousand
for the  three-month  period ended September 30, 2005 from $489 thousand for the
same  period in 2004.  The  increase  is the  direct  result  of a $1.1  million
increase in the average balance of such borrowings and a 28.7% or 84 basis point
increase in rates paid on these  borrowings  for the  three-month  period ending
September 30, 2005 when compared to the same period last year.  Interest expense
on borrowings  increased $563 thousand to $1.9 million for the nine-month period
ended  September  30, 2005 from $1.3  million  for the same period in 2004.  The
increase is a direct  result of a $9.5 million or 15.7%  increase in the average
balance of  borrowings  and a 23.5% or 68 basis point  increase on rates paid on
borrowings for the nine-month period ended September 30, 2005.

                                       18
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

                   INTEREST EXPENSE ON SUBORDINATED DEBENTURES

         Interest expense on subordinated  debentures  increased $77 thousand to
$264  thousand for the  three-month  period ended  September  30, 2005 from $187
thousand  for the  same  period  last  year.  For the  nine-month  period  ended
September 30, 2005, interest expense on subordinated  debentures  increased $204
thousand  to $524 from $728  thousand  as compared to the same period last year.
The interest expense associated with these subordinated  debentures reflects the
adjustable  interest rate associated with these  debentures which is tied to the
three-month  LIBOR (London  Interbank Offered Rate). As interest rates rise, net
income will be negatively  affected as the interest  rate on these  subordinated
debentures reprice.

                       PROVISION FOR LOAN AND LEASE LOSSES

         During the three and nine-month  periods ended  September 30, 2005, the
Corporation  recorded a provision for loan and lease losses of $311 thousand and
$1.3 million, respectively, compared to an $454 thousand and a $810 thousand for
the same periods in 2004. The allowance for loan losses as a percentage of total
loans was 1.28% at September 30, 2005,  1.15% at September 30, 2004 and 1.15% at
December 31, 2004, respectively.  See the section titled "Allowance For Loan and
Lease Losses" for additional discussion.

                               NON-INTEREST INCOME

         Total  non-interest  income  increased  8.9%  to $2.3  million  for the
three-month  period ended September 30, 2005 when compared to the same period in
2004. For the nine- month period ended  September 30, 2005,  total  non-interest
income  decreased 1.2% to $6.7 million when compared to the same period in 2004.
The various components of non-interest income are discussed below.

         The largest  component of  non-interest  income is Trust and Investment
Services  revenue,  which  increased  1.2% to $844 thousand for the  three-month
period ended  September 30, 2005, when compared to the same periods in 2004. For
the nine-month  period ended September 30, 2005,  Trust and Investment  Services
income  decreased 8.6% or $227  thousand,  when compared to the same period last
year.  The decline is primarily due to lower estate fee income earned in 2005 as
compared to 2004.

         Service charges on deposit accounts  decreased  approximately  11.5% to
$483  thousand for the  three-months  ended  September 30, 2005 compared to $546
thousand for the same period in 2004. For the nine-month  period ended September
30, 2005,  service  charges on deposit  accounts  decreased 9.5% to $1.4 million
when compared to the same period in 2004. To remain competitive and increase the
core deposit base, the Corporation  introduced a "Free Checking"  product during
the first  quarter of this year which  contributed  to the  decrease  in service
charges and will impact this component of  non-interest  income as some existing
accounts on which we previously  collected  service charges may move to this new
product.

         For  the  three-month  period  ended  September  30,  2005,  investment
security gains  decreased $19 thousand from a $17 thousand gain to a $2 thousand
loss, when compared to the same period in 2004. For the nine-month  period ended
September 30, 2005,  investment security gains decreased $12 thousand from a $70
thousand gain to a $58 thousand gain,  when compared to the same period in 2004.
The gains in 2004 were realized as a result of normal portfolio management.

                                       19
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

         The  Corporation  has operating  lease  agreements  with several of our
customers;  the income on these leases is classified as "Rental Income".  Rental
income on operating lease agreements for the three-month  period ended September
30, 2005  increased  13.2% to $257  thousand from $227 thousand when compared to
the same period in 2004.  Rental income on operating  lease  agreements  for the
nine-month  period ended  September 30, 2005,  increased  19.5% to $729 thousand
from  $610  thousand  when  compared  to the same  period in 2004.  See  related
depreciation expense in the non-interest expense section for more details.

         There were no gains / losses from the sale of premises and OREO for the
three-month  period ended September 30, 2005,  compared to $149 thousand loss in
the same period in 2004.  For the  nine-month  period ended  September  30, 2005
there was $7 thousand  loss on the sale of premises and OREO  compared to a $101
thousand loss for the same period in 2004.

         Gains generated on the sale of residential  mortgages for the three and
nine-month  period  ended  September  30, 2005  increased  $25  thousand and $29
thousand  from $93 thousand and $283 thousand to $118 thousand and $312 thousand
compared to the same period last year, respectively. The increases are primarily
due to higher volumes of  originations  and sales of residential  mortgages when
compared to the same periods last year.

         Other  non-interest  income  increased  $55  thousand  or 10.4% to $585
thousand for the three-months ended September 30, 2005 compared to $530 thousand
for the same period in 2004. For the nine-month period ended September 30, 2005,
other  non-interest  income  increased $99 thousand or 5.9% when compared to the
same period in 2004. Other  non-interest  income includes ATM surcharge revenue,
merchant income,  safe deposit box income,  loan fee income,  retail mutual fund
income,   rental  income,   management  fees,  notary  fee  income,   and  other
miscellaneous income.

                              NON-INTEREST EXPENSE

         Total  non-interest  expense for the three-month period ended September
30, 2005  decreased  0.72% or $54 thousand  when  compared to the same period in
2004. Total  non-interest  expense for the nine-month period ended September 30,
2005  increased  6.8% or $1.5 million when  compared to the same period in 2004.
The various components of non-interest expense are discussed below.

         Employee salaries and benefits  decreased 7.0% or $284 thousand for the
three-month period ended September 30, 2005 compared to the same period in 2004.
Employee  salaries  and  benefits  increased  0.31%  or  $37  thousand  for  the
nine-month  period ended  September 30, 2005 when compared to the same period in
2004.  In June of 2005,  approximately  5% of our  workforce  was  reduced.  The
severance packages and career transitioning services provided decreased earnings
for the nine-month period by approximately $188 thousand.

         Net occupancy,  equipment,  and data processing  expense increased 4.9%
and 4.8% to $1.4 million and $4.2 million for the three and  nine-month  periods
ended September 30, 2005, compared to the same periods last year,  respectively.
The increases can be  attributed  to the increased  infrastructure  to build and
support new and existing branch sites.

         Depreciation  on  operating  leases  increased  13.6% and 19.5% to $226
thousand and $638 thousand for the three and nine-month  periods ended September
30,  2005,  compared  to  the  same  periods  last  year,   respectively.   This
depreciation expense is the result of operating lease agreements the Corporation
has with several customers. The income associated with these operating leases is
classified as Rental Income.


                                       20
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

         Professional  services  expense  increased  27.3%  and  78.6%  to  $629
thousand and $2.0 million for the three and nine-month  periods ended  September
30, 2005 compared to the same periods in 2004,  respectively.  The increases are
the result of increased consultant, accounting, and legal fees. Much of the fees
are  attributed to the cost of complying  with the Sarbanes  Oxley Act and other
consulting  fees for demographic  and branch site analyses,  benefit plans,  and
management planning.

         Other non-interest  expense increased 4.2% and 6.8% to $1.3 million and
$3.9  million for the three and  nine-month  periods  ended  September  30, 2005
compared to the same periods last year, respectively. Other non-interest expense
includes  marketing  expenses,  annual  meeting and reports,  trust  processing,
postage,  directors' costs, bank telephone,  dues and subscriptions,  travel and
mileage,  operating  supplies  and adjusted  loan costs.  Increases in marketing
expenses from the introduction of a new corporate mark tag-line, and advertising
campaign were the largest  components of the increases in  non-interest  expense
for both periods.  It is expected that this  marketing  expense will continue to
increase as more parts of the campaign are rolled out and expanded.

         In the  fourth  quarter of 2004,  the  Corporation  opened a  temporary
modular  facility in the Oxford area.  This  facility is equipped to meet all of
our  customer's  needs and will be replaced  by a newly  designed  full  service
branch  in the  fourth  quarter  of  2005  or  early  first  quarter  2006.  The
Corporation  anticipates  an increase in deposit  base as we open new  branches.
This and other new branch sites will have a direct impact on all the  components
of non-interest  expense.  It is anticipated that the increases in costs will be
offset over time by an  increase in net  interest  and fee income  generated  by
business in the new marketing areas.

                                       21
<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 SEPTEMBER 30,
<TABLE>
<CAPTION>

(Dollars in thousands)                                               2005                                     2004
                                                     --------------------------------          -------------------------------
                                                       Daily                                     Daily
                                                      Average                                   Average
                                                      Balance      Interest     Rate            Balance      Interest    Rate
                                                      -------      --------     ----            -------      --------    ----
<S>                                                 <C>           <C>          <C>            <C>           <C>         <C>
ASSETS
Federal funds sold and other overnight investments    $ 31,948      $   272     3.41%          $ 23,388       $   83     1.42%
Interest bearing deposits in banks                         559            1     0.72%               300            -        -
Investment securities

    Taxable                                             88,810          956     4.31%           103,303        1,089     4.22%
    Tax-exempt (1)                                      15,247          152     3.98%            23,805          258     4.34%
                                                       -------       ------                     -------        -----
        Total investment securities                    104,057        1,108     4.26%           127,108        1,347     4.24%
                                                       -------       ------                     -------        -----
Loans (2)
    Taxable                                            644,016       10,095     6.27%           585,881        8,374     5.72%
    Tax-exempt (1)                                      15,474          236     6.10%            11,285          167     5.93%
                                                       -------       ------                     -------        -----
        Total loans                                    659,490       10,331     6.27%           597,166        8,541     5.72%
                                                       -------       ------                     -------        -----
        Total interest-earning assets                  796,054       11,712     5.88%           747,962        9,972     5.33%
Non-interest earning assets
    Allowance for possible loan losses                  (8,178)                                  (6,877)
    Cash and due from banks                             31,526                                   26,463
    Other assets                                        23,190                                   23,878
                                                       -------                                  -------
        Total assets                                  $842,592                                 $791,426
                                                       =======                                  =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Savings, NOWS & money market deposits                 $371,045       $1,179     1.27%          $415,526       $  710     0.68%
Certificates of deposits and other time                199,375        1,674     3.36%           112,284          671     2.39%
                                                       -------        -----                     -------        -----
   Total interest bearing deposits                     570,780        2,853     2.00%           527,810        1,381     1.05%
Junior subordinated debt                                15,465          264     6.83%            15,465          187     4.84%
Federal Home Loan Bank advances and
      other borrowings                                  67,804          639     3.77%            66,713          489     2.93%
                                                       -------        -----                     -------        -----

   Total interest bearing liabilities                  654,049        3,756     2.30%           609,988        2,057     1.35%
                                                       -------        -----                     -------        -----
Non-interest bearing liabilities
    Non-interest bearing demand deposits               126,717                                  124,024
    Other liabilities                                    5,949                                    4,651
                                                       -------                                  -------
        Total liabilities                              785,715                                  738,663
Stockholders' equity                                    56,877                                   52,763
                                                       -------                                  -------
        Total liabilities and stockholders' equity    $842,592                                 $791,426
                                                       =======                                  =======
Net interest income                                                  $7,956                                   $7,915
                                                                      =====                                    =====
Net yield on interest earning assets                                            4.00%                                    4.23%
                                                                                ====                                     ====
<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 penalty
    for 2005 and 2004
(2) Non-accruing loans are included in the average balance.
</FN>
</TABLE>

                                       22
<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
                         NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>

(Dollars in thousands)                                             2005                                     2004
                                                     --------------------------------         --------------------------------
                                                        Daily                                    Daily
                                                       Average                                  Average
                                                       Balance     Interest      Rate           Balance     Interest      Rate
                                                       -------     --------      ----           -------     --------      ----
<S>                                                  <C>           <C>          <C>           <C>           <C>         <C>
ASSETS
Federal funds sold and other overnight investments    $ 14,554      $   346      3.17%         $ 11,692      $   112     1.28%
Interest bearing deposits in banks                         641            4      0.83%              478            1     0.28%
Investment securities
Taxable                                                 93,058        2,927      4.19%          107,360        3,357     4.17%
    Tax-exempt (1)                                      19,128          623      4.34%           24,345          822     4.50%
                                                       -------       ------                     -------       ------
        Total investment securities                    112,186        3,550      4.22%          131,705        4,179     4.23%
                                                       -------       ------                     -------       ------
Loans (2)
    Taxable                                            632,181       28,377      5.98%          545,795       23,234     5.68%
    Tax-exempt (1)                                      14,129          657      6.20%            9,641          425     5.87%
                                                       -------       ------                     -------       ------
        Total loans                                    646,310       29,034      5.99%          555,436       23,659     5.68%
                                                       -------       ------                     -------       ------
        Total interest-earning assets                  773,691       32,934      5.68%          699,311       27,950     5.33%
Non-interest earning assets
    Allowance for possible loan losses                  (7,732)                                  (6,333)
    Cash and due from banks                             26,635                                   23,608
    Other assets                                        23,168                                   23,147
                                                       -------                                  -------
        Total assets                                  $815,762                                 $739,733
                                                       =======                                  =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Savings, NOWS & money market deposits                 $392,135      $ 3,356      1.14%         $375,414        1,724     0.61%
Certificates of deposits and other time                153,531        3,465      3.01%          111,350        2,033     2.43%
                                                       -------       ------                     -------       ------
Total interest bearing deposits                        545,666        6,821      1.67%          486,764        3,757     1.03%
Junior subordinated debt                                15,465          728      6.28%           15,465          524     4.52%
Federal Home Loan Bank advances and
     other borrowings                                   69,724        1,873      3.58%           60,270        1,310     2.90%
                                                       -------       ------                     -------       ------
   Total interest bearing liabilities                  630,855        9,422      1.99%          562,499        5,591     1.33%
                                                       -------       ------                     -------       ------
Non-interest bearing liabilities
    Non-interest bearing demand deposits               123,430                                  120,404
    Other liabilities                                    5,198                                    4,114
                                                       -------                                  -------
        Total liabilities                              759,483                                  687,017
Stockholders' equity                                    56,279                                   52,716
                                                       -------                                  -------
        Total liabilities and stockholders' equity    $815,762                                 $739,733
                                                       =======                                  =======
Net interest income                                                 $23,512                                  $22,359
                                                                     ======                                   ======
Net yield on interest earning assets                                             4.05%                                   4.26%
                                                                                 ====                                    ====

<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 penalty
    for 2005 and 2004.
(2) Non-accruing loans are included in the average balance.
</FN>
</TABLE>

                                       23
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

                             FDIC INSURANCE PREMIUMS

         Federal law currently requires that the FDIC increase  assessment rates
if the reserve ratio of the FDIC's Bank  Insurance Fund (BIF) were to fall below
1.25%.  Such increased  assessments  would be required to be designed to restore
the BIF  reserve  ratio to at least  1.25%  within  twelve  months.  At present,
Management  cannot be sure whether the BIF reserve  ratio will be above or below
the minimum required level or whether Congress will enact legislation that would
change the requirement that the FDIC increase assessment rates.  Management also
cannot  predict  at this  time what the  Bank's  assessment  for FDIC  insurance
premiums would be if the FDIC is required to increase  assessment rates in 2006,
because  that would be a function  of the FDIC's  analysis of what level of fees
would be necessary to bring the BIF into compliance.

                                  INCOME TAXES

         Income tax expense for the three and nine-month periods ended September
30, 2005 was $554 thousand and $1.4 million,  compared to $525 thousand and $1.8
million in the same periods last year.  This  represents  effective tax rates of
23.1% for the  three-month  period  and 26.1% for the  nine-month  period  ended
September 30, 2005. The effective tax rate for the three and nine-month  periods
ended September 30, 2004 were 26.9% and 29.0%, respectively.

               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 demand,  NOW, money market,  savings and certificates  less
than $100 thousand 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:

                                       24
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

                                DEPOSIT ANALYSIS
<TABLE>
<CAPTION>

(Dollars in thousands)                        September 30, 2005           December 31, 2004
                                     ---------------------------       --------------------------
                                      Average         Effective         Average         Effective     Dollar      Percentage
DEPOSIT TYPE                          Balance            Yield          Balance           Yield      Variance      Variance
------------                          -------         ----------       ---------        ---------    --------     ----------
<S>                                 <C>                 <C>            <C>               <C>        <C>            <C>

NOW Accounts                         $151,754            1.01%          $129,569          0.51%      $ 22,185        17.12%
Money Market                           28,572            1.22%            26,255          0.51%         2,317         8.82%
Statement Savings                      61,891            0.74%            65,682          0.56%        (3,791)      (5.77)%
Other Savings                           1,329            0.50%             1,370          0.51%           (41)      (2.99)%
CD's Less than $100,000               104,122            2.94%            85,873          2.46%        18,249        21.25%
                                      -------                            -------                      -------

Total Core Deposits                   347,668            1.56%           308,749          1.06%        38,919        12.61%

Non-Interest Bearing
Demand Deposit Accounts               115,702              --            125,074            --         (9,372)      (7.49)%
                                      -------                            -------                      -------

Total Core and Non-Interest
  Bearing Deposits                    463,370            1.17%           433,823          0.75%        29,547         6.81%
                                      -------                            -------                      -------

Tiered Savings                        148,589            1.43%           168,180          0.86%       (19,591)     (11.65)%
CD's Greater than $100,000             49,409            3.17%            25,966          2.28%        23,443        90.28%
                                      -------                            -------                      -------

Total Deposits                       $661,368            1.38%          $627,969          0.84%      $ 33,399         5.32%
                                      -------                            -------                      -------
</TABLE>

         The Bank, as a member of the FHLB, maintains several credit facilities.
During the three and nine-month  periods ending September 30, 2005, average FHLB
advances were approximately $67.8 million and $69.7 million,  respectively,  and
consisted of term  advances  representing  a  combination  of maturities in each
period.  The Bank  currently has a maximum  borrowing  capacity with the FHLB of
approximately  $190.6 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. FHLB advances increased significantly
during  the first and  second  quarter  of 2005 as they were used to  supplement
deposit growth to support strong loan growth.

         The goal of interest  rate  sensitivity  management  is to avoid widely
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
$217.1  million or 25.9% of total assets at September  30, 2005  compared with a
negative  $117.6  million or 14.2% of total  assets at September  30, 2004.  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 and 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 and manages interest
rate  risk as a regular  part of  corporate  operations  with the  intention  of
maintaining a net interest margin within an acceptable range.

                                       25
<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 SEPTEMBER 30, 2005
<TABLE>
<CAPTION>

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

ASSETS
    Federal Funds and other overnight
       investments sold                        $     25,600     $        --       $        --      $        --     $   25,600
    Investment securities                            24,833          52,360            23,878               --        101,071
    Interest bearing deposits in banks                  353              --                --               --            353
    Loans and leases                                257,675         294,012           113,044           (8,488)       656,243
    Cash and due from banks                              --              --                --           30,810         30,810
    Premises & equipment                                 --              --                --           13,797         13,797
    Other assets                                         --              --                --            9,347          9,347
                                                -----------      ----------        ----------       ----------      ---------
       Total assets                            $    308,461     $   346,372       $   136,922      $    45,466     $  837,221
                                                ===========      ==========        ==========       ==========      =========

LIABILITIES AND CAPITAL
    Interest bearing deposits                  $    496,369     $    51,795       $    13,343      $        --     $  561,507
    Non-interest bearing deposit                         --              --                --          127,752        127,752
    FHLB advances and other
       borrowings                                    13,524          53,966             2,445               --         69,935
    Junior Subordinated Debt                         15,465              --                --               --         15,465
    Other liabilities                                   228              --             5,312               --          5,540
    Capital                                             --               --                --           57,022         57,022
                                                -----------      ----------        ----------       ----------      ---------
       Total liabilities & capital             $    525,586     $   105,761       $    21,100      $   184,774     $  837,221
                                                ===========      ==========        ==========       ==========      =========
    Net interest rate
      sensitivity gap                          $  (217,125)     $   240,611       $   115,822      $  (139,308)    $       --
                                                ==========       ==========        ==========       ==========      =========
    Cumulative interest rate
      sensitivity gap                          $  (217,125)     $    23,486       $   139,308      $        --     $       --
                                                ==========       ==========        ==========       ==========      =========
    Cumulative interest rate
      sensitivity gap divided
      by total assets                               (25.9%)            2.8%             16.6%
                                                ===========      ==========        ==========
</TABLE>


                       ALLOWANCE FOR LOAN AND LEASE LOSSES

         The  allowance  for loan and lease losses is an amount that  Management
believes  will be adequate  to absorb  loan  losses on  existing  loans that may
become  uncollectible  based  upon  Management's  periodic  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.

                                       26
<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 LOSSES
                       AND COMPARISON OF LOANS OUTSTANDING
<TABLE>
<CAPTION>

                                                                         Three Months                       Nine Months
                                                                             Ended                             Ended
                                                                         September 30,                      September 30,
                                                                  --------------------------       --------------------------
(Dollars in thousands)                                                 2005           2004             2005            2004
                                                                       ----           ----             ----            ----
<S>                                                                <C>             <C>              <C>             <C>

Balance at beginning of period                                      $  8,004        $  6,626         $  7,213        $  5,864
                                                                     -------         -------          -------         -------

Provision charged to operating expense                                   311             454            1,322             810
                                                                     -------         -------          -------         -------

    Recoveries of loans previously charged-off                           225             127              396           1,024
    Loans charged-off                                                    (52)           (283)            (443)           (774)
                                                                     -------         -------          -------         -------

Net recoveries (loans charged-off)                                       173            (156)             (47)            250
                                                                     -------         -------          -------         -------

Balance at end of period                                            $  8,488        $  6,924         $  8,488        $  6,924
                                                                     =======         =======          =======         =======
Period-end loans outstanding                                        $664,731        $603,865         $664,731        $603,865
Average loans outstanding                                           $651,358        $597,166         $646,310        $555,436
Allowance for loan losses as a
    percentage of period-end loans outstanding                         1.28%           1.15%            1.28%           1.15%

Net charge-offs (recoveries) to average loans
    outstanding                                                      (0.03%)           0.03%            0.01%         (0.05%)
</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 assets are primarily collateralized by real estate and are in the
process of collection.  Non-performing  assets were $8.2 million,  $8.6 million,
and $3.0 million as of September 30, 2005,  December 31, 2004, and September 30,
2004, respectively.

         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 has
taken aggressive steps to control current and future credit quality issues.  The
following chart represents detailed information  regarding  non-performing loans
and leases.

                                       27
<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>

                                                                                       September 30,                December 31,
                                                                              -----------------------------         ------------

(Dollars in thousands)                                                          2005                  2004              2004
                                                                              --------              --------           ------

<S>                                                                          <C>                   <C>               <C>

Past due over 90 days and still accruing                                      $     --              $     69          $    --

Non-accrual loans                                                                8,204                 1,542            7,877
                                                                                ------               -------           ------

Total non-performing loans                                                       8,204                 1,661            7,877

Other real estate owned                                                             --                 1,365              757
                                                                                ------               -------           ------

Total non-performing assets                                                   $  8,204              $  3,026          $ 8,634
                                                                               =======               =======           ======

Non-performing loans as a percentage of period end loans                         1.23%                 0.28%            1.27%

Allowance for loan losses as a
   percentage of non-performing loans                                          103.46%               416.86%           91.57%

Non-performing assets as a percentage of
   total loans and other real estate owned                                       1.23%                 0.50%            1.40%

Allowance for possible loan losses as a percentage
   of non-performing assets                                                    103.46%               228.82%           83.54%
</TABLE>

         The allowance for loan losses as a percentage of  non-performing  loans
ratio  indicates  that the  allowance for loan losses is sufficient to cover the
principal of all  non-performing  loans at September 30, 2005. Other real estate
owned  ("OREO")  represents  residential  and  commercial  real  estate that had
secured  non-performing  loans that the Corporation 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.

                                 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.

         The Corporation examines commercial and non-residential  mortgage loans
on  non-accrual  status for  impairment.  The balance of impaired loans was $8.2
million,  $7.9  million,  and $1.5 million at September  30, 2005,  December 31,
2004, and September 30, 2004 respectively. The associated allowance for impaired
loans was $6 thousand,  $231  thousand and $149  thousand at September 30, 2005,
December 31, 2004 and September 30, 2004, respectively.

         For the three and nine-month periods ended September 30, 2005, activity
in the allowance for impaired loan losses include a provision of $6 thousand and
$343 thousand,  charge offs of $0 thousand and $119  thousand,  recoveries of $0
and $0  respectively.  Contractual  interest  amounted to $166  thousand for the
three-months  ended  September  30, 2005 and $482  thousand for the  nine-months
ended  September 30, 2005.  Cash collected on loans for the three and nine-month
periods   ended   September   30,  2005  was  $1.5  million  and  $1.9  million,
respectively, all of which was applied to principal.

                                       28
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

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

         For the three and nine-month periods ended September 30, 2004, activity
in the  allowance  for  impaired  loan losses  include a provision of $0 and $43
thousand,  charge  offs of $40  thousand  and $65  thousand,  respectively,  and
recoveries  of $0 and $0,  respectively.  Contractual  interest  amounted to $33
thousand for the three-months ended September 30, 2004 and $126 thousand for the
nine-months  ended September 30, 2004. Cash collected on loans for the three and
nine-month  periods ended September 30, 2004 was $47 thousand and $910 thousand,
respectively. The amount applied to principal was $47 thousand and $883 thousand
for the three and  nine-month  periods ended  September 30, 2004, and $0 and $27
thousand was applied to interest, respectively.

                                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 September 30, 2005,  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. The  Corporation's  Risk-Based  Capital  Ratios,  shown
below, have been computed in accordance with regulatory accounting policies.

         The decrease in the Corporation's  capital ratio from December 31, 2004
to September 30, 2005 is due to a variety of factors including unrealized losses
on  securities  held for sale and  increased  liabilities  to support  our asset
growth.

<TABLE>
<CAPTION>

                                                 September 30,                  December 31,
RISK-BASED                                -------------------------             ------------           "Well Capitalized"
CAPITAL RATIOS                             2005               2004                  2004                  Requirements
--------------                             ----               ----                  ----               ------------------

    Corporation
    -----------
<S>                                      <C>                <C>                   <C>                     <C>

Leverage Ratio                             8.64%              8.26%                 8.62%                      N/A
Tier I Capital Ratio                      10.68%             10.19%                10.80%                      N/A
Total Risk-Based Capital Ratio            11.76%             11.19%                11.91%                      N/A

       Bank
       ----

Leverage Ratio                             8.06%              8.18%                 8.11%                    5.00%
Tier I Capital Ratio                       9.75%             10.08%                10.16%                    6.00%
Total Risk-Based Capital Ratio            10.97%             11.16%                11.26%                   10.00%
</TABLE>

         The  Corporation  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.

                                       29
<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 2004 Annual Report
of the  Corporation,  filed as an exhibit  to its Form 10-K for the fiscal  year
ended  December  31,  2004  with  the  SEC  via  EDGAR.   Please  refer  to  the
"Management's   Discussion   and  Analysis"   section  on  pages  18-30  of  the
Corporation's 2004 Annual Report for additional 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  three  certifications  (the  "Section  302
Certifications"),  one by each of our Chief Executive  Officer (CEO),  President
and our Chief Financial Officer,  our principal executive and financial officers
(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.

As required by Rule  13a-15(b),  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 to provide  reasonable
assurance that the disclosure controls and procedures met their objectives as of
the end of the period covered by this Report.

Changes in internal control over financial reporting. As required by Rule
13a-15(d), the Corporation's management, including the Principal Officers
conducted an evaluation of the Corporation's internal control over financial
reporting to determine whether any changes occurred during the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, the Corporation's internal control over financial reporting.
During the second quarter of 2005, there were no such changes.

                                       30
<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 2.      Unregistered Sales of Equity Securities and Use of Proceeds
             -----------------------------------------------------------
<TABLE>
<CAPTION>

                      ISSUER PURCHASES OF EQUITY SECURITIES

                                          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>

    July 1 to July 30, 2005                   --             --                --                           $6,298,873

    August 1 to August 31, 2005               --             --                --                           $6,298,873

    September 1 to September 30, 2005         --             --                --                           $6,298,873

    Total                                     --             --                --                           $6,298,873

<FN>

Note: All of the foregoing shares were purchased pursuant to the Corporation's
program to repurchase up to $10.0 million of the Corporation's common stock that
was publicly announced on October 16, 2004.
</FN>
</TABLE>

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

             None

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

             None

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

             None

                                       31
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                     PART II - OTHER INFORMATION - Continued


Item 6.      Exhibits
             --------

             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 10-Q for the year 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.

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

* Indicates document previously filed



                                       32
<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





November 9, 2005                    /s/ John A. Featherman III
                                    ---------------------------
                                    John A. Featherman III
                                    Chief Executive Officer





November 9, 2005                    /s/ John Balzarini
                                    ---------------------------
                                    John Balzarini
                                    Treasurer and Chief Financial Officer
                                    (Principal Accounting and Financial Officer)




                                       33
<PAGE>
                FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES

                                  Exhibit Index
                                  -------------

             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 year
ended March 31, 2005.

             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.


             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 Treasurer and Chief
                        Financial Officer

             32.1       Section 906 Certification of the Chief Executive Officer

             32.2       Section 906 Certification of the President

             32.3       Section 906 Certification of the Treasurer and Chief
                        Financial Officer


* Indicates document previously filed


                                       34