Exhibit 99.1

Executive Vice President / Chief Financial Officer

UNION FIRST MARKET BANKSHARES REPORTS FOURTH QUARTER

AND FULL YEAR RESULTS

Richmond, Va., January 28, 2014 - Union First Market Bankshares Corporation (the “Company” or “Union”) (NASDAQ: UBSH) today reported net income of $8.1 million and earnings per share of $0.32 for its fourth quarter ended December 31, 2013. Excluding after-tax acquisition-related expenses of $651,000, operating earnings⁽¹⁾ for the quarter were $8.8 million and operating earnings per share⁽¹⁾ was $0.35. The quarterly results represent an increase of $339,000, or 4.0%, in operating earnings from the prior quarter and a decrease of $686,000, or 7.3%, from the quarter ended December 31, 2012. Operating earnings per share of $0.35 for the current quarter increased $0.01, or 2.9%, from the most recent quarter and declined $0.02, or 5.4%, from the prior year’s fourth quarter.

For the year ended December 31, 2013 the Company reported net income of $34.5 million and earnings per share of $1.38. Excluding after-tax acquisition-related expenses of $2.0 million, operating earnings for 2013 were $36.5 million and operating earnings per share was $1.46. The annual results represent an increase of $1.1 million, or 3.2%, in operating earnings and $0.09 per share, or 6.6%, from 2012 levels. These fourth quarter and year to date financial results do not include the financial results of StellarOne Corporation (“StellarOne”), which the Company acquired on January 1, 2014, and are prior to the effective date of the merger with StellarOne.

“2013 was a year of significant progress and change at Union and with the closing of the StellarOne acquisition on January 1, 2014, Union became the largest community bank headquartered in Virginia,” said G. William Beale, president and chief executive officer of Union First Market Bankshares, “The combination of two of Virginia’s largest community banks provides Union with the growth opportunities, asset base and footprint to continue to deliver a best-in-class customer experience, offer superior financial services and solutions, provide a rewarding experience for our teammates and generate top-tier financial performance for our shareholders.”

“Union’s operating financial performance in the fourth quarter continued to be mixed as the sustained positive performance in the Company’s community banking segment was muted by the poor results from our mortgage segment. The community bank segment turned in another quarter of operating earnings growth fueled by gains in core deposit households, loan growth and improvements in credit quality. However, overall financial results were negatively impacted by continuing losses from the mortgage business driven by declining mortgage loan originations and the impact of a large, non-recurring indemnification charge in the fourth quarter. Although not included in Union’s 2013 consolidated financial results, StellarOne turned in solid financial results in its final quarter as a stand-alone company driven by strong loan growth and improving credit quality metrics.”

“Union remains committed to achieving top-quartile financial performance and providing our shareholders with above average returns on their investment. In 2014, the company is focused on smoothly integrating StellarOne into Union to achieve cost savings, generating sustainable growth in the combined community banking franchise and returning the mortgage banking segment to profitability as quickly as possible.”

Select highlights:

⁽¹⁾For a reconciliation of the non-GAAP measures operating earnings, ROA, ROE, EPS, and efficiency ratio, see “Alternative Performance Measures (non-GAAP)” section of the Key Financial Results. 

NET INTEREST INCOME

On a linked quarter basis, tax-equivalent net interest income was $40.0 million, an increase of $826,000, or 2.1%, from the third quarter of 2013. The fourth quarter tax-equivalent net interest margin increased by 7 basis points to 4.27% from 4.20% in the previous quarter. The increase in net interest margin was principally attributable to the increase in earning asset yields (+4 bps), the decline in cost of funds (+4 bps) and the continued decline in accretion on the acquired net earning assets (-1 bps). The increase in net interest income was driven by higher average investment balances and higher yields on taxable securities and a decline in the cost of funds. Loan yields and average balances were largely unchanged from the prior quarter. Yields on investment securities increased on higher average balances and a higher rate on taxable investments as prepayment speeds slowed. The cost of interest-bearing liabilities declined during the quarter largely driven by lower time deposit account balances.

For the three months ended December 31, 2013, tax-equivalent net interest income decreased $249,000, or 0.6%, when compared to the same period last year. The tax-equivalent net interest margin decreased by 2 basis points to 4.27% from 4.29% in the prior year. The decline in net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (-4 bps) and declines in cost of funds exceeding the reduction in earning asset yields (+2 bps). Lower earning asset interest income was principally due to lower yields on loans as new and renewed loans were originated and repriced at lower rates and cash flows from securities investments reinvested at lower yields. The decline in the cost of interest-bearing liabilities from the prior year’s fourth quarter was driven by a shift in mix from time deposits to demand deposits, reductions in deposit rates and lower wholesale borrowing costs.

The Company continues to believe that net interest margin will decline modestly over the next several quarters as decreases in earning asset yields are projected to outpace declines in interest-bearing liabilities rates.

⁽¹⁾ Core net interest margin (FTE) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income.

For the year ended December 31, 2013, tax-equivalent net interest income was $156.9 million, a decrease of $1.7 million, or 1.1%, when compared to the same period last year. The tax-equivalent net interest margin decreased by 12 basis points to 4.22% from 4.34% in the prior year. The decline in the net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (-6 bps) and a decline in the yield on interest-earning assets that outpaced the reduction in the cost of funds (-6 bps). Lower interest-earning asset income was principally due to lower yields on loans as new loans and renewed loans were originated and repriced at lower rates and declining investment securities yields driven by cash flows from securities investments reinvested at lower yields.

The Company’s fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. The 2013 and remaining estimated discount/premium and net accretion impact are reflected in the following table (dollars in thousands):

ASSET QUALITY/LOAN LOSS PROVISION

Overview

During the fourth quarter, the Company continued to reduce the levels of impaired loans, troubled debt restructurings, past due loans, and nonperforming assets, which were at their lowest levels since the fourth quarter of 2009. Net charge-offs, the related ratio of net charge-offs to total loans, and the loan loss provision also decreased from the same quarter of the previous year. Net charge-offs increased from the prior quarter due to the charge-off of loans specifically reserved for in prior periods, while the provision decreased from the prior quarter due to lower historical loss factors. The allowance to nonperforming loans coverage ratio was at its highest level since the first quarter of 2008. The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of residential housing and commercial real estate and the pace at which the local economies in the Company’s operating markets improve.

Nonperforming Assets (“NPAs”)

At December 31, 2013, nonperforming assets totaled $49.2 million, a decline of $9.8 million, or 16.6%, from a year ago and a decrease of $6.5 million, or 11.7%, from the third quarter. In addition, NPAs as a percentage of total outstanding loans declined 37 basis points from 1.99% a year earlier and decreased 23 basis points from 1.85% last quarter to 1.62% in the current quarter.

Nonperforming assets at December 31, 2013 included $15.0 million in nonaccrual loans (excluding purchased impaired loans), a net decrease of $11.2 million, or 42.7%, from December 31, 2012 and a net decrease of $4.9 million, or 24.6%, from the prior quarter. The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

The following table presents the composition of nonaccrual loans (excluding purchased impaired loans) and the coverage ratio, which is the allowance for loan losses expressed as a percentage of nonaccrual loans, at the quarter ended (dollars in thousands):

Nonperforming assets at December 31, 2013 also included $34.1 million in OREO, an increase of $1.3 million, or 4.0%, from the prior year and down $1.6 million, or 4.5%, from the prior quarter. The following table shows the activity in OREO for the quarter ended (dollars in thousands):

The additions to OREO were principally related to residential real estate; sales from OREO were principally related to residential and commercial real estate.

The following table presents the composition of the OREO portfolio at the quarter ended (dollars in thousands):

⁽¹⁾ Includes closed branch property and land previously held for branch sites.

Included in land development is $9.3 million related to a residential community in the Northern Neck region of Virginia, which includes developed residential lots, a golf course, and undeveloped land. Foreclosed properties were adjusted to their fair values at the time of each foreclosure and any losses were taken as loan charge-offs against the allowance for loan losses at that time. OREO asset balances are evaluated at least quarterly by the Bank’s Special Asset Loan Committee and any necessary write downs to fair values are recorded as impairment.

Past Due Loans

At December 31, 2013, total accruing past due loans were $26.5 million, or 0.87% of total loans, a decline from $32.4 million, or 1.09% of total loans, a year ago and a decrease from $30.5 million, or 1.02% of total loans, at September 30, 2013.

Charge-offs

For the quarter ended December 31, 2013, net charge-offs of loans were $4.9 million, or 0.65% on an annualized basis, compared to $8.3 million, or 1.11%, for the same quarter last year and $2.3 million, or 0.30%, for the third quarter of 2013. The increase in charge-offs from the prior quarter related to loans that were previously considered impaired and specifically reserved for in prior periods. Of the $4.9 million in net charge-offs in the current quarter, $4.7 million, or 96%, related to impaired loans specifically reserved for in the prior period. Net charge-offs in the current quarter included commercial loans of $3.3 million.

Provision

The provision for loan losses for the current quarter was $1.2 million, a decrease of $2.1 million from the same quarter a year ago and a decrease of $594,000 from the previous quarter. The decrease in provision for loan losses in the current quarter compared to the prior periods is driven by improving asset quality and the impact of lower historical loss factors. The provision to loans ratio for the quarter ended December 31, 2013 was 0.16% on an annualized basis compared to 0.44% for the same quarter a year ago and to 0.24% last quarter.

Allowance for Loan Losses

The allowance for loan losses (“ALL”) as a percentage of the total loan portfolio, adjusted for purchase accounting (non-GAAP), was 1.10% at December 31, 2013, a decrease from 1.35% at December 31, 2012 and 1.25% from the prior quarter. In acquisition accounting, there is no carryover of previously established allowance for loan losses. The allowance for loan losses as a percentage of the total loan portfolio was 0.99% at December 31, 2013, 1.18% at December 31, 2012, and 1.13% at September 30, 2013. The decrease in the allowance and related ratios was primarily attributable to the charge-off of impaired loans specifically reserved for in prior periods and improving credit quality metrics.

Impaired loans have declined from $155.4 million at December 31, 2012 and from $119.2 million at September 30, 2013 to $112.6 million at December 31, 2013. The nonaccrual loan coverage ratio was at its highest level since the first quarter of 2008 at 200.4% at December 31, 2013, an increase from 133.2% from the same quarter last year and 169.9% at September 30, 2013. The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers in assessing the adequacy of the allowance for loan losses.

Troubled Debt Restructurings (“TDRs”)

The total recorded investment in TDRs as of December 31, 2013 was $41.8 million, a decline of $21.7 million, or 34.2%, from $63.5 million at December 31, 2012 and a decrease of $6.1 million, or 12.7%, from $47.9 million at September 30, 2013. Of the $41.8 million of TDRs at December 31, 2013, $34.5 million, or 82.5%, were considered performing while the remaining $7.3 million were considered nonperforming. The decline in the TDR balance from the prior year is attributable to $13.6 million being removed from TDR status, $11.6 million in net payments, $2.4 million in transfers to OREO, and $1.9 million in charge-offs, partially offset by additions of $7.8 million. Loans removed from TDR status represent restructured loans with a market rate of interest at the time of the restructuring, which were performing in accordance with their modified terms for a consecutive twelve month period and that were no longer considered impaired.

The following table shows the Company’s performing and nonperforming TDRs by modification type for the quarter ended (dollars in thousands):

NONINTEREST INCOME

NM - Not Meaningful

On a linked quarter basis, noninterest income decreased $837,000, or 9.1%, to $8.4 million from $9.2 million in the third quarter. Excluding mortgage segment operations, noninterest income decreased $96,000, or 1.3%. Service charges on deposit accounts decreased $75,000 primarily related to lower overdraft and returned check fees in the current quarter. Other service charges decreased $89,000, or 2.8%, due to lower interchange and letter of credit fees in the current quarter. Gains on sales of mortgage loans, net of commissions, decreased $742,000, or 36.0%, as rising mortgage interest rates led to declines in mortgage loan originations, which decreased by $62.7 million, or 28.6%, in the current quarter to $156.2 million from $218.9 million in the third quarter. Of the loan originations in the current quarter, 30.7% were refinances, which was up slightly from 28.6% in the third quarter. Included in the current quarter gain on sale of mortgage loans was a non-recurring charge of $966,000 for indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans.

For the quarter ended December 31, 2013, noninterest income decreased $3.4 million, or 29.2%, to $8.4 million from $11.8 million in the prior year’s fourth quarter. Excluding mortgage segment operations, noninterest income increased $577,000, or 8.7%, from the same period a year ago. Other service charges, commissions and fees increased $312,000 primarily due to higher net interchange fee income and fees on letters of credit. Other operating income increased $385,000, or 31.8%, related to increased income on bank owned life insurance. Gains on sales of mortgage loans, net of commissions, decreased $4.0 million, or 75.1%, primarily due to lower loan origination volume and gain on sale margin compression due to rising mortgage interest rates. Mortgage loan originations decreased by $175.6 million, or 52.9%, in the current quarter to $156.2 million from $331.8 million in the fourth quarter of 2012. As noted above, included in the current quarter gain on sale of mortgage loans was a non-recurring charge of $966,000 for indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans.

NM - Not Meaningful

For the year ended December 31, 2013, noninterest income decreased $2.4 million, or 5.7%, to $38.7 million, from $41.1 million a year ago. Excluding mortgage segment operations, noninterest income increased $2.6 million, or 10.5%, from last year. Service charges on deposit accounts increased $459,000 primarily related to higher overdraft and returned check fees as well as service charges on savings accounts. Other account service charges and fees increased $1.4 million due to higher net interchange fee income, revenue on retail investment products, and fees on letters of credit. Other operating income increased $1.1 million primarily related to increased income on bank owned life insurance, trust income, and other insurance-related revenues. Conversely, gains on bank premises decreased $342,000 as the Company recorded a loss in the current year on the closure of bank premises coupled with net gains in the prior year related to sale of bank premises. Gains on sales of mortgage loans, net of commissions, decreased $4.8 million driven by lower loan origination volume and lower gain on sale margins in 2013. Mortgage loan originations decreased by $154.8 million, or 14.1%, to $941.4 million in 2013 compared to $1.1 billion in 2012. Of the loan originations in the current year, 38.9% were refinances compared to 54.3% in 2012. Lower gain on sale margins were also partly due to reductions resulting from valuation reserves of $363,000 related to aged mortgage loans held-for-sale as well as the non-recurring charge of $966,000 for the indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans.

NONINTEREST EXPENSE

NM - Not Meaningful

⁽¹⁾ OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses. 

On a linked quarter basis, noninterest expense increased $1.3 million, or 3.6%, to $35.4 million from $34.1 million when compared to the third quarter. Excluding mortgage segment operations and acquisition-related costs, noninterest expense increased $844,000, or 2.9%, compared to the third quarter. Occupancy expenses increased $285,000, or 10.1%, primarily related to lease termination costs. OREO and credit-related costs increased $120,000 from the prior quarter due to increased credit-related legal fees in the current quarter. Other operating expenses increased $944,000, primarily due to increased legal and litigation-related expenses. These increases were partially offset by reduced salary-related expenses of $340,000, primarily related to lower levels of incentive compensation and seasonal payroll taxes in the current quarter.

For the quarter ended December 31, 2013, noninterest expense increased $1.0 million, or 3.0%, to $35.4 million from $34.4 million for the fourth quarter of 2012. Excluding mortgage segment operations and acquisition-related costs, noninterest expense increased $78,000, or 0.3%, compared to the fourth quarter of 2012. OREO and credit-related costs increased $355,000, as the Company incurred higher credit-related legal fees of $237,000, higher foreclosure and OREO expenses of $70,000, and higher losses on the sales of OREO of $48,000 in the current quarter compared to the same quarter in 2012. Other operating expenses increased $711,000, mainly due to increased legal and litigation-related expenses. These increases were partially offset by declines in salaries and benefits expenses of $544,000, primarily related to reduced levels of incentive compensation in the current year, as well as declines in occupancy expenses of $44,000 and furniture and equipment expenses of $178,000, primarily due to branch closures in 2012.

NM - Not Meaningful

⁽¹⁾ OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses.

For the year ended December 31, 2013, noninterest expense increased $3.8 million, or 2.9%, to $137.3 million, from $133.5 million a year ago. Excluding mortgage segment operations and acquisition-related costs of $2.1 million incurred in 2013, noninterest expense declined $1.8 million, or 1.5%, compared to 2012. Salaries and benefits expense increased $1.7 million due to costs associated with strategic investments in mortgage segment personnel in 2012 and 2013 and severance expense recorded in the current year related to the relocation of Union Mortgage Group, Inc.’s headquarters to Richmond. Occupancy expenses decreased $607,000 and furniture and equipment expenses declined $367,000, primarily due to branch closures in 2012. OREO and credit-related expenses increased $241,000, or 5.2%, mainly related to valuation adjustments on OREO property in the current year. Other operating expenses increased $690,000, or 1.7%, due to increases in legal and litigation-related expenses of $1.2 million and FDIC insurance expenses of $672,000, partially offset by lower amortization expenses of $1.5 million.

BALANCE SHEET

At December 31, 2013, total assets were $4.2 billion, an increase of $129.5 million from September 30, 2013, and an increase of $80.7 million from December 31, 2012. Total cash and cash equivalents were $73.0 million at December 31, 2013, a decrease of $9.9 million from the same period last year, and a decrease of $2.1 million from September 30, 2013. Investment in securities increased $91.9 million, or 15.7%, from $585.4 million at December 31, 2012 to $677.3 million at December 31, 2013, and increased $87.9 million from September 30, 2013, related to current quarter purchases (primarily mortgage backed and tax-free municipals) in anticipation of the StellarOne merger. Mortgage loans held for sale were $53.2 million, a decrease of $114.5 million from December 31, 2012, and a decline of $5.0 million from September 30, 2013.

At December 31, 2013, loans (net of unearned income) were $3.0 billion, an increase of $72.5 million, or 2.4%, from December 31, 2012, and an increase of $37.1 million, or 4.9% on an annualized basis, from September 30, 2013. Average loans outstanding increased $109.8 million, or 3.8%, year over year and $7.1 million, or 0.2%, from the prior quarter.

As of December 31, 2013, total deposits were $3.2 billion, a decrease of $60.9 million, or 1.8%, when compared to December 31, 2012, and an increase of $11.9 million, or 0.4%, from September 30, 2013. The decline of year over year deposit totals were driven by decreases in time deposits of $160.9 million, partially offset by an increase of lower cost deposit levels of $45.8 million and an increase of NOW accounts of $43.9 million. Linked quarter deposit growth was driven by higher NOW accounts of $34.5 million, partially offset by a decrease in other time deposits of $24.6 million.

Net short term borrowings increased $131.7 million (primarily Federal Home Loan Bank of Atlanta “FHLB”) from December 31, 2012, as a result of funding the purchases of securities in advance of the StellarOne merger described above. During the third quarter of 2012, the Company modified its fixed rate convertible FHLB advances to floating rate advances, which resulted in reducing the Company’s FHLB borrowing costs. In connection with this modification, the Company incurred a prepayment penalty of $19.6 million, which is being amortized as a component of interest expense on borrowing over the life of the advances. The prepayment amount is reported as a component of long-term borrowings in the Company’s consolidated balance sheet.

The Company’s capital ratios continued to be considered “well capitalized” for regulatory purposes. The Company’s ratio of total capital to risk-weighted assets was 14.17% and 14.57% on December 31, 2013 and 2012, respectively. The Company’s ratio of Tier 1 capital to risk-weighted assets was 13.05% and 13.14% at December 31, 2013 and 2012, respectively. The Company’s common equity to asset ratios at December 31, 2013 and 2012 were 10.49% and 10.64%, respectively, while its tangible common equity to tangible assets ratio was 8.94% and 8.97% at December 31, 2013 and 2012. During the first quarter of 2013, the Company entered into an agreement to purchase 500,000 shares of its common stock from Markel Corporation, the Company’s largest shareholder, for an aggregate purchase price of $9,500,000, or $19.00 per share. The repurchase was funded with cash on hand and the shares were retired. During the second, third, and fourth quarters of 2013, the Company did not repurchase any shares. The Company’s authorization to repurchase an additional 250,000 shares under its current repurchase program authorization expired December 31, 2013. Also, the Company paid a dividend of $0.14 per share during the current quarter, no change from the prior quarter and an increase of $0.02 per share from the same quarter a year ago.

COMMUNITY BANK SEGMENT INFORMATION

On a linked quarter basis, the community bank segment reported net income of $10.0 million for the fourth quarter, an increase of $821,000 from $9.2 in the third quarter. Excluding after-tax acquisition-related expenses, net income increased $1.0 million, or 10.3%, from $9.7 million in the prior quarter to $10.7 million in the fourth quarter. Net interest income was $38.4 million, an increase of $898,000 from $37.5 million in the third quarter of 2013. The increase in net interest income was driven by higher average investment balances and higher yields on taxable securities and a decline in the cost of funds. In addition, the provision for loan losses declined by $594,000 during the current quarter due to improving asset quality metrics and the impact of lower historical loss factors.

Noninterest income was consistent with the prior quarter at $7.2 million. Noninterest expense increased $1.1 million, or 3.7%, to $31.0 million from $29.9 million when compared to the third quarter. Excluding acquisition-related expenses in the current and prior quarters of $739,000 and $473,000, respectively, noninterest expense increased $844,000, or 2.9%, from the prior quarter, primarily due to increased legal and litigation-related expenses.

For the three months ended December 31, 2013, the community bank segment’s net income of $10.0 million increased $1.5 million, or 18.2%, from the prior year’s fourth quarter; excluding after-tax acquisition-related costs of $651,000, net income increased $2.2 million, or 25.9%. Net interest income declined $404,000, or 1.0%, to $38.4 million due to the impact of net interest margin compression partially offset by loan growth. In addition, the Company’s provision for loan losses was $2.1 million lower than the same quarter of the prior year primarily due to continued improvement in asset quality.

Noninterest income increased $577,000, or 8.7%, to $7.2 million from $6.6 million in the prior year’s fourth quarter. Other service charges, commissions and fees increased $312,000, primarily due to higher net interchange fee income and fees on letters of credit. Other operating income increased $437,000, primarily related to increased income on bank owned life insurance. Partially offsetting these increases was a decrease in gains on sale of securities of $211,000, as a loss was recognized in the current quarter compared to gains in the fourth quarter of 2012.

Noninterest expense increased $817,000, or 2.7%, to $31.0 million from $30.2 million when compared to the fourth quarter of 2012. The increase is primarily attributable to acquisition-related costs, which were $739,000 in the current quarter. Excluding these acquisition-related costs, noninterest expense was consistent with noninterest expense of the fourth quarter of 2012 at $30.3 million, increasing only $78,000, or 0.3%.

For the year ended December 31, 2013, the community bank segment’s net income increased $4.3 million, or 13.0%, to $37.2 million when compared to the prior year; excluding after-tax acquisition-related costs of $2.0 million in 2013, net income increased $6.3 million, or 19.3%. Net interest income decreased $3.0 million, or 2.0%, to $150.0 million when compared to the prior year due to declines in the net interest margin partially offset by loan growth. In addition, the Company’s provision for loan losses was $6.1 million lower than the prior year due to continued improvement in asset quality.

Noninterest income increased $2.6 million, or 10.5%, to $27.5 million from $24.9 million last year. Service charges on deposit accounts increased $459,000 primarily related to higher overdraft and returned check fees as well as service charges on savings accounts. Other account service charges and fees increased $1.4 million due to higher net interchange fee income, revenue on retail investment products, and fees on letters of credit. Other operating income increased $1.3 million primarily related to increased income on bank owned life insurance, trust income, and other insurance-related revenues. Partially offsetting these increases were decreases in gains on sale of bank premises of $342,000, as a loss was recognized in the current year compared to gains in 2012, and lower net gains on securities of $169,000.

Noninterest expense increased $280,000, or 0.2%, to $120.3 million in 2013 from $120.0 million in 2012. Excluding acquisition-related costs of $2.1 million in 2013, noninterest expense decreased $1.8 million, or 1.5%, from the prior year. Salaries and benefits declined $475,000 related to lower stock compensation expense. Occupancy expenses and furniture and equipment expenses declined $1.2 million and $367,000, respectively, largely due to branch closures that occurred in 2012.

MORTGAGE SEGMENT INFORMATION

On a linked quarter basis, the mortgage segment reported a net loss of $1.9 million for the fourth quarter compared to a net loss of $1.2 million in the third quarter, representing an increase in losses of $662,000.  The increase in mortgage rates that began in May 2013 continued to negatively affect mortgage loan origination volumes. Due to the higher rate environment as well as lower seasonal demand that impacted the current quarter, both refinance and purchase origination volumes have steadily declined since the second quarter. Mortgage originations declined $62.7 million, or 28.6%, from $218.9 million in the third quarter to $156.2 million. Refinance volume, excluding construction loan conversions, decreased $14.7 million, or 23.5%, to $47.9 million, and represented 30.7% of total originations in the fourth quarter.

Gains on sales of mortgage loans, net of commissions decreased $742,000, or 36.0%, to $1.3 million from $2.1 million in the third quarter. Included in gains on sale revenue was a non-recurring $966,000 charge for indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans originated pursuant to insured loan programs administered by the United States Department of Agriculture, as previously discussed in the Company’s Form 10-Q as of and for the quarter ended September 30, 2013. Excluding this indemnification accrual, gains on sales of loans increased $224,000, or 10.9%, reflecting higher gain on sale margins experienced in the fourth quarter compared to the third quarter, and reflective of a more stable interest rate environment.

For the three months ended December 31, 2013, the mortgage segment reported a net loss of $1.9 million compared to net income of $981,000 for the same period last year, representing a decline of $2.9 million. Mortgage loan originations decreased by $175.6 million, or 52.9%, to $156.2 million from $331.8 million in the prior year driven by higher mortgage interest rates and lower refinance loan demand. Refinance volume decreased $141.2 million, or 74.7%, from $189.1 million in the fourth quarter of 2012, which represented 57.0% of total originations, to $47.9 million in the current quarter, which represented 30.7% of total originations.

During the current quarter, the Company recorded gains on the sale of mortgage loans, net of commission expenses, of $1.3 million, which were $4.0 million, or 75.1%, lower than the same period last year. The current quarter’s gain on sale of mortgage loans, net of commissions includes the non-recurring $966,000 charge for indemnification claims described above. Excluding this accrual, net gain on sale revenue decreased $3.0 million, or 56.9%, from the same period last year, primarily due to lower loan origination volumes and gain on sale margin compression driven by the higher interest rate environment in the current quarter. Also, in addition to the indemnification claim described above, indemnification reserves arising from the normal course of selling loans to investors was higher than the comparable prior year quarter by $325,000.

For the year ended December 31, 2013, the mortgage segment incurred a net loss of $2.7 million compared to net income of $2.5 million during the prior year, representing a decline of $5.2 million. Mortgage loan originations decreased by $154.8 million, or 14.1%, to $941.4 million from $1.1 billion during the prior year due to the higher interest rate environment in the second half of 2013 compared to the lower interest rate environment for the full year 2012. The impact of the interest rate environment was offset by a full year impact of the additional mortgage loan officers added in the first half of 2012. 

Gains on sales of mortgage loans, net of commission expenses, decreased 28.5%, or $4.8 million, and included the non-recurring $966,000 charge for indemnification claims described above. Excluding this accrual, net gains on sales of loans decreased $3.8 million, or 22.7%, driven by the 14.1% drop in mortgage loan originations at lower margins.

Expenses increased by $3.7 million, or 26.7%, over last year primarily due to increases in salary and benefit expenses of $2.2 million related to the addition of mortgage loan originators and support personnel in 2012, investments made in the current year to enhance the mortgage segment’s operating capabilities, and severance related to the relocation of the mortgage segment’s headquarters to Richmond. In addition, increases in expenses included higher rent expense of $563,000 related to annual rent increases, lease termination costs, and the headquarters relocation, loan-related expenses of $236,000, primarily related to appraisal and credit reporting expenses, and professional fees of $200,000.

While management continues to recalibrate the mortgage segment’s cost structure to align with declining mortgage origination levels, in the near term, the return to profitability in the mortgage segment is dependent on increased mortgage production volumes and/or higher gain on sale margins.

STELLARONE INFORMATION

StellarOne’s reported net income was $25.9 million in 2013, an increase of $3.7 million from net income of $22.2 million in 2012. Excluding after-tax acquisition-related costs of $1.9 million, StellarOne’s 2013 operating earnings were $27.8 million, an increase of $5.6 million, or 25.2%, compared to $22.2 million in 2012. The increase in year over year operating earnings was driven by increases in net interest income as a result of robust loan growth as well as continued credit quality improvements which resulted in a negative loan loss provision in 2013.

StellarOne’s fourth quarter reported earnings increased $1.0 million to $7.3 million from $6.3 million in the third quarter of 2013. Excluding after-tax acquisition-related costs of $577,000, operating earnings increased $1.1 million, or 16.2%, in the current quarter to $7.9 million from operating earnings of $6.8 million in the third quarter of 2013. The primary drivers of the linked quarter earnings increase were continued asset quality improvements resulting in a reduction in the provision for loan losses of $2.1 million partially offset by declines in the gain on sale of mortgage loans, net of commissions, of $331,000.

Average loan balances increased $37.0 million, or 6.6 % annualized, on a linked quarter basis to $2.29 billion and increased by $206.0 million, or 9.8%, as compared to the fourth quarter of 2012.

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ABOUT UNION FIRST MARKET BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation (NASDAQ: UBSH) is the holding company for Union First Market Bank, which has 90 branches and more than 150 ATMs throughout Virginia and StellarOne Bank, which has 54 branches and more than 60 ATMs throughout Virginia as well as trust and wealth management services.  Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products; and Union Insurance Group, LLC, which offers various lines of insurance products. 

Additional information on the Company is available at http://investors.bankatunion.com

MERGER WITH STELLARONE CORPORATION

On January 1, 2014, the Company completed its previously announced acquisition of StellarOne Corporation. The Company plans to combine the banking subsidiaries, Union First Market Bank and StellarOne Bank, in May of 2014.

FORWARD-LOOKING STATEMENTS

Certain statements in this report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise and are not statements of historical fact.  Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events.  Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of and changes in: general economic and bank industry conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, changes in the stock and bond markets, accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and savings habits.  More information is available on the Company’s website, http://investors.bankatunion.com and on the Securities and Exchange Commission’s website, www.sec.gov.  The information on the Company’s website is not a part of this press release.  The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company.