744126--3/16/2009--FIRST_CHESTER_COUNTY

related topics

{loan, real, estate}

{regulation, change, law}

{condition, economic, financial}

{loss, insurance, financial}

{customer, product, revenue}

{cost, contract, operation}

{stock, price, share}

{competitive, industry, competition}

{control, financial, internal}

{tax, income, asset}

{financial, litigation, operation}

{product, liability, claim}

The current turmoil in the financial markets may lead to an increased levels of regulation, loan delinquencies, and problem loans, and a reduction of business activity generally. Adverse changes in the economic conditions in our market area could materially and negatively affect our business. Competitive pressures from banks, financial services companies and other companies offering banking services could negatively impact our business. Changes in interest rates could reduce our net interest margin and net interest income. Significant increases in interest rates may affect customer loan demand and payment habits. We may experience lower net interest income if our loan growth exceeds that of deposit growth requiring us to obtain other sources of funds at higher costs. If our allowance for loan and lease losses is not adequate to cover actual or estimated future loan and lease losses, our earnings may decline. Disruptions in the secondary market for residential mortgage loans adversely affected AHB's operations prior to the merger and may adversely affect the AHB division of the Bank. The Bank could be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm liquidity, results of operations and financial condition. The AHB Division's dependence on certain relationships, such as with Freddie Mac, could adversely affect the mortgage-banking business. The scope of our residential mortgage loan production exposes us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the federal, state and local levels in the United States. Our mortgage-banking operations rely on other companies to provide key components of its business infrastructure. Significant legal actions could subject us to substantial liabilities or litigation costs. The use of correspondents, brokers and other third parties to originate loans outside of its market area subjects our mortgage-banking operations to certain risks. Our mortgage-banking operations face prepayment risk from loans sold for which servicing is retained. Adverse changes in the market value of securities and investments that we manage for others may negatively impact the growth level of our non-interest income. Expansion of our branch network may increase our expenses without proportionate increases in income. Our branch locations may be negatively affected by changes in regional and local demographics. Changes in the regulatory environment may adversely affect our business or the ability of the Bank to pay dividends to the Corporation. Technology costs, new product development, and marketing costs may exceed our expectations and negatively impact our profitability. Changes to financial accounting standards may affect our reported results of operations. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. Our common stock is thinly traded.

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744126--3/16/2009--FIRST_CHESTER_COUNTY_CORP