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As filed with the Securities and Exchange Commission on March 5, 2004

Registration No. 333-112416

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

UNION BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

212 North Main Street

Bowling Green, Virginia 22427

(804) 633-5031

(Address, including zip code, and telephone number, including area

code, of registrant’s principal executive offices)

Peter A. Seitz, Esq.

Executive Vice President and General Counsel

Union Bankshares Corporation

212 North Main Street

Bowling Green, Virginia 22427

(804) 632-2115

(Name, address, including zip code, and telephone number,

including area code of agent for service)

Copies of all correspondence to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the proposed merger described herein have been satisfied or waived.

If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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[Guaranty Financial Corporation LOGO]

Dear Fellow Shareholders:

You are cordially invited to attend a special meeting of shareholders of Guaranty Financial Corporation to be held at the Glenmore Country Club, 1750 Piper Way, Keswick, Virginia on Thursday, April 22, 2004 at 10:00 a.m. At the special meeting, you will be asked to consider and vote upon a proposal to approve an agreement and plan of reorganization pursuant to which Guaranty will merge with Union Bankshares Corporation, a multi-bank holding company headquartered in Bowling Green, Virginia.

By notice of this letter, you are being asked to return three pieces of information:

If the merger agreement is approved by Guaranty shareholders and the merger is subsequently completed, each outstanding share of Guaranty common stock will be converted into the right to receive (i) $28.00 in cash or (ii) 0.842 shares of Union common stock.

You have the opportunity to elect to receive cash or Union common stock, or a combination of cash and Union common stock, for your shares of Guaranty common stock, subject to allocation procedures set forth in the merger agreement. These allocation procedures are intended to ensure that 60% of the outstanding shares of Guaranty common stock will be converted into the right to receive Union common stock and 40% of the outstanding shares of Guaranty common stock will be converted into the right to receive cash. Because of these procedures, the actual allocation of Union common stock and/or cash you receive will depend on the elections of other Guaranty shareholders and may be different from what you elect. Union’s common stock trades on the Nasdaq National Market under the symbol “UBSH.” On March 4, 2004, the closing price of Union common stock was $32.45.

The merger cannot be completed unless holders of a majority of the outstanding shares of Guaranty common stock vote in favor of approval of the merger agreement at the special meeting. If approved, we anticipate the merger will occur in the second quarter of 2004. Your Board of Directors has unanimously approved the merger and believes it is in the best interests of Guaranty and you, our shareholders. Accordingly, the Board unanimously recommends that you vote “FOR” approval of the merger agreement.

The accompanying proxy statement/prospectus provides you with detailed information about the special meeting and the proposed merger. We encourage you to read this entire document carefully, including the section discussing risk factors beginning on page 11. You can also obtain more information about Union and Guaranty in documents each has filed with the Securities and Exchange Commission.

Your vote is important. Whether or not you plan to attend, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed envelope. If you do not return your card or vote in person, the effect will be a vote against approval of the merger agreement.

We look forward to seeing you at the meeting.

Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved of the Union common stock to be issued in the merger or determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense. The shares of Union common stock to be issued in the merger are not savings or deposit accounts or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This proxy statement/prospectus is dated March 5, 2004 and is first being mailed to shareholders on or about March 12, 2004.

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GUARANTY FINANCIAL CORPORATION

1658 State Farm Boulevard

Charlottesville, Virginia 22911

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD

ON APRIL 22, 2004

A special meeting of shareholders of Guaranty Financial Corporation (“Guaranty”) will be held on Thursday, April 22, 2004 at 10:00 a.m. at the Glenmore Country Club, 1750 Piper Way, Keswick, Virginia, for the following purposes:

We have fixed March 1, 2004, as the record date for the special meeting. Only holders of record of Guaranty common stock at the close of business on that date are entitled to receive notice of and to vote at the special meeting or any adjournments or postponements of the meeting.

By Order of the Board of Directors

/s/    Tara Y. Harrison        

Tara Y. Harrison

Corporate Secretary

March 5, 2004

Our board of directors has determined that the merger agreement is in the best interests of Guaranty and its shareholders, and unanimously recommends that shareholders vote “FOR” approval of the merger agreement.

Your vote is very important. Whether or not you plan to attend the special meeting, please promptly complete, sign, date and return your proxy card in the enclosed envelope. Failure to vote your shares by mail or in person at the special meeting, will have the same effect as a vote against the merger agreement.

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ADDITIONAL INFORMATION

Important business and financial information about Union Bankshares Corporation and Guaranty Financial Corporation is incorporated in this proxy statement/prospectus by reference to other documents that are not included or delivered with this proxy statement/prospectus. You may obtain copies of these documents without charge by requesting them in writing or by telephone from the companies as follows:

If you would like to request any documents, please do so by April 15, 2004 in order to receive them before the special meeting.

For additional information regarding where you can find information about the companies, see “Where You Can Find More Information” beginning on page 48.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The Guaranty board unanimously approved and adopted the merger agreement, and unanimously recommends voting for the approval of the merger agreement.

You are also being asked to approve a proposal to adjourn the special meeting if necessary to permit further solicitation of proxies on the proposal to approve the merger agreement. This proposal requires approval by a majority of the votes cast at the special meeting.

The Guaranty board unanimously recommends voting for the approval of the proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies.

Q: What will I receive in the merger?

Q: What are the tax consequences of the merger to me?

Your tax consequences will depend on your personal situation. You should consult your tax advisor for a full understanding of the tax consequences of the merger to you.

Q: Will I receive dividends after the merger?

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The special meeting will take place at 10:00 a.m. on Thursday, April 22, 2004. You may attend the meeting and vote your shares in person, rather than voting by proxy. In addition, you may withdraw and revoke your proxy up to and including the day of the meeting by following the directions on page 14 and either change your vote or attend the meeting and vote in person. If you hold your shares in “street name” you will need additional documents from your broker in order to vote your shares in person at the special meeting.

You should also send your Guaranty common stock certificates and your properly completed election form and letter of transmittal to Registrar and Transfer Company as soon as possible, but not later than 5:00 p.m., EST on April 22, 2004.

William E. Doyle, Jr.

President and Chief Executive Officer

Guaranty Financial Corporation

1658 State Farm Boulevard

Charlottesville, Virginia 22911

Telephone: (434) 970-1100

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. To understand the merger more fully, and for a more complete description of the legal terms of the merger, you should read carefully this entire document and the documents to which we refer you. See “Where You Can Find More Information” on page 48.

Throughout this document, the merger between Union and Guaranty is referred to as the “merger,” and the Agreement and Plan of Reorganization, dated as of December 18, 2003, by and between Union and Guaranty, including a related Plan of Merger between the parties, is referred to collectively as the “merger agreement.”

Parties to the Merger (pages 38 and 39)

Union Bankshares Corporation

212 North Main Street

Bowling Green, Virginia 22427

(804) 633-5031

Union Bankshares Corporation is a multi-bank holding company headquartered in Bowling Green, Virginia providing financial services through its four community banks, Union Bank & Trust Company, Northern Neck State Bank, Rappahannock National Bank and the Bank of Williamsburg, and its three non-bank financial services affiliates, Union Investment Services, Inc., a full service discount brokerage company, Mortgage Capital Investors, Inc. and Johnson Mortgage Company, L.L.C. Union’s current market area stretches from Rappahannock County to Fredericksburg, south to Richmond, east to Williamsburg and throughout the Northern Neck area of Virginia. At December 31, 2003, Union had total consolidated assets of $1.2 billion, total consolidated deposits through its banking subsidiaries of $1.0 billion and consolidated shareholders’ equity of $118.5 million.

Guaranty Financial Corporation

1658 State Farm Boulevard

Charlottesville, Virginia 22911

(434) 970-1100

Guaranty Financial Corporation is a one-bank holding company headquartered in Charlottesville, Virginia. Guaranty, through its subsidiary, Guaranty Bank, operates seven banking offices serving the City of Charlottesville and the counties of Albemarle, Fluvanna and Nelson. At December 31, 2003, Guaranty had $199.0 million in total consolidated assets, $175.2 million in deposits through its banking subsidiary and $20.2 million in consolidated shareholders’ equity.

The Merger (page 14)

The merger agreement provides for the merger of Guaranty into Union. The merger agreement also calls for Guaranty Bank to be merged into Union Bank & Trust Company, a wholly owned banking subsidiary of Union, after the merger of the two holding companies. The parties expect to complete the merger of the holding companies in the second quarter of 2004 and the merger of the subsidiary banks in the third quarter of 2004. The merger agreement is attached to this proxy statement/prospectus as Appendix I. We encourage you to read the merger agreement, as it is the legal document that governs the merger.

Guaranty Shareholders Will Receive Whole Shares of Union Common Stock and/or Cash for each Share of Guaranty Common Stock Exchanged Pursuant to the Merger (pages 14 and 15)

If the merger of Guaranty with and into Union is completed, each outstanding share of Guaranty common stock will be converted into the right to receive (a) $28.00 in cash or (b) 0.842 shares of Union common stock, plus cash in lieu of any fractional share interest. You have the opportunity to elect to receive cash or Union common stock, or a combination of cash and Union common stock, for your shares of Guaranty common stock, subject to allocation procedures set forth in the merger agreement. These allocation procedures are intended to ensure that 60% of the outstanding shares of Guaranty common stock will be converted into the right to receive Union common

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stock and 40% of the outstanding shares of Guaranty common stock will be converted into the right to receive cash. If holders of more than 60% of the outstanding shares of Guaranty common stock elect to receive Union common stock in the merger, Union has the right to issue a greater proportion of shares of common stock (but Union does not expect to issue more than 1,500,000 shares in the merger). Because of the allocation procedures, the actual allocation of Union common stock and/or cash you receive will depend on the elections of other Guaranty shareholders and may be different from what you elect.

When and How to Choose the Method of Payment for Your Shares (page 24)

Shares of Guaranty common stock will be exchanged for either Union common stock or cash as chosen by you, subject to the election and allocation procedures discussed herein and described in detail in the merger agreement. Accompanying this proxy statement/prospectus is an election form on which you may specify whether you wish to receive cash, Union common stock or a combination of cash and stock in exchange for all shares of Guaranty common stock held by you, or that you make “no election” as to whether you receive cash or Union common stock in payment for your Guaranty shares. In order to make an effective election, you must send in your Guaranty common stock certificates together with your properly completed election form and letter of transmittal to Registrar and Transfer Company not later than 5:00 p.m., EST on Thursday, April 22, 2004, the election deadline. If Registrar and Transfer Company does not receive your stock certificates and properly completed election form by the election deadline, then you will be treated as a non-electing shareholder and Union will determine whether cash, stock or a combination of cash and stock will be distributed to you. Also, if you fail to respond you will not receive Union stock and associated dividends or any cash payments as a result of the exchange until you have surrendered your Guaranty common stock certificates to Registrar and Transfer Company.

Your choice will be honored to the extent possible, but because of the overall limitation on the amount of cash and shares of Union common stock available, whether you receive the amount of cash, stock or a combination thereof that you request will depend in part on how many other Guaranty shareholders submit elections and how many choose to receive cash and how many choose to receive stock. Because Union anticipates converting 60% of the outstanding shares of Guaranty common stock into Union common stock and 40% of the outstanding shares of Guaranty common stock into cash, you may not receive exactly the form of consideration that you elect and may receive a pro rata amount of cash and Union common stock.

Union will not issue fractional shares. Instead, you will be entitled to receive a cash payment (without interest) in lieu of any fractional share in an amount determined by multiplying the fractional share interest to which such holders would otherwise be entitled by $28.00.

The Tax Consequences of the Merger for Guaranty Shareholders Will Be Dependent on the Merger Consideration Received (page 33)

You generally will not recognize any gain or loss on the conversion of shares of Guaranty common stock solely into shares of Union common stock. However, you generally will recognize gain if you receive cash either in exchange for your shares of Guaranty common stock or in lieu of any fractional share of Union common stock that you would otherwise be entitled to receive.

Tax matters are complicated, and the tax consequences of the merger to you will depend upon the facts of your particular situation. Accordingly, we strongly urge you to consult your own tax advisor for a full understanding of the tax consequences to you of the merger.

Union Dividend Policy Following the Merger

Union paid semi-annual dividends of $0.29 and $0.31 per share in 2003. Union expects that it will continue to pay at least this amount in dividends in the future, but may change that policy based on business conditions, Union’s financial condition and earnings or other factors.

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Guaranty Board Unanimously Recommends Shareholder Approval (page 14)

The Guaranty board unanimously approved the merger and the merger agreement. The board believes that the merger is fair to you and in your best interests. The Guaranty board unanimously recommends that you vote “FOR” approval of the merger agreement. The Guaranty board believes that, as a result of the merger, Guaranty shareholders will have less business and financial risk and will have greater liquidity in their shares.

Exchange Ratio Fair to Shareholders, According to Financial Advisor (page 17)

Guaranty engaged the firm of Davenport & Company LLC to review the proposed merger and provide a fairness opinion. Davenport has given its opinion to the Guaranty board that, as of December 18, 2003 (the date the merger agreement was executed), the merger consideration was fair from a financial point of view to Guaranty shareholders. A copy of the fairness opinion, setting forth the information reviewed, assumptions made and matters considered, is attached to this proxy statement/prospectus as Appendix II. We encourage you to carefully read the entire opinion of Davenport. The opinion of Davenport has not been updated prior to the date of this document and does not reflect any change in circumstances after December 18, 2003. Guaranty has paid Davenport a cash fee of $10,000, and has agreed to pay an additional cash fee based on the transaction value upon consummation of the merger.

No Dissenters’ Rights (page 35)

Under Virginia law, shareholders of Guaranty are not entitled to dissent from the merger and demand an appraisal of the “fair value” of their shares.

Meeting to be Held April 22, 2004 (page 13)

The special meeting of shareholders of Guaranty will be held on Thursday, April 22, 2004 at 10:00 a.m. at the Glenmore Country Club, located at 1750 Piper Way, Keswick, Virginia.

Majority Guaranty Shareholder Vote Required (page 13)

Approval of the merger agreement requires the affirmative vote of a majority of the votes entitled to be cast at the special meeting. Your failure to vote will have the effect of a vote against approval of the merger agreement. The directors and executive officers of Guaranty, who collectively own about 20.48% of the shares entitled to vote at the special meeting, have agreed individually to vote their shares in favor of the merger.

Brokers who hold shares of Guaranty common stock as nominees will not have authority to vote those shares on the merger agreement or to adjourn the special meeting unless shareholders provide voting instructions.

The merger does not require the approval of Union’s shareholders.

Record Date for Special Meeting is March 1, 2004; One Vote Per Share (page 13)

Guaranty shareholders are entitled to vote at the special meeting if they owned shares of Guaranty common stock at the close of business on March 1, 2004. On March 1, 2004, there were 2,000,659 shares of Guaranty common stock outstanding. Guaranty shareholders will have one vote at the meeting for each share they owned on March 1, 2004.

Benefits to Management in the Merger (page 32)

When considering the recommendation of the Guaranty board, you should be aware that some Guaranty directors and officers have interests in the merger that differ from, or are in addition to, the interests of other Guaranty shareholders.

Indemnification and Insurance. Union has generally agreed to indemnify, for the period of six years after the merger, the officers and directors of Guaranty against certain liabilities arising before the effective date of the

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merger and to provide liability insurance for the current officers and directors of Guaranty for three years after the merger.

Director Appointments. Douglas E. Caton, current Chairman of Guaranty, will be appointed to the Union board of directors. In addition, a director recommended by Guaranty from among the current members of the board of directors of Guaranty or Guaranty Bank, and approved by Union, will become a director of Union Bank & Trust Company.

Potential Payments Under Employment Agreement. Guaranty has an employment agreement with William E. Doyle, Jr., the President and Chief Executive Officer of Guaranty. Under the terms of his employment agreement, if Mr. Doyle’s employment is terminated by Guaranty for reasons other than “cause” or by Mr. Doyle for “good reason” (as defined in the agreement), he will be entitled to receive severance pay equal to one-twelfth of his annual base salary in effect at the time of termination each month for 36 months or for the remainder of the term of the agreement, whichever is less. The term of Mr. Doyle’s employment agreement ends May 31, 2006. If his employment terminates for reasons other than cause or for good reason within one year of a change in control of Guaranty, he will be entitled to severance payments approximately equal to the excess of 299% of his average annualized compensation as determined under Section 280G of the Internal Revenue Code of 1986, as amended, for the period that he was employed by Guaranty prior to the change in control. If Mr. Doyle’s employment is terminated as set forth above after the merger, he will be entitled to total severance payments, including continued compensation for the remainder of the term of his contract, amounting to approximately $695,000.

Stock Options. Stock options under Guaranty’s stock option plan held by certain directors, officers and employees of Guaranty that are outstanding and unexercised at the effective date of the merger will be converted into options to acquire shares of Union common stock, adjusted to reflect the 0.842 exchange ratio of the stock election component of the merger consideration. In addition, in accordance with Guaranty’s stock option plan, for 60 days after the merger each stock option may be cancelled by the option holder in exchange for a cash payment equal to the difference between the fair market value of Union common stock on the date the option is cancelled and the per share exercise price.

The Guaranty board was aware of these interests and considered them before approving and adopting the merger agreement.

Conditions that Must Be Satisfied for the Merger to Occur (page 27)

The following conditions must be met for Union and Guaranty to complete the merger:

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Unless prohibited by law, either Guaranty or Union could elect to waive a condition that has not been satisfied and complete the merger anyway.

Union and Guaranty Must Obtain Regulatory Approvals to Complete the Merger (page 28)

The parties cannot complete the merger unless they obtain the approval of the Virginia State Corporation Commission and the Board of Governors of the Federal Reserve System. On March 3, 2004, Union filed a notification of the merger with the Federal Reserve and an application with the Virginia State Corporation Commission. While the parties cannot predict whether or when they will obtain the required regulatory approvals, the parties see no reason why the approvals will not be obtained in a timely manner.

Termination of the Merger Agreement (page 30)

Union and Guaranty can mutually agree to terminate the merger agreement at any time without completing the merger. Either company may also terminate the merger agreement in the following circumstances:

In addition, Union may terminate the merger agreement at any time before the special meeting if the board of directors of Guaranty withdraws or modifies its recommendation to the Guaranty shareholders that the merger agreement be approved in any way which is adverse to Union, or Guaranty materially breaches its covenants requiring the calling and holding of a meeting of shareholders to consider the merger agreement and prohibiting the solicitation of other offers. Union may terminate the merger agreement if Guaranty enters into an agreement with another party with respect to a business combination transaction or with respect to an acquisition directly from Guaranty of securities representing 10% or more of the voting power of Guaranty. Union also may terminate the merger agreement if a third party commences a tender offer or exchange offer for 20% or more of the outstanding shares of Guaranty common stock and the board of directors of Guaranty recommends that Guaranty shareholders tender their shares in the offer or otherwise fails to recommend that they reject the offer within a specified period.

Guaranty may terminate the merger agreement at any time before the special meeting to enter into an acquisition agreement or similar agreement with respect to an unsolicited “superior proposal,” as defined in the merger agreement, which has been received and considered by Guaranty in compliance with the applicable terms of the merger agreement, provided that Guaranty has notified Union at least five business days in advance of any such termination and given Union the opportunity during such period to make an offer at least as favorable as the superior proposal, as determined by the Guaranty board of directors. A $2.2 million termination fee would be payable by Guaranty to Union under these and certain other circumstances. See “The Merger – Termination Fees” beginning on page 31.

In addition, Guaranty may terminate the merger agreement at any time during the five-day period following the “determination date”, as defined in the merger agreement, if (a) the average closing price of Union common stock during the 20 consecutive trading days ending on the determination date is less than $24.424 and (b) the number obtained by dividing such average closing price by $30.53 is less than the number obtained by dividing the closing value of the Nasdaq Bank Index on the determination date by the closing value of the Nasdaq Bank Index on December 16, 2003 and subtracting 0.20 from such quotient. If this occurs, Union could voluntarily elect to increase the per share cash consideration and/or per share stock consideration of the merger such that either (a) or (b) above may be deemed to have not occurred, thereby nullifying Guaranty’s termination right.

Termination Fees (page 31)

Guaranty must pay Union a termination fee of $2.2 million if the merger agreement is terminated by Union or Guaranty under certain specified circumstances. In addition, Union will be required to pay Guaranty up to $750,000 if the merger agreement is terminated by Union or Guaranty under certain specific circumstances. These termination and payment circumstances are more fully described on pages 33 through 35 in the merger agreement.

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Affiliate Agreement (page 32)

The directors and executive officers of Guaranty have entered into an agreement with Union pursuant to which they have agreed individually to vote all of their shares in favor of the merger agreement. As of March 1, 2004, such individuals owned shares representing approximately 20.48% of the voting power of Guaranty common stock entitled to vote at the special meeting.

Merger to Take Place in the Second Quarter of 2004 (page 24)

The merger of Guaranty into Union will become effective at the date and time stated on the certificate of merger issued by the Virginia State Corporation Commission. We anticipate the merger will take place in the second quarter of 2004.

Guaranty is Prohibited from Soliciting Other Offers (page 30)

Guaranty has agreed that, while the merger is pending, it will not initiate or, subject to some limited exceptions, engage in discussions with any third party other than Union regarding extraordinary transactions such as a merger, business combination or sale of a material amount of assets or capital stock.

The Merger Will Be Accounted for Under the Purchase Method of Accounting (page 32)

Union will use the purchase method of accounting to account for the merger.

Listing of Union Common Stock

Union will list the shares of its common stock to be issued in the merger on the Nasdaq National Market.

Market Price Information (page 36)

Shares of Union common stock are traded on the Nasdaq National Market under the symbol “UBSH”. Guaranty common stock is traded on the Nasdaq National Market under the symbol “GSLC”. On December 18, 2003, the last trading day preceding public announcement of the proposed merger, Union common stock closed at $30.52 per share and Guaranty common stock closed at $19.68 per share. On March 4, 2004, Union common stock closed at $32.45 per share and Guaranty common stock closed at $26.45 per share.

Union cannot assure you that its stock price will continue to trade at or above the prices shown above. You should obtain current stock price quotations for Union common stock from a newspaper, via the Internet or by calling your broker.

Recent Financial Developments

Union. For the year ended December 31, 2003, net income for Union was $16.7 million or $2.17 per share, assuming dilution, compared to $14.5 million or $1.90 per share, assuming dilution, for 2002. At December 31, 2003, Union had total consolidated assets of $1.23 billion, an increase of 10.7% over the $1.12 billion in total consolidated assets at December 31, 2002. Total consolidated loans at December 31, 2003 were $878.3 million, up 22.9% from the $714.8 million in total consolidated loans at December 31, 2002. Total consolidated deposits at December 31, 2003 increased to $1.0 billion, up from $897.6 million at December 31, 2002.

Guaranty. For the year ended December 31, 2003, net income for Guaranty was $1.9 million or $0.97 per share, assuming dilution, compared to $1.8 million or $0.89 per share, assuming dilution, for 2002. At December 31, 2003, Guaranty had total consolidated assets of $199.0 million, which was an increase over the $197.1 million in total consolidated assets at December 31, 2002. Total loans outstanding decreased 4.4% from $163.2 million at December 31, 2002 to $156.0 million at December 31, 2003. Total deposits at December 31, 2003 increased to $175.2 million, up from $171.3 million at December 31, 2002.

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Comparative Per Share Data

The following tables include per share data for Union common stock and Guaranty common stock, including book values, cash dividends declared and net income, on the date and for the periods presented, (a) for Union and Guaranty on a historical basis; (b) for Union on an unaudited pro forma combined basis; and (c) on an unaudited equivalent per share of Guaranty common stock basis.

The pro forma combined and equivalent per share information combines the Union information together with Guaranty information as though the merger had been consummated on December 31, 2002 and September 30, 2003. The pro forma data in the tables assume that the merger is accounted for using the purchase method of accounting. The pro forma data does not give effect to the reduction in operating expenses and the revenue enhancement opportunities that are anticipated subsequent to the merger. Therefore, while helpful in illustrating the financial characteristics of the merger under one set of circumstances, the pro forma data is not indicative of the results of future operations or other actual results that would have occurred had the merger been consummated at the beginning of the periods presented. You should read the information below in conjunction with Union’s and Guaranty’s audited financial statements and unaudited interim financial statements, together with the related footnotes, that are included and/or incorporated by reference in this proxy statement/prospectus.

The number of shares issued in the calculations assumes that 60% of the weighted average of Guaranty shares outstanding during the applicable period, or in the case of book value calculations, the actual number of shares outstanding at September 30, 2003, are converted into Union shares at the exchange ratio of 0.842.

The pro forma combined book value per share represents Guaranty’s historical book value as adjusted for the fair value and number of shares issued in connection with the merger. The Guaranty pro forma equivalent amounts are calculated by multiplying the pro forma combined amounts by the exchange ratio of 0.842.

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Selected Consolidated Financial Data

We are providing the following information to help you analyze the financial aspects of the merger. We derived this information from audited financial statements for 1998 through 2002 and unaudited financial statements for the nine months ended September 30, 2003 and 2002 for each company. This information is only a summary, and you should read it in conjunction with the historical financial statements and the related notes to those statements included and/or incorporated by reference in this proxy statement/prospectus, including that information contained in the annual and quarterly reports and other documents that Union and Guaranty have filed with the Securities and Exchange Commission. See “Where You Can Find More Information” on page 48. You should not rely on the nine month information as being indicative of results expected for the entire year.

UNION – SELECTED HISTORICAL FINANCIAL DATA

GUARANTY – SELECTED HISTORICAL FINANCIAL DATA

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RISK FACTORS RELATING TO THE MERGER

Upon completion of the merger, you will receive shares of Union common stock and/or cash in exchange for your shares of Guaranty common stock. Before deciding whether or not to approve the transaction, you should be aware of and consider the following risks and uncertainties that are applicable to the merger in addition to the other information contained in or incorporated by reference into this document, including the matters addressed under the caption “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 12.

The value of the stock consideration depends on Union’s stock price, and you may receive Union common stock valued at less than $28.00 per share for your shares of Guaranty common stock.

You will not know the value of the Union common stock you may receive in the merger at the time you vote or at the time you make an election as to the form of consideration. You will be required to make your election to receive cash and/or shares of Union common stock prior to the closing. If the closing price of Union common stock on the effective date of the merger is less than $33.25, the actual value of the stock consideration received will be less than $28.00 per share of common stock exchanged in the merger, because of the stock exchange ratio of 0.842 shares of Union common stock for each Guaranty share. In addition, there will be a time period after the completion of the merger before Guaranty shareholders receive their consideration representing Union common stock. Until the stock certificates are received, Guaranty shareholders will not be able to sell their Union shares in the open market and, thus, will not be able to avoid losses resulting from any decline in the trading price of Union common stock during this period.

You may not receive the form of consideration that you elect in exchange for your shares of Guaranty common stock, which may result in different tax consequences to you.

The merger agreement contemplates that not more than 40% of the consideration paid to Guaranty shareholders be paid in cash. If the elections made by Guaranty shareholders would result in more than 40% of the merger consideration being payable by Union in cash, those shareholders electing to receive cash will have their cash consideration reduced by a pro rata amount and will receive a portion of their consideration in the form of Union common stock. Accordingly, there is a risk that you will not receive a portion of the merger consideration in the form that you elect, which could result in, among other things, tax consequences that differ from those that would have resulted had you received the form of consideration you elected. See “The Merger — Merger Consideration and Election and Allocation Procedures” on page 24 and “Material Federal Income Tax Consequences” on page 33.

The fairness opinion obtained by Guaranty from Davenport & Company LLC will not reflect changes in circumstances between the signing of the merger agreement and the merger.

Guaranty has not obtained an updated opinion as of the date of this document from Davenport & Company LLC, its financial advisor. Changes in the operations and prospects of Union, general market and economic conditions and other factors which may be beyond the control of Union, and on which the fairness opinion was based, may alter the value of Union or the prices of shares of Union common stock by the time the merger is completed. The opinion does not speak as of the time of the merger will be completed or as of any date other than the date of such opinion. See “The Merger — Opinion of Guaranty’s Financial Advisor” on page 17.

The merger agreement limits Guaranty’s ability to pursue alternatives to the merger.

The merger agreement contains “no-shop” provisions that, subject to limited exceptions, limit Guaranty’s ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of the company. In addition, Guaranty must pay Union a termination fee of $2.2 million if the merger agreement is terminated and Guaranty, subject to certain restrictions, consummates another similar transaction. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Guaranty from considering or proposing the acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger.

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Combining Union and Guaranty may be more difficult, costly or time-consuming than we expect.

Union and Guaranty have operated, and, until the completion of the merger, will continue to operate, independently. The integration process could result in the loss of key employees, the disruption of each company’s ongoing business, inconsistencies in standards, controls, procedures and policies that adversely affect either company’s ability to maintain relationships with customers and employees or achieve the anticipated benefits of the merger. As with any merger of financial institutions, there also may be disruptions that cause Union and Guaranty to lose customers or cause customers to withdraw their deposits from Union, or other unintended consequences that could have a material adverse effect on Union’s results of operations or financial condition.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This document and the documents incorporated herein by reference contain forward-looking statements by Union and Guaranty within the meaning of the federal securities laws. These forward-looking statements include information about the financial condition, results of operations and businesses of Union and Guaranty, including statements relating to the merger. This document also includes forward-looking statements about the consummation and anticipated timing of the merger and the tax-free nature of the merger. In addition, any of the words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “projects,” “predicts” and similar expressions indicate forward-looking statements. These forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

Management of Union and Guaranty each believes that the forward-looking statements about its respective company are reasonable; however, you should not place undue reliance on them. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of Union following completion of the merger may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond Union’s and Guaranty’s ability to control or predict.

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THE SPECIAL MEETING

Date, Place and Time

This proxy statement/prospectus is being furnished to you in connection with the solicitation of proxies by Guaranty’s board of directors for use at the special meeting of shareholders. The special meeting will be held at the Glenmore Country Club located at 1750 Piper Way, Keswick, Virginia on Thursday, April 22, 2004 at 10:00 a.m.

Purpose of the Special Meeting

The purpose of the special meeting is to consider and vote upon a proposal to approve the merger agreement, to consider and approve a proposal to adjourn the special meeting if necessary to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger agreement and to consider any other matters that may be properly submitted for a vote at the special meeting. At this time, the Guaranty board is unaware of any matters, other than as set forth above, that may be presented for action at the special meeting.

The merger agreement is attached to this proxy statement/prospectus as Appendix I.

Record Date

Only shareholders of record of Guaranty common stock at the close of business on March 1, 2004, the record date, are entitled to notice of and to vote at the special meeting or any adjournment thereof. At the close of business on March 1, 2004, there were 2,000,659 shares of Guaranty common stock issued and outstanding held by approximately 330 shareholders of record.

Vote Required

Approval of the merger agreement requires the affirmative vote of the holders of a majority of the votes entitled to be cast at the meeting, in person or by proxy. The affirmative vote of a majority of the votes cast on the matter at the special meeting is required to approve the proposal to adjourn a special meeting if necessary to permit further solicitation of proxies on the proposal to approve the merger agreement and any other matter properly submitted to shareholders for consideration at the special meeting. Each share of Guaranty common stock outstanding on March 1, 2004 entitles the holder to cast one vote upon each matter properly submitted at the special meeting.

A quorum, consisting of the holders of a majority of the issued and outstanding shares of Guaranty common stock, must be present in person or by proxy before any action may be taken at the special meeting. Abstentions and broker non-votes will be treated as shares that are present for purposes of determining the presence of a quorum, but will not be counted in the voting on a proposal.

Broker non-votes are shares held by brokers or nominees as to which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and the broker or nominee does not have discretionary voting power under applicable securities law rules. Under these rules, the proposals to approve the merger agreement and to adjourn the special meeting are not items on which brokerage firms may vote in their discretion on behalf of their clients if such clients have not furnished voting instructions within 10 days of a special meeting. Because the proposal to approve the merger agreement requires the affirmative vote of a majority of the votes entitled to be cast by the outstanding shares of Guaranty common stock, abstentions and broker non-votes will have the same effect as a vote against the proposal to approve the merger agreement at the special meeting. For the same reason, the failure of a shareholder to vote by proxy or in person at the special meeting will have the effect of a vote against this proposal. Because of the vote required for the proposal to adjourn a special meeting, abstentions and broker non-votes will have no effect on this proposal.

As of March 1, 2004, directors and executive officers of Guaranty and their affiliates beneficially owned an aggregate of 409,821 shares of Guaranty common stock, or 20.48% of the shares of Guaranty common stock

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outstanding on that date and entitled to vote on the merger. These persons have agreed individually to vote their shares of Guaranty common stock in favor of the merger, and we expect them to do so.

Voting and Revocation of Proxies

A proxy card is enclosed with this proxy statement/prospectus. You are requested to complete, date and sign the proxy card and return it promptly in the enclosed envelope. All shares of Guaranty common stock represented by properly executed proxies received before or at the special meeting will, unless the proxies are revoked, be voted in accordance with the instructions indicated on those proxies. If no instructions are indicated on a properly executed proxy card, the shares will be voted “FOR” the merger agreement and “FOR” the proposal to adjourn the special meeting if necessary to permit further solicitation of proxies on the proposal to approve the merger agreement.

A shareholder may revoke his or her proxy at any time before it is voted by:

Attendance at the special meeting will not in and of itself constitute revocation of a proxy.

If you hold your shares in street name, you will need additional information from your broker in order to vote your shares in person at the special meeting.

Solicitation of Proxies

Union and Guaranty will equally share the costs of this solicitation of proxies. Solicitations may be made by mail, telephone, facsimile or personally by directors, officers and employees of Guaranty on a part-time basis and for no additional compensation for performing such services. Union and Guaranty will share equally the expenses of printing and mailing this proxy statement/prospectus.

Recommendation of the Guaranty Board of Directors

The board of directors of Guaranty has unanimously approved the merger agreement and the transactions contemplated by the agreement. The Guaranty board believes that the proposed transaction is fair to and in the best interests of Guaranty and its shareholders. The Guaranty board unanimously recommends that its shareholders vote “FOR” approval of the merger agreement. The Guaranty board of directors also unanimously recommends that its shareholders vote “FOR” approval of the proposal to adjourn the special meeting if necessary to solicit additional proxies to vote in favor of the merger agreement.

THE MERGER

(Proposal 1)

The following is a summary description of the material aspects of the merger agreement and the merger. This description does not purport to be complete and is qualified in its entirety by reference to the merger agreement and the fairness opinion of Guaranty’s financial advisor, which are attached as appendices I and II, respectively, to this proxy statement/prospectus. We urge you to read such appendices in their entirety.

Terms of the Merger

Under the terms and conditions set forth in the merger agreement, Guaranty will be merged with and into Union. At the effective date of the merger, each share of common stock of Guaranty issued and outstanding

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immediately prior to the effective date will cease to be outstanding and will be converted into the right to receive:

You have the opportunity to elect to receive cash or Union common stock, or a combination of cash and Union common stock, for your shares of Guaranty common stock, subject to allocation procedures set forth in the merger agreement. These allocation procedures are intended to ensure that 60% of the outstanding shares of Guaranty common stock will be converted into the right to receive Union common stock and 40% of the outstanding shares of Guaranty common stock will be converted into the right to receive cash. If holders of more than 60% of the outstanding shares of Guaranty common stock elect to receive Union common stock in the merger, Union has the right to issue a greater proportion of shares of common stock (but Union does not expect to issue more than 1,500,000 shares in the merger). Because of the limitations described above, the actual allocation of cash and/or shares of Union common stock you receive will depend on the elections of other Guaranty shareholders and may be different from what you elect.

After the merger of Guaranty into Union, Guaranty Bank will be merged into Union Bank & Trust Company, a wholly owned banking subsidiary of Union. The parties expect the holding companies will merge in the second quarter of 2004 and merger of the subsidiary banks will take place in the third quarter of 2004.

Background of the Merger

Since October 2000, when Guaranty entered into a written agreement with the Federal Reserve Bank of Richmond and Virginia’s Bureau of Financial Institutions, Guaranty’s primary focus has been on repositioning the company to stabilize and improve financial performance. Significant steps taken included hiring a new chief executive officer, creating a new strategic plan, selling branches in markets outside of the Charlottesville market area, revising business line operating models and implementing new operating policies and procedures. This deliberate focus resulted in record earnings in 2002, improved credit quality, and, in October 2002, a complete release from the written agreement Guaranty entered into with the banking regulators.

In each of the past two years, Guaranty also has focused upon a longer-term strategy aimed at profitably growing the company. Consideration was given to Guaranty’s progress in improving financial results and operational performance, its competitive position in the marketplace, growth expectations for the local economy, industry trends and future capital investment requirements. Guaranty considered de novo expansion and growth through acquisition in markets and business lines which might complement its current operation. While repositioning-related plans have remained the highest priority, Guaranty vigorously pursued an acquisition opportunity in mid-2003. After several months of discussion, a mutually agreeable arrangement could not be negotiated and talks were discontinued.

In September 2003, Davenport & Company LLC was engaged to assist Guaranty in identifying, analyzing and evaluating strategic alternatives for the future, as follows:

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Davenport assisted Guaranty in preparing specific, well defined operating assumptions for each alternative, and financial results were projected for a five-year period, beginning with 2004. Based upon the projected financial results and the expected impact on Guaranty’s stock price, Guaranty determined that a sale was most likely to create the highest value for its shareholders.

In October 2003, the Guaranty board engaged Davenport to conduct a price discovery process in which potential acquirors would be contacted to determine their interest in merging with Guaranty. The objective was to confirm the value of Guaranty in a sale scenario, so that a proper comparison to other strategic alternatives could be completed. A list of 13 potential partners was reviewed, evaluated and approved by the board. Potential acquirors were selected based upon their financial strength, operating style, quality of management, market valuation and potential for future success.

In November 2003, Davenport initiated contact with prospective acquirors, subsequently delivering confidentiality agreements and information packages to 13 different banking companies. By November 18, 2003, Guaranty had received non-binding expressions of interest from four institutions. On November 20, 2003, at the Guaranty board’s annual strategic planning retreat, a thorough review and discussion of each proposal was conducted, as well as a review of Guaranty’s preliminary 2004 operating budget. At the conclusion of the retreat, the board decided that Union submitted the most attractive proposal and that management should move forward with Union to complete a mutual due diligence process. Following due diligence and two subsequent board meetings, Guaranty’s board unanimously approved the terms of the merger and a definitive merger agreement was approved and signed on December 18, 2003.

Guaranty’s Reasons for the Merger

In deciding to enter into the merger agreement, Guaranty’s board considered a number of factors. The board did not assign a relative weight or specific weights to the factors considered. The principal factors that led the Guaranty board to approve the merger agreement were:

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Other material factors considered were the financial condition and history of performance of Union, and the compatibility of the managements of the two organizations. The Guaranty board believes that the addition of the resources that Union will provide to Guaranty will enable Guaranty to provide a wider and improved array of financial services to consumers and businesses, and added flexibility in dealing with the changing competitive environment in their market areas.

The Guaranty board has concluded that the terms of the merger agreement, which were determined through arms-length negotiations, are fair to Guaranty’s shareholders. As explained below, this conclusion is supported by the opinion of an independent financial advisor. In establishing the exchange ratio, the Guaranty board also considered the exchange ratio in relation to the market value and earnings per share of Union’s common stock and Guaranty’s common stock, as well as information concerning the financial conditions, results of operations and prospects of Union and Guaranty.

The board of directors of Guaranty believes that the merger is in the best interests of Guaranty and its shareholders. Guaranty’s directors have all committed to vote shares under their control in favor of the merger to the extent of their fiduciary ability.

The Guaranty board unanimously recommends that you vote “FOR” approval of the merger agreement.

Union’s Reasons for the Merger

Union entered into the merger agreement with Guaranty, because, among other things, Union believes the merger is consistent with its expansion strategy to target entry into strong markets demographically that logically extend Union’s existing footprint. The Charlottesville Metropolitan Statistical Area has some of the best market demographics in Virginia, Guaranty has the largest market share among community banks operating in Charlottesville and the region lies just west of Union’s existing franchise. As an alternative, the board of directors of Union had previously considered opening new branch or loan production offices in the Charlottesville area. However, with the presence of three Charlottesville-based community banks, Union opted to deploy resources elsewhere. With the opportunity to acquire Guaranty at a reasonable premium, the Union board concluded that the opportunity was unique and merited careful consideration.

Opinion of Guaranty’s Financial Advisor

Guaranty engaged Davenport to act as its financial advisor in connection with Guaranty’s board of directors’ evaluation of potential merger partners. Davenport agreed to assist Guaranty in analyzing, structuring, negotiating and closing a potential merger. Davenport was also engaged to render a written opinion to Guaranty’s board as to the fairness, from a financial point of view, of the consideration to be paid to Guaranty’s shareholders in accordance with a potential merger. In requesting Davenport’s advice and opinion, no restrictions or limitations were imposed by Guaranty upon Davenport with respect to the investigations made or the procedures followed by Davenport in rendering its opinion.

On December 18, 2003, Davenport reviewed the financial aspects of the proposed merger and delivered its opinion (the “Davenport Opinion”) to Guaranty’s board of directors to the effect that, as of that date, and based upon and subject to the assumptions, limitations and qualifications set forth in the opinion, the consideration to be paid to Guaranty’s shareholders pursuant to the merger agreement was fair to Guaranty’s shareholders from a financial point of view.

The full text of the Davenport Opinion, which describes, among other things, the assumptions made, matters considered, and the limitations on the review undertaken, is attached to this document as Appendix II and is incorporated in this document by reference. The description of the Davenport Opinion set

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forth below is qualified in its entirety by reference to the full text of the Davenport Opinion in Appendix II. Guaranty’s shareholders are urged to read the Davenport Opinion carefully and in its entirety.

The Davenport Opinion is directed only to the fairness, from a financial point of view, of the consideration to be received by Guaranty’s shareholders in the merger, and it is not a recommendation on the amount of consideration being paid by Union. Further, the Davenport Opinion is not a recommendation to any Guaranty shareholder as to how he or she should vote at the special meeting. Davenport was not retained as an advisor or agent to Guaranty’s shareholders or any other person, and it is acting only as an advisor to Guaranty’s board.

Davenport is a regional investment banking firm. As part of its investment banking business, Davenport is regularly engaged in the valuation of businesses and securities in connection with mergers, acquisitions, underwritings, sales and distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Davenport was selected by Guaranty to act as its financial advisor because of Davenport’s expertise in valuing and advising financial institutions in merger and acquisition transactions and because Davenport was familiar with Guaranty and its business, having previously provided financial advisory services to Guaranty.

In arriving at its opinion, Davenport, among other things:

In rendering its opinion, Davenport assumed and relied upon the accuracy, completeness and fairness of all of the financial and other information that was available to it from public sources, that was provided to it by Guaranty and Union or their representatives, or that was otherwise reviewed by it. Davenport did not attempt or assume any responsibility to independently verify any of the information reviewed by it. Davenport is not an expert in the evaluation of loan portfolios for the purpose of assessing the adequacy of allowances for losses, and it assumed that Guaranty’s and Union’s respective allowances are, in the aggregate, adequate. Davenport did not review any individual credit files or make any independent evaluation, appraisal or physical inspection of the assets,

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liabilities or individual properties of Guaranty or Union, nor was Davenport furnished with any evaluation or appraisal of their assets, liabilities or properties.

With respect to the financial forecast information furnished to or discussed with Davenport by Guaranty or Union, Davenport assumed that such financial forecast information had been reasonably prepared and reflected the best currently available estimates and judgment of Guaranty’s or Union’s management as to the expected future financial performance of Guaranty or Union. Davenport assumed no responsibility for and expressed no view as to any such forecasts or estimates or the assumptions upon which they were based. Davenport assumed that the merger will be completed substantially in accordance with the terms set forth in the merger agreement and that the merger will be accounted for as a purchase under generally accepted accounting principles. The Davenport Opinion is necessarily based on economic, market, financial and other conditions as they existed on, and on the information made available to Davenport as of, the date of the Davenport Opinion. Davenport does not have any obligation to update, revise or reaffirm this opinion or otherwise comment on any events occurring after December 18, 2003.

The Davenport Opinion was just one of the many factors taken into consideration by Guaranty’s board of directors in determining to approve the merger agreement. (See “— Guaranty’s Reasons for the Merger” on page 16.) The Davenport Opinion does not address the relative merits of the merger as compared to any alternative business strategies that might exist for Guaranty, nor does it address the effect of any other business combination in which Guaranty might engage. The Davenport Opinion was not an expression of an opinion as to the prices at which shares of Union common stock or Guaranty common stock would trade following the announcement of the merger or the actual value of the Union common shares when issued pursuant to the merger, or the prices at which the Union common shares will trade following the completion of the merger.

In connection with rendering its opinion, Davenport performed a variety of financial analyses. The following is a summary of the material analyses presented to Guaranty’s board of directors at its December 18, 2003 meeting. The financial analyses summarized below include information presented in tabular format. The summary set forth below does not purport to be a complete description of the analyses performed by Davenport, but describes, in summary form, the principal elements of the presentation made by Davenport to Guaranty’s board of directors on December 18, 2003. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, such an opinion is not readily susceptible to summary description. Each of the analyses conducted by Davenport was carried out in order to provide a different perspective on the transaction and add to the total mix of information available. Davenport did not form a conclusion as to whether any individual analysis, considered in isolation, supported or failed to support an opinion as to fairness from a financial point of view. Rather, in reaching its conclusion, Davenport considered the results of the analyses in light of each other and ultimately reached its opinion based on the results of all analyses taken as a whole. Davenport did not place particular reliance or weight on any individual analysis, but instead concluded that its analyses, taken as a whole, supported its determination. Accordingly, notwithstanding the separate factors summarized below, Davenport believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all analyses and factors, could create an incomplete or misleading view of the evaluation process underlying its opinion.

In performing its analyses, Davenport made numerous assumptions with respect to industry performance, general business, economic and market conditions and other matters, many of which are beyond the control of Guaranty and Union. The projections and other information used in the analyses performed by Davenport are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by the projections and other information used in the analyses, and the results of such analyses.

Transaction Summary. Davenport reviewed the terms of the proposed merger including the aggregate transaction value. As is more specifically set forth in the merger agreement, upon consummation of the merger, each holder of Guaranty common stock will be entitled to receive consideration of either $28.00 in cash or 0.842 shares of Union common stock per share of Guaranty common stock, or a combination of cash and stock, at such shareholder’s election. Davenport further understands that these shareholder elections are subject to certain allocation procedures intended to ensure that 60% of the outstanding shares of Guaranty common stock will be converted into the right to receive Union common stock and 40% of the outstanding shares of Guaranty common stock will be converted into the right to receive cash. (See “— Merger Consideration and Election and Allocation Procedures” on page 24.)

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Transaction multiples from the merger were based on a $26.62 weighted average per share deal price and financial data as of and for the last twelve months (“LTM”) ended September 30, 2003 for Guaranty. The $26.62 weighted average per share deal price was calculated based on $28.00 in cash for 40% of the Guaranty shares and $25.71 (calculated using the exchange ratio of 0.842 times the Union closing stock price of $30.53 on December 16, 2003) for 60% of the Guaranty shares. This weighted average per share value resulted in an implied total transaction value of approximately $54.0 million. Based on the per share deal price of $26.62, Davenport calculated the premium over Guaranty’s closing price of $20.25 as of December 16, 2003 to be 31.5%, the price to LTM earnings per share to be 28.0x, the price to estimated 2003 earnings per share to be 26.5x, the price to estimated 2004 earnings per share to be 23.8x, the price to book value to be 2.68x, the price to deposits to be 30.2%, and the price to assets to be 26.9%.

The following table provides a summary description of some of the financial analyses Davenport used in the preparation of its fairness opinion. Some of Davenport’s analyses are not readily susceptible to summary description and are not included in the table. Davenport believes that its analyses must be considered together as a whole and that selecting portions of or individual factors considered in its analyses, without considering all other factors and analyses, could create an incomplete or inaccurate view of the analyses and the process that Davenport used in arriving at its opinion.

Bank Acquisition Analysis. Davenport analyzed the transaction details of 15 community bank acquisition transactions announced from January 1, 2002, through December 17, 2003, in Virginia, Maryland, North Carolina, South Carolina, Tennessee, West Virginia and the District of Columbia with transaction values between $25 million and $150 million (the “Bank Acquisitions”). These transactions are listed in the following table.

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The transaction values of the Bank Acquisitions ranged from $25.6 million to $140.8 million. For each Bank Acquisition transaction Davenport compared the implied ratio of price per common share paid to the LTM earnings per share of the acquired company and also compared the implied price per common share to the acquired company’s most recent book value, assets and deposits per share based on the latest publicly available financial statements of the acquired company prior to the announcement of the acquisition. Davenport also compared the implied price per common share to the closing market price of the acquired company one day prior to the announcement of the transaction. These multiples for the Bank Acquisitions and the implied multiples for Guaranty based on the proposed merger are summarized in the table below.

Analysis of Certain Other Publicly Traded Companies. To provide contextual data and comparative market information, Davenport compared selected financial information for Guaranty and Union to the corresponding publicly available information of certain other Virginia community banks whose securities are publicly traded. The peer group companies were chosen because they possess general business, operating and financial characteristics representative of companies in the region and the industry in which Guaranty and Union operate. The Guaranty peer group companies were comprised of Virginia banks with total assets between $150 million and $400 million and with a return on average equity greater than 7.5%. Guaranty’s peer group companies were: Alliance Bankshares Corporation, Benchmark Bankshares, Inc., BOE Financial Services, Cardinal Bankshares Corporation, Central Virginia Bankshares, Inc., Citizens Bank & Trust Company, Commonwealth Bankshares, Inc., F & M Bank Corp., Fauquier Bankshares, Inc., First National Corporation, Hampton Roads Bankshares, Inc., James Monroe Bancorp, Inc., Patrick Henry National Bank, Peoples National Bank, Pinnacle Bankshares Corporation, Shore Financial Corporation and Valley Financial Corporation.

The Union peer group companies were comprised of Virginia banks with total assets between $600 million and $2 billion. Union’s peer group companies were: American National Bankshares, Inc., Eastern Virginia Bankshares, Inc., First Community Bankshares, Inc., FNB Corporation, National Bankshares, Inc., Virginia Commerce Bancorp, Inc. and Virginia Financial Group, Inc.

The data and ratios that were analyzed included each company’s most recent total assets, year to date return on average equity and return on average assets, market value, last closing stock price, price to LTM earnings per share, price to book value and price to tangible book value. Balance sheet information is as of September 30, 2003. Year to date (“YTD”) is the nine months ended September 30, 2003. Market information used in the ratios provided below is as of December 16, 2003. “LTM” is the last twelve months ended September 30, 2003. The following table summarizes the relevant data items for Guaranty and the Guaranty peer group.

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The following table summarizes the relevant data items for Union and the Union peer group.

Present Value Analysis. Davenport performed a present value analysis on the per share stock price of Guaranty by making assumptions about Guaranty’s future growth, profitability and stock price and discounting Guaranty’s future estimated dividends over a five year period and a terminal value for Guaranty at the end of five years back to the present. Davenport performed two different present value analyses. One analysis assumed steady asset growth and the other analysis combined steady asset growth with branch expansion. In the steady growth analysis, Davenport used an asset growth rate of 8% and gradually improving profitability and efficiency ratios. In the branch expansion analysis, Davenport used the same underlying growth and profitability assumptions used in the steady growth analysis and the estimated financial impact of adding four new branches over the five-year forecast period. In determining dividends for both scenarios, Davenport used the forecasted dividend of $0.36 for 2004, and assumed the annual dividend would increase $0.06 per year to $0.60 in 2008.

In performing these analyses, Davenport calculated the terminal value using a range of 13.0x to 17.0x estimated 2008 earnings per share. Present values were calculated using a discount rate range of 12.0% to 14.0%. The asset growth and profitability assumptions were based on Guaranty’s historical growth rates, discussions with management and community banking industry trends. The discount rate and terminal value earnings multiple assumptions were based on industry trends and the expectations of investors that invest in community banks. The steady growth analysis provided a range of present values from $13.48 to $18.67 per share and the branch expansion analysis provided a range of present values from $16.40 to $22.87 per share.

Davenport noted that it included a present value analysis because it is a widely used valuation methodology, but also noted that the results of this methodology are highly dependent upon the numerous assumptions that must be made. The projections and other information used in the present value analysis performed by Davenport are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by the projections and other information used in the analyses, and the results of such analyses.

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Relative Contribution Analysis. Davenport analyzed the relative contributions to be made by Guaranty and Union to the combined institution based on balance sheet data as of September 30, 2003 and net income data for the years ended December 31, 2001 and 2002, for the nine months ended September 30, 2003 and projected for the year ending December 31, 2004. The market value data is as of December 16, 2003. Davenport compared such contributions to the ownership stake that Guaranty shareholders would have in the combined institution, based on the exchange ratio of 0.842 shares of Union stock for each share of Guaranty stock, assuming (i) the consideration to be received by Guaranty shareholders was all stock and (ii) the consideration to be received by Guaranty shareholders was 60% stock and 40% cash. This information is presented in the following table.

Accretion/Dilution Analyses. Davenport analyzed the estimated pro-forma accretion/dilution impact of the merger to Guaranty shareholders on a per share basis based on earnings per share for the last twelve months ended September 30, 2003, balance sheet data as of September 30, 2003 and the market price as of December 16, 2003. This information is presented in the following table.

Davenport also analyzed the estimated pro-forma accretion/dilution impact of the merger to Guaranty shareholders on a per share basis based on the estimated pro-forma combined 2004 cash and GAAP earnings per share using Guaranty’s and Union’s estimated 2004 net income and assuming cost savings equal to 25% of Guaranty’s estimated 2004 noninterest expenses. This analysis showed 86.4% accretion in the 2004 cash earnings per share and 80.0% accretion in the 2004 GAAP earnings per share to Guaranty’s shareholders. Davenport also analyzed the estimated pro-forma 2004 dividend based on estimates provided by Union’s management which showed 85.2% accretion in the 2004 dividend to Guaranty’s shareholders.

Other Analyses. Davenport reviewed the financial and market performance of Guaranty and Union individually and relative to relevant industry peer groups. Davenport also reviewed earnings estimates, balance sheet composition, historical stock performance, stock liquidity and research coverage for Union.

Other. In the ordinary course of its business as a broker-dealer, Davenport may, from time to time, purchase securities from, and sell securities to, Guaranty and Union. As a market maker in securities, Davenport may from time to time have a long or short position in, and buy or sell, equity securities of Guaranty and Union for Davenport’s own account or for the accounts of its customers.

Fees. Pursuant to the terms of an engagement letter dated as of October 22, 2003 between Guaranty and Davenport, Guaranty has paid Davenport a cash fee of $10,000, and has agreed to pay an additional cash fee based on the transaction value upon consummation of the merger. Based on Union’s closing price of $30.52 on December 18, 2003, the additional cash fee would have been approximately $540,000. Guaranty has also agreed to reimburse Davenport for reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify Davenport and certain related persons against certain liabilities in connection with its engagement, including liabilities under the federal securities laws. The terms of the fee arrangement with Davenport, which

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Davenport and Guaranty believe are customary in transactions of this nature, were negotiated at arm’s length between Guaranty and Davenport, and Guaranty’s board was aware of such arrangement, including the fact that a significant portion of the aggregate fee payable to Davenport is contingent upon consummation of the merger. In the past, Davenport has provided investment banking services to Guaranty for which services Davenport received customary fees.

Effective Date

If the merger is approved by the shareholders of Guaranty, all required governmental and other consents are obtained and the other conditions to the merger are satisfied or waived, the merger will be consummated and made effective on the date and at the time indicated on the certificate of merger issued by the Virginia State Corporation Commission pursuant to the Virginia Stock Corporation Act. See “ — Representations and Warranties; Conditions to the Merger.”

It is anticipated that the merger will occur in the second quarter of 2004.

Merger Consideration and Election and Allocation Procedures

Upon consummation of the merger, each outstanding share of Guaranty common stock will be converted into the right to receive $28.00 in cash, without interest, or 0.842 shares of Union common stock, at the election of each Guaranty shareholder and subject to the election, allocation and pro ration procedures set forth in the merger agreement and described below. See “— Merger Consideration,” “— Election Procedures” and “— Allocation Procedures” below. No fractional shares of Union common stock will be issued in connection with the merger. Instead, Union will make a cash payment to each Guaranty shareholder who would otherwise receive a fractional share.

The form of the consideration ultimately received by you will depend upon the election, allocation and pro ration procedures described below and the choices of other Guaranty shareholders. Accordingly, no guarantee can be given that your choice will be honored.

In addition, because the tax consequences to you will be dependent on the form of consideration received, you are urged to read carefully the information set forth below under “— Material Federal Income Tax Consequences” beginning on page 33.

Merger Consideration. The merger agreement provides that each share of Guaranty common stock outstanding immediately prior to the effective date of the merger shall be converted into, and shall be cancelled in exchange for, the right to receive either:

As described under “— Elections” below, you have the opportunity to elect the form of consideration to be received for all shares of Guaranty common stock held by you, subject to allocation and pro ration procedures set forth in the merger agreement. These allocation procedures are intended to ensure that 60% of the outstanding shares of Guaranty common stock will be converted into the right to receive Union common stock and 40% of the outstanding shares of Guaranty common stock will be converted into the right to receive cash. If holders of more than 60% of the outstanding shares of Guaranty common stock elect to receive Union common stock in the merger, Union has the right to issue a greater proportion of shares of common stock (but Union does not expect to issue more than 1,500,000 shares of its common stock in the merger).

The market price of Union common stock is subject to change at all times based on the future financial condition and operating results of Union, future market conditions and other factors. The market price of the Union common stock at the effective date of the merger or at the time that Guaranty shareholders who receive Union

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common stock in the merger actually receive stock certificates evidencing those shares may be higher or lower than recent prices. For further information concerning the historical prices of Union common stock, see “Market for Common Stock and Dividends” on page 36. You are urged to obtain current market prices for Union common stock in connection with voting your shares on the merger agreement at the special meeting and making your election decision.

Elections. Accompanying this proxy statement/prospectus, is an election form and letter of transmittal that permits you:

The Guaranty shares in these three categories are referred to below as stock election shares, cash election shares and no-election shares.

In order to make an effective election, you must send in your Guaranty common stock certificates together with your properly completed election form and letter of transmittal to Registrar and Transfer Company not later than 5:00 p.m., EST on Thursday, April 22, 2004, the election deadline. If you either (a) do not submit a properly completed election form by the election deadline or (b) revoke your election form prior to the election deadline and do not resubmit a properly completed election form by the election deadline, the shares of Guaranty common stock held by you will be designated no-election shares.

Election Procedures. All elections will be required to be made on the election form. To make an effective election with respect to your shares of Guaranty common stock, you must, in accordance with the election form:

If you have a particular preference as to the form of consideration to be received for your shares of Guaranty common stock, you should make an election because shares as to which an election has been made will be given priority in allocating such consideration over shares as to which no election was made. Neither the Guaranty board nor its financial advisor makes any recommendation as to whether shareholders should elect to receive the cash consideration or the stock consideration in the merger. You must make your own decision with respect to such election, bearing in mind the tax consequences of the election you choose. See “— Material Federal Income Tax Consequences” beginning on page 33.

Even if you have no preference, we suggest that you return your election form together with your Guaranty common stock certificates by the election deadline indicating that you have no preference, so that you may receive the merger consideration allocable to you promptly following completion of the exchange procedures after the merger is consummated. See “— Procedures for Exchanging Guaranty Common Stock Certificates” beginning on page 26.

Allocation Procedures. Your ability to receive all cash or all shares of Union common stock in exchange for your shares of Guaranty common stock in the merger is subject to allocation procedures set forth in the merger agreement. These allocation procedures are intended to ensure that 60% of the outstanding shares of Guaranty common stock will be converted into the right to receive Union common stock and 40% of the outstanding shares of Guaranty common stock will be converted into the right to receive cash.

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It is unlikely that elections will be made in the exact proportions provided for in the merger agreement. As a result, the merger agreement describes procedures to be followed if Guaranty shareholders in the aggregate elect to receive more or less of the Union common stock than Union has agreed to issue. These procedures are summarized below.

Pursuant to the merger agreement, the aggregate cash consideration in the merger shall amount to the product of the number of shares of Guaranty common stock outstanding immediately prior to the effective date of the merger times 0.40 times $28.00.

The above-described allocation will be made by Union’s exchange agent within five business days after the completion of the merger.

Procedures for Exchanging Guaranty Common Stock Certificates

Accompanying this proxy statement/prospectus is an election form and letter of transmittal for use in effecting your election and for the surrender of your Guaranty common stock certificates in exchange for the merger consideration ultimately allocated to you. The election form and letter of transmittal and other related documents contain instructions describing the appropriate steps you must take in order to make an effective election and to properly surrender your Guaranty common stock for exchange and cancellation to the exchange agent. In order to make an effective election, you must send in your Guaranty common stock certificates together with your properly completed election form and letter of transmittal to Registrar and Transfer Company not later than 5:00 p.m., EST on Thursday, April 22, 2004.

The exchange agent will complete the allocation within five business days after the effective date of the merger, which we anticipate will be May 1, 2004. Shareholders who have surrendered their Guaranty common stock certificates together with a properly completed election form and letter of transmittal will receive the merger consideration allocated to them as soon as practicable thereafter.

Please be aware that if you fail to return your properly completed election form and letter of transmittal and your Guaranty common stock certificates to the exchange agent, you will not receive the merger consideration you are entitled to until you have done so. No interest will be paid or accrued on any cash constituting merger consideration (including cash in lieu of fractional shares). Accordingly, it is important for you to act promptly. Please carefully read and accurately complete the election form and letter of transmittal and deliver it together with your Guaranty common stock certificates to Registrar and Transfer Company prior to the election deadline.

No stock certificates representing fractional shares of Union common stock will be issued upon the surrender for exchange of Guaranty stock certificates. In lieu of the issuance of any such fractional share, Union will pay to each former shareholder of Guaranty who otherwise would be entitled to receive a fractional share of

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Union common stock an amount in cash determined by multiplying the fraction of a share of Union common stock which such holder would otherwise be entitled to receive pursuant to the merger agreement by $28.00.

If you receive shares of Union common stock in the merger, you will receive dividends on Union common stock or other distributions declared after the completion of the merger only if you have surrendered your Guaranty stock certificates. Only then will you be entitled to receive all previously withheld dividends and distributions, without interest.

After completion of the merger, no transfers of Guaranty common stock issued and outstanding immediately prior to the completion of the merger will be allowed. Guaranty stock certificates that are presented for transfer after the completion of the merger will be canceled and exchanged for the appropriate merger consideration.

Union will only issue a Union stock certificate in a name other than the name in which a surrendered Guaranty stock certificate is registered if you present the exchange agent with all documents required to show and effect the unrecorded transfer of ownership of the shares of Guaranty common stock formerly represented by such Guaranty stock certificate, and show that you paid any applicable stock transfer taxes.

If your Guaranty stock certificate has been lost, stolen or destroyed, you may be required to deliver an affidavit and a lost certificate bond as a condition to receiving any Union stock certificate to which you may be entitled.

Representations and Warranties; Conditions to the Merger

The merger agreement contains representations and warranties by Union and Guaranty, including representations and warranties with respect to their individual organizations, authorizations to enter into the merger agreement, capitalization, financial statements and pending and threatened litigation. These representations and warranties, except as otherwise provided in the merger agreement, will not survive the effective date of the merger.

The obligations of Union and Guaranty to consummate the merger are subject to the following conditions, among others:

Also, each company’s obligation to effect the merger, unless waived, is subject to:

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Regulatory Approvals

The merger of Guaranty into Union cannot occur without the approval of the Board of Governors of the Federal Reserve System and the Virginia State Corporation Commission. On March 3, 2004, Union filed a notification of the merger with the Federal Reserve and an application with the Virginia State Corporation Commission respectively. The notification and application were each accepted but no approvals have been obtained.

While we cannot predict whether or when we will obtain all required regulatory approvals, we see no reason why the approvals will not be obtained in a timely manner. However, there can be no assurance that the necessary approvals will be obtained, or that any approval will not be conditioned in a manner which makes consummation of the merger, in the judgment of the board of directors of Union or Guaranty, inadvisable or unduly burdensome.

Business Pending the Merger

Until the merger, Guaranty has agreed to conduct its and its subsidiaries operations only in the ordinary and usual course, and to use reasonable best efforts to preserve intact their business organizations and assets and maintain their rights, franchises and authorizations and their existing relations with customers, suppliers, employees and business associates.

In addition, and except with the prior consent of Union, until the effective date of the merger, Guaranty may not:

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Pending consummation of the merger, Union has agreed that it will operate its business in the ordinary course and use its best efforts to preserve its respective properties, business and customer and employee relationships. In addition, Union has agreed that it will not take any action, engage in any transactions or enter into any agreements which would adversely affect or delay in any material respect the ability of Union or Guaranty to obtain the necessary approvals, consents or waivers required to effect the merger or to perform its covenants and agreements on a timely basis. Finally, Union has agreed that it will not take any action that would prevent the merger from qualifying as a tax-free reorganization within the meaning of the Internal Revenue Code.

No Solicitation

Guaranty has agreed that it will not solicit or encourage inquiries or proposals with respect to, furnish any information relating to, or participate in any negotiations regarding any merger, reorganization, consolidation, share exchange, joint venture, business combination or similar transaction involving Guaranty, or any purchase of all or any material portion of the assets of Guaranty (referred to as an “acquisition transaction”).

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Notwithstanding the non-solicitation provision described above, the Guaranty board may furnish information to, or enter into discussions or negotiations with, any person or entity that makes an unsolicited, written bona fide proposal regarding a transaction described above if, and only to the extent that:

Guaranty is required to notify Union of the receipt of any such proposal or inquiry, and to provide it with the identity of the party making the proposal or inquiry and the terms and conditions of the proposal or inquiry.

Waiver and Amendment

At any time on or before the effective date of the merger, any term or condition of the merger may be waived by the party which is entitled to the benefits thereof, without shareholder approval, to the extent permitted under applicable law. The merger agreement may be amended at any time before the merger by agreement of the parties whether before or after the later of the date of the Guaranty special meeting, except statutory requirements and requisite approvals of the shareholders of Guaranty and regulatory authorities. Any material change in a material term of the merger agreement would require a resolicitation of Guaranty’s shareholders. Such a material change would include, but not be limited to, a change in the tax consequences to Guaranty’s shareholders.

Termination of the Merger Agreement

The merger agreement may be terminated:

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In addition, Guaranty may terminate the merger agreement at any time during the five-day period following the “determination date”, as defined in the merger agreement, if (a) the average closing price of Union common stock during the 20 consecutive trading days ending on the determination date is less than $24.424 and (b) the number obtained by dividing such average closing price by $30.53 is less than the number obtained by dividing the closing value of the Nasdaq Bank Index on the determination date by the closing value of the Nasdaq Bank Index on December 16, 2003 and subtracting 0.20 from such quotient. If this occurs, Union could voluntarily elect to increase the per share cash consideration and/or per share stock consideration such that either (a) or (b) above may be deemed to have not occurred, thereby nullifying Guaranty’s termination right. Union is not required to increase the merger consideration, however, if the situation described above occurs.

In the event of termination, the merger agreement will become null and void, except that certain provisions thereof relating to expenses and confidentiality of information exchanged between the parties will survive any such termination.

Termination Fees

The merger agreement provides that Guaranty must pay Union a $2.2 million termination fee under the circumstances and in the manner described below:

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In addition, if the merger agreement is terminated by Guaranty pursuant to the second bullet point in the first paragraph under “— Termination of the Merger Agreement” on page 30 as a result of a material breach by Union of a representation, warranty or obligation contained in the merger agreement, or by Union pursuant to the third bullet point in the first paragraph under “— Termination of the Merger Agreement” on page 30, and subject to the exception set forth below, Union will reimburse Guaranty for its properly documented early termination fees, plus any incremental difference in price paid by Guaranty for the same services to continue to use its existing or other commercially recognized vendor, and offset by any credits or price reductions realized by Guaranty if it subsequently reinstates any terminated contracts. In no event, however, will Union will responsible for an aggregate payment in excess of $750,000. Notwithstanding the foregoing, Union will not be obligated to make any payments to Guaranty upon termination by Union of the merger agreement pursuant to the third bullet point in the first paragraph under “— Termination of the Merger Agreement” on page 30 if the failure to the consummate the merger by October 31, 2004 arises out of or results from the knowing action or inaction of Guaranty that is in violation of Guaranty’s obligations under the merger agreement.

Any termination fee that becomes payable pursuant to the merger agreement shall be paid by wire transfer of immediately available funds to an account designated by the receiving party.

If a party fails to timely pay the termination fee to the other party, the party which is to pay the fee will be obligated to pay the costs and expenses incurred by the other party to collect such payment, together with interest.

If for any reason other than as a result of an event of termination, as described above, the merger is not approved by Guaranty’s shareholders, then Guaranty shall reimburse Union for one-half of its reasonable out-of-pocket and other expenses incurred by Union in connection with the merger agreement up to $100,000.

Affiliate Agreement

In connection with the execution and delivery of the merger agreement, the directors and executive officers of Guaranty entered into an affiliate agreement with Union under which these individuals agreed to vote all of their shares in favor of the merger agreement. As of March 1, 2004, these individuals owned shares of Guaranty common stock representing approximately 20.48% of the outstanding common shares of Guaranty entitled to vote on the merger.

The affiliate agreement prohibits, subject to limited exceptions, the shareholder from selling, transferring, pledging, encumbering or otherwise disposing of any shares of Guaranty stock. The affiliate agreement terminates upon the earlier to occur of the completion of the merger and the termination of the merger agreement in accordance with its terms.

Accounting Treatment

The merger will be accounted for under the purchase method of accounting under generally accepted accounting principles. Under the purchase method of accounting, the assets and liabilities of Guaranty will be recorded, as of completion of the merger, at their respective fair values and added to those of Union. Financial statements and reported results of operations of Union issued after completion of the merger will reflect these values, but will not be restated retroactively to reflect the historical financial position or results of operations of Guaranty.

Interests of Certain Persons in the Merger

As discussed below, certain members of Guaranty’s management, as well as certain members of the Guaranty board of directors, have interests in the merger in addition to their interests as shareholders of Guaranty. In each case, the Guaranty board was aware of these potential interests, and considered them, among other matters, in approving the merger agreement and the transactions contemplated thereby.

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Indemnification and Insurance. Union has generally agreed to indemnify, for the period of six years after the merger, the officers and directors of Guaranty against certain liabilities arising before the effective date of the merger. Union also has agreed to provide directors’ and officers’ liability insurance for the present officers and directors of Guaranty for a period of three years after the merger.

Director Appointments. Douglas E. Caton, current Chairman of Guaranty, will be appointed to the Union board of directors. In addition, a director recommended by Guaranty from among the current members of the board of directors of Guaranty or Guaranty Bank, and approved by Union, will become a director of Union Bank & Trust Company.

Potential Payments Under Employment Agreement. Guaranty has an employment agreement with William E. Doyle, Jr., the President and Chief Executive Officer of Guaranty. Under the terms of his employment agreement, if Mr. Doyle’s employment is terminated by Guaranty for reasons other than “cause” or by Mr. Doyle for “good reason” (as defined in the agreement), he will be entitled to receive severance pay equal to one-twelfth of his annual base salary in effect at the time of termination each month for 36 months or for the remainder of the term of the agreement, whichever is less. The term of Mr. Doyle’s employment agreement ends May 31, 2006. If his employment terminates for reasons other than cause or for good reason within one year of a change in control of Guaranty, he will be entitled to severance payments approximately equal to the excess of 299% of his average annualized compensation as determined under Section 280G of the Internal Revenue Code of 1986, as amended for the period that he was employed by Guaranty prior to the change in control. If Mr. Doyle’s employment is terminated as set forth above after the merger, he will be entitled to total severance payments, including continued compensation for the remainder of the term of his contract, amounting to approximately $695,000.

Stock Options. Certain directors, officers and employees of Guaranty hold stock options under Guaranty’s stock option plan to acquire an aggregate of 68,900 shares of Guaranty common stock at exercise prices ranging from $7.90 to $26.80 per share. Such options, to the extent not exercised before the merger, will be converted into options to acquire shares of Union common stock, appropriately adjusted to reflect the stock election component of the merger consideration. In addition, in accordance with Guaranty’s stock option plan, for 60 days after the merger each stock option may be cancelled by the option holder in exchange for a cash payment equal to the difference between the fair market value of Union common stock on the date the option is cancelled and the per share exercise price.

Employee and Benefit Plans. As soon as administratively practicable following the merger, employees of Guaranty who continue on as employees of Union will be entitled to participate in the Union pension, health and welfare benefit and similar plans on the same terms and conditions as employees of Union. These employees will receive credit for their years of service to Guaranty for participation and vesting purposes only.

Material Federal Income Tax Consequences

The following is a discussion of certain material federal income tax consequences of the merger under the Internal Revenue Code to Guaranty shareholders. The discussion does not deal with all aspects of federal taxation that may be relevant to particular Guaranty shareholders. Certain tax consequences of the merger may vary depending upon the particular circumstances of each Guaranty shareholder and other factors.

Tax matters are very complicated, and the tax consequences of the merger to you will depend upon the facts of your particular situation. You are urged to consult with your tax advisor to determine the particular tax consequences of the merger to you.

This summary is based on current law as in effect on the date of this proxy statement/prospectus and the advice of LeClair Ryan, A Professional Corporation, legal counsel to Union. This law is subject to change and any such change may be made with retroactive effect. No assurance can be given that, after any such change, this description would not be different. The advice in this summary is also based on, among other things, certain customary assumptions and representations relating to certain facts and circumstances of, and the intentions of the parties to, the merger. Neither Union nor Guaranty has requested a ruling from the Internal Revenue Service in connection with the merger.

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The Merger. The merger, when consummated in accordance with the terms of the merger agreement, will constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code.

The federal income tax consequences of the merger to a Guaranty shareholder generally will depend on whether the shareholder receives cash, Union common stock or a combination thereof in exchange for his or her shares of Guaranty common stock.

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Cash in Lieu of Fractional Shares. No fractional shares of Union common stock will be issued in the merger. If you receive cash in lieu of a fractional share, you will be treated as having received such fractional share pursuant to the merger and then as having exchanged such fractional share for cash in a redemption by Union. You will generally recognize capital gain or loss on such a deemed redemption of the fractional share in an amount determined by the excess of the amount of cash received and your tax basis in the fractional share. Any capital gain or loss will be long-term capital gain or loss if the Guaranty common stock exchanged was held for more than one year.

Closing Opinion. It is a condition precedent to the obligations of Union and Guaranty to effect the merger that they receive an opinion from LeClair Ryan, dated as of the effective date of the merger, that the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. Such opinion will be based upon facts existing at the effective date of the merger, and in rendering such opinion, counsel will require and rely upon facts, representations and assumptions that will be provided by Union, Guaranty and others.

Union and Guaranty have not and will not seek any ruling from the Internal Revenue Service regarding any matters relating to the merger, and as a result there can be no assurance that the Internal Revenue Service will not disagree with or challenge any of the conclusions described herein.

Backup Withholding. Non-corporate holders of Guaranty common stock may be subject to information reporting and backup withholding imposed at a rate of 28% on any cash payments they receive. Guaranty shareholders will not be subject to backup withholding, however, if they:

Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against a Guaranty shareholder’s United States federal income tax liability, provided they furnish the required information to the Internal Revenue Service.

Reporting Requirements. Guaranty shareholders who receive Union common stock as a result of the merger will be required to retain records pertaining to the merger and will be required to file with their United States federal income tax return for the year in which the merger takes place a statement setting forth certain facts relating to the merger.

No Dissenters’ Rights

Shareholders of Guaranty do not have dissenters’ rights under Virginia law or under Guaranty’s articles of incorporation or bylaws in connection with the merger. See “Comparative Rights of Shareholders” on page 42.

Certain Differences in Rights of Shareholders

Both Union and Guaranty are corporations subject to the provisions of the Virginia Stock Corporation Act. The rights of Guaranty shareholders are presently governed by Guaranty’s articles of incorporation and bylaws, as well as the Virginia Stock Corporation Act. Upon consummation of the merger and certain Guaranty shareholders becoming shareholders of Union, such shareholders’ rights will be governed by the articles of incorporation and bylaws of Union and the Virginia Stock Corporation Act.

There are no material differences between the rights of a Guaranty shareholder under Guaranty’s articles of incorporation and bylaws, on the one hand, and the rights of a Union shareholder under the articles of incorporation and bylaws of Union, on the other hand, except as disclosed in the section “Comparative Rights of Shareholders” on page 42.

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Restrictions on Resales of Shares by Affiliates

The shares of Union common stock to be issued in connection with the merger will be registered under the Securities Act of 1933 and will be freely transferable under the Securities Act, except for shares issued to any person who is deemed to be an “affiliate” of Guaranty at the time of the special meeting. An “affiliate” of Guaranty, as defined by the rules under the Securities Act, is a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, Guaranty. Affiliates of Guaranty generally include a director, executive officer or 10% shareholder of Guaranty.

Each affiliate of Guaranty has agreed that he or she will not transfer any shares of stock received in the merger except in compliance with the Securities Act. This proxy statement/prospectus does not cover any resale of Union common stock received in the merger by any person who may be deemed to be an affiliate of Guaranty.

Expenses of the Merger

In general, whether or not the merger is consummated, Guaranty and Union will pay their own expenses incident to preparing, entering into and carrying out the merger agreement, and preparing and filing this proxy statement/prospectus. Union and Guaranty will, however, share equally the expenses of printing this proxy statement/prospectus.

In addition, if for any reason other than as a result of the fifth or sixth bullet point in the first paragraph under “Termination of the Merger Agreement” on page 30 the merger is not approved by Guaranty’s shareholders at the special meeting or any adjournment thereof, then Guaranty shall reimburse Union for one-half of its reasonable out-of-pocket and other expenses incurred by Union in connection with entering into the merger agreement and the transactions contemplated thereunder, provided that the maximum amount that Guaranty shall be responsible to Union is $100,000.

MARKET FOR COMMON STOCK AND DIVIDENDS

Union common stock is traded on the Nasdaq National Market under the symbol “UBSH.” Guaranty common stock also trades on the Nasdaq National Market, under the symbol “GSLC.”

As of the record date for the special meeting, there were 2,000,659 shares of Guaranty common stock outstanding, which were held by approximately 330 holders of record. Such numbers of shareholders do not reflect the number of individuals or institutional investors holding stock in nominee name through banks, brokerage firms and others.

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The following table sets forth during the periods indicated the high and low sales prices of Union common stock and Guaranty common stock as reported on the Nasdaq National Market and the dividends declared per share of Union common stock and Guaranty common stock.

The following table shows the closing price per share of Union common stock and Guaranty common stock on (a) December 18, 2003, the last trading day preceding public announcement of the merger agreement, and (b) March 4, 2004, the last full trading day for which closing prices were available at the time of the printing of this document. The historical prices are as reported on the Nasdaq National Market. The following table also includes the equivalent price per share of Guaranty common stock on those dates. The equivalent per share price reflects the value of the Union common stock that would be received by Guaranty shareholders in the merger based on an assumed exchange ratio of 0.842 shares of Union common stock for each share of Guaranty common stock, which is the per share stock consideration in the merger.