744126--7/27/2010--FIRST_CHESTER_COUNTY

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Risks related to our business and industry There is substantial doubt about our ability to continue as a going concern. We presently are subject to, and in the future may become subject to, regulatory enforcement actions that could have a material adverse effect on our business, operations, financial condition, results of operations or the value of our common stock. We are required to maintain minimum capital to meet regulatory requirements, and if we fail to maintain sufficient capital, we may be subject to further enforcement actions. Our ability to pay dividends is subject to limitations. Our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2009, and may not be effective in future periods, as a result of newly identified material weaknesses in internal controls. Our failure to timely file periodic reports with the SEC could result in the delisting of our common stock from the Nasdaq Capital Market. 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. 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 may continue to adversely affect the AHB division of the Bank. Secondary market investors could suspend or terminate their master purchase agreements or correspondent loan purchase agreements with the Bank as a result of breaches of representations, warranties or covenants, which could harm liquidity, financial condition and regulatory compliance. 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 a large 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. 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. Our common stock is thinly traded. Risks related to the merger with Tower Termination of the merger agreement could negatively impact the Corporation. If the merger agreement is terminated, certain transactions between Tower and the Corporation designed to alleviate regulatory pressure on the Bank may not have their intended results. Our shareholders cannot be certain of the amount of nor the market value of the merger consideration they will receive because the market price of Tower common stock will fluctuate and the exchange ratio is subject to adjustment in the event that First Chester delinquent loans are less than or equal to $35 million or exceed $55 million. The opinion obtained by us from our financial advisor will not reflect changes in circumstances between signing the merger agreement and completion of the merger. Regulatory approvals for the merger may expire prior to the closing of the merger. Tower may fail to realize the anticipated benefits of the merger. Our shareholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management. The merger agreement limits our ability to pursue alternatives to the merger and raise capital. The merger is subject to closing conditions, that, if not satisfied or waived, will result in the merger not being completed, which may result in material adverse consequences to our business and operations. The shares of Tower common stock to be received by our shareholders as a result of the merger will have different rights from the shares of our common stock.

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744126--7/27/2010--FIRST_CHESTER_COUNTY_CORP