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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2004

Commission File No. 0-20293

UNION BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

212 North Main Street

P.O. Box 446

Bowling Green, Virginia 22427

(Address of principal executive offices) (zipcode)

(804) 633-5031

(Registrant’s telephone number, including area code)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b–2 of the Exchange Act).    YES  x    NO  ¨

As of April 27, 2004, Union Bankshares Corporation had 7,639,146 shares of Common Stock outstanding.

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UNION BANKSHARES CORPORATION

FORM 10-Q

March 31, 2004

INDEX

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PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share information)

See accompanying notes to condensed consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(dollars in thousands, except per share amounts)

See accompanying notes to condensed consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2004 AND 2003

(dollars in thousands)

See accompanying notes to condensed consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31, 2004 and 2003

(dollars in thousands)

See accompanying notes to condensed consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2004

The consolidated financial statements include the accounts of Union Bankshares Corporation and its subsidiaries (the “Company”). Significant intercompany accounts and transactions have been eliminated in consolidation.

The information contained in the financial statements is unaudited and does not include all of the information and footnotes required by auditing standards generally accepted in the United States of America for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2003 Annual Report on Form 10-K. If needed, certain previously reported amounts have been reclassified to conform to current period presentation.

The current Company plan approved in 2003 authorizes the reservation of 350,000 shares of common to be used in the granting of incentive options to certain employees. Prior to this plan, the Company had a plan adopted in 1993 that authorized the reservation of up to 400,000 shares of common stock. The 1993 plan ended in 2003 but has options that can be exercised until 2012. Under both Plans, the option price cannot be less than the fair market value of the stock on the date granted. An option’s maximum term is ten years from the date of grant. Options granted under the Plan may be subject to a graded vesting schedule.

The Company accounts for the Plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based compensation cost is reflected in net income, as all options granted under the Plan have an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based compensation.

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The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

3. ALLOWANCE FOR LOAN LOSSES

The following summarizes activity in the allowance for loan losses for the three months ended March 31, (in thousands):

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Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares outstanding attributable to stock options. At March 31, 2004 and 2003, there were 52,300 and 50,876 options respectively that were anti-dilutive. The following is a reconcilement of the denominators of the basic and diluted EPS computations for the three months ended March 31, 2004 and 2003.

In addition to commitments to extend credit and issue standby letters of credit, the Company’s subsidiary, the Bank of Williamsburg is a guarantor on the warehousing line used for short term funding of loans held for sale by Johnson Mortgage Company. The total amount of potential liability is $2.4 million. This is a requirement of the lender and generates only de minimis risk for the Company since the collateral loans have commitments from investors before they are made.

On December 19, 2003, the Company announced the signing of a definitive merger agreement with Guaranty Financial Corporation (“Guaranty”). The transaction is valued at approximately $54 million in stock and cash and took place on May 1, 2004. At this point, all regulatory and shareholder approvals have occurred. Guaranty will initially become a subsidiary of Union Bankshares Corporation then be merged into Union Bank & Trust Company in September upon completion of the various data and systems conversions. Guaranty had $209.4 million in assets at March 31, 2004.

Also during the first quarter of 2004, the Company was notified it was the successful bidder for two branch locations which are being sold as a result of another bank merger.. These branches are located at 11101 Hull Street Road (Victorian Square) and 13644 Hull Street

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Road (Harbour Pointe) in Chesterfield County and provide a further expansion of the Company’s presence in the Greater Richmond market, complimenting its locations in Hanover and Henrico Counties. In addition, two branches in Hanover County that were announced last year, are in various stages of construction with at least one expected to open late in 2004.

During the first quarter of 2004, Union Bankshares Corporation Statutory Trust I, a wholly-owned subsidiary of the Corporation, was formed for the purpose of issuing redeemable Capital Securities. On March 18, 2004, $22.5 million of trust preferred securities were issued through a pooled underwriting totaling approximately $858.8 million. The securities have a LIBOR-indexed floating rate of interest. The interest rate as of March 31, 2004 was 3.86% and these interest rates adjust quarterly. Interest is payable quarterly. The securities have an optional redemption date of March 18, 2009, and are subject to varying call provisions beginning March 24, 2004. The principal asset of the Trust is $22.5 million of the Corporation’s junior subordinated debt securities with the like maturities and like interest rates to the Capital Securities.

The Trust Preferred Securities may be included in Tier 1 capital for regulatory capital adequacy determination purposes up to 25% of Tier I capital after its inclusion. The portion of the Trust Preferred not considered as Tier I capital may be included in Tier II capital.

The obligations of the Corporation with respect to the issuance of the Capital Securities constitute a full and unconditional guarantee by the Corporation of the Trust’s obligations with respect to the Capital Securities.

Subject to certain exceptions and limitations, the Corporation may elect from time to time to defer interest payments on the junior subordinated debt securities, which would result in a deferral of distribution payments on the related Capital Securities.

There are no new accounting pronouncements in the first quarter of 2004 effecting the Company.

Union Bankshares Corporation has two reportable segments: traditional full service community banking and mortgage loan origination. The community bank segment includes four banks which provide loan, deposit and investment services to retail and commercial customers throughout their locations in Virginia. The mortgage segment provides a variety of mortgage loan products principally in Virginia and Maryland. These loans are originated and sold primarily in the secondary market through purchase commitments from investors, which subject the Company to only de minimis risk.

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Profit and loss is measured by net income after taxes including realized gains and losses on the Company’s investment portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies of the Company. Intersegment transactions are recorded at cost and eliminated as part of the consolidation process.

Both of the Company’s reportable segments are service based. The mortgage business is a fee based business while the banks are driven principally by net interest income. The banks provide a distribution and referral network through their customers for the mortgage loan origination business. The mortgage segment offers a more limited network for the banks, due largely to the minimal degree of overlapping geographic markets.

The community bank segment provides the mortgage segment with the short-term funds needed to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest. These transactions are eliminated in the consolidation process. A management fee for support services (including data processing, item processing, accounting, human resources and other services) is charged to all subsidiaries and eliminated in the consolidation totals.

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Information about reportable segments and reconciliation of such information to the consolidated financial statements for the three months ended March 31, 2004 and 2003 follows:

Union Bankshares Corporation

Segment Report

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The Company had authorization from the Board of Directors of Union Bankshares dated November 2002 to buy up to 100,000 shares of the Company’s outstanding common stock in the open market at prices that management and the Board of Directors determine to be prudent. The Company considers current market conditions and the Company’s current capital level, in addition to other factors, when deciding whether to repurchase stock. When a plan is in place, it is anticipated that any repurchased shares will be used primarily for general corporate purposes, including the dividend reinvestment plan, incentive stock option plan and other employee benefit plans.

No shares were repurchased in the first three months of 2004. During the first three months of 2003, under a plan from November 2002, the Company repurchased 1,000 shares of its common stock in the open market at an average cost of $24.07.

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INDEPENDENT ACCOUNTANT’S REPORT

To the Board of Directors

Union Bankshares Corporation

Bowling Green, Virginia

We have reviewed the condensed consolidated balance sheet of Union Bankshares Corporation and Subsidiaries as of March 31, 2004 and the related condensed consolidated statements of income, shareholders’ equity and cash flows for the three-month periods ended March 31, 2004 and 2003. These condensed financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Union Bankshares Corporation as of December 31, 2003, and the related consolidated statements of income, shareholders’ equity and cash flows for the year ended (not presented herein); and in our report dated January 14, 2004, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Winchester, Virginia

May 5, 2004

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis is presented to aid the reader in understanding and evaluating the financial condition and results of operations of the Company. The analysis focuses on the consolidated financial statements, the footnotes thereto, and the other financial data herein. Highlighted in the discussion are material changes from prior reporting periods and any identifiable trends affecting the Company. Amounts are rounded for presentation purposes, while the percentages presented may be computed based on unrounded amounts.

FORWARD-LOOKING STATEMENTS

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

Critical Accounting Policies

General

The accounting and reporting policies of Union Bankshares Corporation and its subsidiaries are in accordance with accounting principles generally accepted in the United States (“GAAP”) and conform to general practices within the banking industry. The Company’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies could result in material changes in the Company’s consolidated financial position and/or results of operations.

The more critical accounting and reporting policies include Union’s accounting for the allowance for loan losses, goodwill and intangibles, and income taxes. Union’s accounting policies are fundamental to understanding the Company’s consolidated financial position and consolidated results of operations. Accordingly, the Company’s significant accounting policies are discussed in detail in Note 1 in the “Notes to Consolidated Financial Statements” in the 2003 Form 10-K filed in March 2004 with the SEC.

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The following is a summary of the Company’s significant accounting policies that are highly dependent on estimates, assumptions and judgments.

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in the loan portfolio. The allowance is based on two basic principles of accounting: (i) Statement of Financial Accounting Standard (“SFAS”) No. 5, Accounting for Contingencies, which requires that losses be accrued when they are probable of occurring and estimatable and (ii) SFAS No. 114, Accounting by Creditors for Impairment of a Loan, which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

The Company’s allowance for loan losses is the accumulation of various components that are calculated based on independent methodologies. All components of the allowance represent an estimation performed pursuant to either SFAS No. 5 or SFAS No. 114. Management’s estimate of each SFAS No. 5 component is based on certain observable data that management believes are most reflective of the underlying credit losses being estimated. This evaluation includes credit quality trends; collateral values; loan volumes; geographic, borrower and industry concentrations; seasoning of the loan portfolio; the findings of internal credit quality assessments and results from external bank regulatory examinations. These factors, as well as historical losses and current economic and business conditions, are used in developing estimated loss factors used in the calculations.

Reserves for commercial loans are determined by applying estimated loss factors to the portfolio based on management’s evaluation and “risk grading” of the commercial loan portfolio. Reserves are provided for noncommercial loan categories using estimated loss factors applied to the total outstanding loan balance of each loan category. Specific reserves are typically provided on all impaired commercial loans in excess of a defined threshold that are classified in the Special Mention, Substandard or Doubtful risk grades. The specific reserves are determined on a loan-by-loan basis based on management’s evaluation the Company’s exposure for each credit, given the current payment status of the loan and the value of any underlying collateral.

While management uses the best information available to establish the allowance for loan and lease losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the valuations or, if required by regulators, based upon information available to them at the time of their examinations. Such adjustments to original estimates, as necessary, are made in the period in which these factors and other relevant considerations indicate that loss levels may vary from previous estimates.

Goodwill and Intangibles

SFAS No. 141, Business Combinations, requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. For purchase acquisitions, Union is required to record assets acquired, including identifiable intangible assets, and liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analysis or other valuation techniques. Effective January 1, 2001, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, which prescribes the accounting for goodwill and intangible assets subsequent to initial recognition. The provisions of SFAS No. 142 discontinue the amortization of goodwill and intangible assets with indefinite lives but require at least an annual impairment review, and more frequently if certain impairment indicators are in evidence.

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Goodwill is included in other assets and totaled $864,000 at March 31, 2004 and 2003. Core deposit intangibles are included in other assets and are being amortized on a straight-line basis over the period of expected benefit, which ranges from 10 to 15 years. Core deposit intangibles, net of amortization, amounted to $4,783,000 and $5,354,000 at March 31, 2004 and 2003, respectively. The Company adopted SFAS 147, Acquisitions of Certain Financial Institutions, on January 1, 2002 and determined that core deposit intangibles will continue to be amortized over the estimated useful life. It is anticipated that both goodwill and core deposit intangibles will increase upon completion of the Company’s acquisition of Guaranty Financial Corporation which is anticipated to become effective May 1, 2004.

Results of Operations

Net income for the first quarter of 2004 was $3.6 million, down 8.5% from $3.9 million for the same period in 2003. This decrease resulted from slowed mortgage lending activity which was partially offset by modest growth in the community bank segment. Net income in the community banking segment increased by $87,000 or 2.6% to $3.5 million compared to $3.4 million in the prior year’s first quarter. The mortgage segment’s net income declined by $421,000 or 77.1%, totaling $125,000 for the quarter ended March 31, 2004 compared to $546,000 in the comparable quarter of last year. First quarter 2004 diluted earnings per share for the Company amounted to $.47, as compared to $.52 in the same quarter of 2003. The Company’s annualized return on average assets for the three months ended March 31, 2004 was 1.16% as compared to 1.43% a year ago. The Company’s annualized return on average equity was 11.95% and 14.97% for the three months ended March 31, 2004 and 2003, respectively.

The slight increase in the Company’s community bank segment’s net income was the result of increased net interest income and increased noninterest income offset by increased noninterest expense. Net interest income before provision increased $797,000 as a result of higher interest income on higher loan volume and lower interest expense on higher deposit volume. Noninterest income was up $608,000 driven by higher service charge income and increased income from the brokerage commissions. These increases were offset by an increase in noninterest expense of $1.3 million which was driven by increases in: salaries of $566,000, furniture and equipment of $121,000 and other operating expenses of $577,000. Most of these were related to expansion efforts begun after 2003’s first quarter. Between year end 2003 and March 31, 2004 loans grew $39.2 million while deposits grew $32.9 million over the same period. This growth in loans continued to help offset the impact of declining rates on interest earning assets. In addition, 42.7% of the deposit growth was in demand deposits which helped hold down interest expense.

The mortgage segment’s net income declined from $546,000 in March 2003 to $125,000 in March 2004. This decline is the result of a protracted low interest rate environment which resulted in record levels of refinance activity, but slowed significantly in the fourth quarter of 2003, continuing into the first quarter of 2004 as long term rates increased slightly, with further increases anticipated. Mortgage production for the quarter of nearly $88 million was slightly ahead of expectations in what is typically the slowest production quarter. Approximately 60% of the volume represented purchase money financing with only 40% from refinancings as compared to the first quarter of 2003 when refinancings made up 59% of the volume. This movement to more traditional purchase money home financing is expected to continue as the year progresses. The trend seen in the first quarter reflects MCI’s strategy of focusing its efforts toward the new and resale home purchase market, working with home buyers, builders, realtors and other referral

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sources to provide a more stable loan production platform. This strategy should generate a steady flow of business in a more normal rate environment. It is anticipated that rising mortgage rates will significantly reduce mortgage refinancing activity and, to a lesser extent, financings of new and resale homes. In addition, home inventory levels in certain markets may further suppress mortgage loan volumes. Industry forecasts anticipate a reduction in mortgage originations of over 50% in 2004. The Company will continue to closely monitor production volumes so adjustments in staffing and other fixed costs can be made in an appropriate and timely manner.

Total assets as of March 31, 2004 were $1.299 billion, an increase of 5.2% from $1.235 billion at December 31, 2003. Loans totaled $917.5 million at March 31, 2004, an increase of $39.2 million or 4.5% from $878.3 million at December 31, 2003. The securities portfolio increased to $259.2 million at the end of the first quarter of 2004 versus $240.1 million at year end 2003. This was principally the result of the temporary investment of $22.5 million in cash from the issuance of trust preferred securities in late March 2004 which is to be used to fund the pending acquisition of Guaranty Financial Corporation.. Loans held for sale increased $4.1 million to $32.7 million compared to $28.7 million at December 31, 2003.

Total deposits at March 31, 2004 were $1.03 billion, up 3.3% from $1.00 billion at December 31, 2003. Other borrowings totaled $129.9 million at March 31, 2004, a 19.4% increase from $108.8 million at year end 2003. The principal reason for this increase was the issuance of $22.5 million in trust preferred securities to fund the cash portion of the pending acquisition of Guaranty Financial Corporation. Stockholders’ equity totaled $123.4 million at March 31, 2004, which represents a book value of $16.15 per share and an increase of $4.9 million or 4.2% from December 31, 2003.

On a year-to-year basis, loans increased 22.3% to $917.5 million at March 31, 2004 compared to $750.1 million a year earlier. Deposits at March 31, 2004 were up 9.8% at $1.03 billion compared to $941.0 million at the end of March 2003. Of the $92.3 million growth in deposits, $17.1 million or 18.5% was in noninterest bearing deposits and $30.4 million or 32.9% was in longer term certificates of deposits. The growth in demand deposits helps the short term cost of funds, while the growth in certificates provides protection for the net interest margin in a rising rate environment. While the growth in loans continues to allow the Company to maintain a good earnings margin in spite of the lower yield on loans, the margin is expected to stay flat until there is a marked increase in interest rates. However, as investors gain confidence, some of the lower cost deposits, such as demand and NOW accounts, may move back into the stock market and cause renewed compression in the net interest margin. In an attempt to cover the potential exodus of funds, the Company has initiated some certificate of deposit programs to lock in blocks of funds at lower rates.

Net Interest Income

Net interest income on a tax-equivalent basis for the first quarter of 2004 increased by 5.2% to $11.7 million from $11.1 million for the same period a year ago. Over that time, average interest earning assets grew by $117.1 million or 11.1% and average interest-bearing deposits increased by $78.0 million or 10.0%. Of the $78.0 million increase in average interest bearing deposits, 49.1%, or $38.3 million was in certificate of deposits. Total average interest-bearing liabilities on a year to year basis were up 10.1% which reflects the Company’s ability to fund growth through deposits. The net interest margin was 4.00% for the three months ended March 31, 2004, down 26 basis points from 4.26% the same period in 2003. For this same period, the yield on earning

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assets was 5.98%, down 61 basis points from 6.59% in March of 2003 and the cost of interest-bearing liabilities was 2.40% down 40 basis points from 2.80% for the same period in 2003. The net interest margin of 4.00% at March 31, 2004 is flat when compared to 3.99% for the fourth quarter 2003 and 4.03% at the end of the third quarter 2003.

The relatively flat net interest margin with a slightly downward trend of 3 to 4 basis points over the last 3 quarters is principally the result of the low rate environment that has existed since the last rate cut by the Federal Reserve in June 2003 and the Company’s ability to lower its deposit cost as asset yield declined. The Company’s balance sheet remains asset sensitive and management anticipates that as interest rates start to rise, the margin will begin to improve.

Competition for deposits, particularly as it impacts certificate of deposit (CD) rates, is rate sensitive. Management continues to focus on increasing and retaining lower cost deposit products (including noninterest-bearing demand deposits and savings accounts) and locking in current lower rates with longer term (3-5 year) CD rates in an effort to maintain a lower cost of funds and a stable interest margin. The Company plans to continue to aggresively manage the deposit cost and maintain the net interest margin until rates rise.

In addition, the subsidiary banks have periodically engaged in wholesale leverage transactions to better leverage their capital position by borrowing funds to invest in securities at margins of 150 to 200 basis points. Although such transactions increase net income and return on equity, they negatively impact the net interest margin. As of March 31, 2004 such transactions accounted for $10 million of the Company’s total borrowings.

Included in the average earning assets for the quarter is $22.7 million in loans held for sale. These loans are mortgage loans originated by the mortgage segment and held for the short period between closing with the customer and funding by the investor. The loans have their final rates locked and are presold to investors and typically fund within 90 days. The Company, through a subsidiary bank, funds these presold mortgages using short term funding, typically Federal funds. The spread between the mortgage loan rates and the short term rates provides a positive contribution to interest income and net income. Upon funding by the investor, these loans generate earnings in the noninterest income category through gains on sales of loans.

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Union Bankshares Corporation

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)