Exhibit 99.1

UNION BANKSHARES REPORTS INCREASE IN 2nd QUARTER EARNINGS

FOR IMMEDIATE RELEASE (Bowling Green, Virginia) — Union Bankshares (NASDAQ: UBSH - News) reports net income for the second quarter 2004 of $4.6 million, up 5% from $4.3 million for the same period in 2003. Over this same period, earnings per share on a diluted basis decreased from $.57 to $.53. Return on average equity for the quarter ended June 30, 2004 was 12.13%, while return on average assets for the same period was 1.23%, compared to 15.60% and 1.50% respectively, for the quarter ended June 30, 2003.

“The second quarter of 2004 was highlighted by internal growth initiatives and market opportunities,” indicated G. William Beale, President of Union Bankshares Corporation. “The acquisition of Guaranty Financial Corporation was completed effective May 1^st and we have been very pleased with the results achieved to date. We are also excited about the quality of the personnel serving that strong customer base and very attractive market. The integration of Guaranty into our systems and processes is progressing well and we anticipate conversion into Union Bank & Trust Company in early September. Costs savings anticipated in the acquisition are on target and most are expected to be achieved by the end of 2004.

The second quarter also saw the expansion of bank presence in the Richmond market as we opened two branches in Chesterfield County in June which became available as the result of a recent large bank merger. Other strategic expansion planned for 2004 is on track and includes the opening of two branches in Hanover County; on Rt. 360 in Mechanicsville in early August and on Pole Green Road in October. While these initiatives will slow the pace of earnings growth in the short-term, they represent very positive long-term opportunities for our organization. We will continue to pursue those opportunities which we feel add value to our organization over the long-term.

Loan demand in our bank markets has been robust as demonstrated by the significant increases in loans over both the last quarter and the last twelve months. Commercial real estate and construction lending have been the nucleus of this growth, complimented by growth in commercial business loans. We believe this is reflective of the growth and economic strength of the markets we serve, as well as the current interest rate environment.

Mortgage lending activity increased during the second quarter which is typically a strong home sales period. The production outlook for the 3^rd quarter is good, though highly dependant upon long-term interest rates. We continue to seek opportunities to expand our mortgage reach to attractive markets, including deeper penetration of our existing bank markets.”

Effective May 1, 2004, Union Bankshares completed its acquisition of Guaranty Financial Corporation (Guaranty) headquartered in Charlottesville, Virginia. This acquisition was accounted for using the purchase method of accounting. The total consideration paid to Guaranty stockholders in connection with the acquisition was approximately $54.9 million with approximately $22.7 million in cash and 1,023,000 shares of Union’s common stock. Guaranty transactions have been included in Union’s financial results since May 1, 2004. Acquired assets on May 1, 2004 totaled $248 million, including $167 million in loans and $184 million in deposits. As part of the purchase price allocation at May 1, 2004, Union recorded $5.8 million in core deposit intangibles, and goodwill of approximately $30.4 million which are reflected in the aforementioned asset totals. Operating results for 2004 include net income from Guaranty of $334,000, which includes approximately $110,000 in amortization of core deposit intangibles. In addition, Union’s interest expense for the quarter and six months included $216,000 and $249,000, respectively, in interest expense on the Trust Preferred Security Pool used to fund the Guaranty acquisition.

On a linked quarter basis (current quarter to most recent quarter), net income improved 26.3% from $3.6 million in the first quarter of 2004 to $4.6 million in the second quarter. The Company’s return on average equity and return on average assets improved to 12.13% and 1.23% from 11.95% and 1.16%, respectively, in the first quarter of 2004. Excluding Guaranty’s net income of $334,000 recorded in the second quarter totals, net income improved 17.1%, or $617,000 on a linked quarter basis.

For the six months ended June 30, 2004, net income decreased slightly to $8.2 million from $8.3 million for the same period a year ago. Over this same period, earnings per share on a diluted basis decreased 7% from $1.09 to $1.01. Return on average equity for the six months ended June 30, 2004 was 12.05%, while return on average assets for the same period was 1.20%, compared to 15.29% and 1.47% respectively, for the six months ended June 30, 2003.

For the second quarter net income for the community banking segment was $4.0 million, an increase of $604,000 or 18% from $3.4 million for the second quarter of 2003. Second quarter net income for the mortgage banking segment was $537,000, a decline of $380,000 or 41.5% from $917,000 in the same quarter of 2003. For the six months ended June 30, 2004, net income for the community bank segment increased to $7.5 million from $6.8 million at June 30, 2003, while the mortgage segment decreased to $662,000 from $1.5 million for the same period of 2003.

Net interest income was up $2.4 million, or 23%, from the second quarter of 2003. Average earning assets for the quarter grew to $1.37 billion compared to $1.09 billion a year earlier providing the Company with a higher earnings base. Guaranty Bank contributed $130 million to average earning assets. This volume growth offset a decrease of 17 basis points in the net interest margin (FTE) which decreased to 4.03% in the second quarter of 2004, down from 4.20% in the same quarter of 2003, but up slightly from 4.00% in the first quarter of 2004.

For the quarter ended June 30, 2004, the provision for loan losses was $308,000 down $337,000 from $645,000 a year earlier. This is reflective of general improvement in overall asset quality and net recoveries of previously charged off loans totaling $467,000 for the quarter. At June 30, 2004, nonperforming assets totaled $11.1 million, including a single credit relationship totaling $10.3 million. These loans are secured by real estate, but based on the information currently available management has allocated $1.1 million in reserves. Since the end of the first quarter 2004, the Company has entered into a workout agreement with the borrower. Under the terms of the workout, the Company extended further credit of approximately $1.6 million secured by property with significant equity. The Company anticipates that this workout will result in a reduction of overall exposure to the borrower.

Noninterest income for the second quarter of 2004 was up 1% to $6.3 million compared to a year ago. This includes a decline of $624,000 in gains on the sales of mortgage loans which was offset by an increase of $511,000 in service charges on deposit accounts and of $150,000 in other service charges. Noninterest income, as compared to the first quarter of 2004, was up $1.6 million largely as a result of a $1.1 million increase in gains on the sales of mortgage loans. Mortgage loan production for the second quarter of 2004 totaled $148.7 million as compared to $158.9 million in the second quarter of 2003 and $87.8 million in the first quarter of 2004.

Noninterest expense for the second quarter 2004 increased by $2.5 million or 24.3% from a year ago and by $3.7 million or 19.04% from the first half of 2003. These increases are largely attributable to the Company’s expansion efforts and infrastructure costs. Guaranty Bank represents $1.3 million of both the quarterly and year to date increases. Expenses were up due to branch expansion efforts in Richmond which added approximately $176,000 in expenses from the same quarter a year ago and $251,000 year to date with minimal offsetting revenue until these locations open. Other expenses related to the new overdraft privilege service contributed $254,000 of the quarterly increase in expenses and $516,000 of the year to date increase. Director expenses also increased by $86,000 for the quarter and $158,000 year to date as the Company enhanced its director compensation structure and responded to the additional requirements of Sarbanes-Oxley. Continued investments in new technology, staff expansions in support areas, and the outsourcing of our data processing service contributed approximately $215,000 to the quarterly increase and $429,000 to the year to date increase, as the Company maintains the appropriate operating foundation for future growth.

Loans at June 30, 2004 increased 49% or $386.6 million from June 30, 2003 and 28% or $257.9 million from March 31, 2004. Guaranty Bank represents $171.2 million of this growth. The remaining growth of $86.7 million was attributed largely to increases in commercial and construction real estate loans, as well as commercial business loans. This loan growth occurred principally within the Richmond, Charlottesville, and Fredericksburg markets. These trends are reflective of the vibrant markets served by the Company and of a strengthening economy. Yields on loans (FTE) decreased from 6.81% during the second quarter of 2003 and from 6.18% in the first quarter 2004 to 6.00% for the second quarter of 2004. The cost of funds also declined, from 2.70% in the second quarter of 2003 and 2.40% for the first quarter of 2004 to 2.18% in the second quarter of 2004. Loan yields declined by 18 basis points during the second quarter of 2004 while deposits and other borrowings declined by 22 basis points resulting in a relatively stable margin. Deposit levels were up $314.9 million, or 32.9%, from the second quarter of 2003 and $239.6 million, or 23.2%, from the first quarter of 2004. The acquisition of Guaranty Bank represents $196 million of this growth in deposits. The remaining growth in deposits of $118.9 million represents a 12.4% increase from a year earlier and a 4.2% from first quarter of 2004.

At June 30, 2004 total assets were $1.61 billion, up 35.4% from $1.19 billion at June 30, 2003. Guaranty Bank represents $251.6 million of this growth. Deposits increased to $1.27 billion, up $314.9 million or 32.9% over $958.1 million at the end of the second quarter 2004, while loans totaled $1.2 billion, up $386.6 million or 49% over June 2003 levels. Guaranty Bank contributed $196 million in deposits and $171.2 million in loans. Securities declined to $244.9 million at June 30, 2004 compared to $255.5 million a year earlier. The Company’s capital position remains strong with an equity-to-assets ratio of 9.5 %.

Union Bankshares is one of the largest community banking organizations based in Virginia, providing full service banking to the Central, Rappahannock, Williamsburg and Northern Neck regions of Virginia through its bank subsidiaries, Union Bank & Trust (23 locations in the counties of Caroline, Chesterfield, Hanover, Henrico, King George, King William, Spotsylvania, Stafford, Westmoreland and the City of Fredericksburg), Northern Neck State Bank (9 locations in the counties of Richmond, Westmoreland, Essex, Northumberland and Lancaster), Guaranty Bank (7 locations in the counties of Albemarle,

Fluvanna, Nelson and the City of Charlottesville), Rappahannock National Bank in Washington, Virginia and Bank of Williamsburg ( 2 locations in Williamsburg and Newport News). Union Bank & Trust also operates a loan production office in Manassas. In addition to banking services, Union Investment Services, Inc. provides full brokerage services and Mortgage Capital Investors provides a full line of mortgage products. The Bank of Williamsburg also owns a non-controlling interest in Johnson Mortgage Company, LLC.

This press release may contain “forward-looking statements,” within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Company and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in economic conditions; significant changes in regulatory requirements; and significant changes in securities markets. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company’s most recent Form 10-K report and other documents filed with the Securities and Exchange Commission. Union Bankshares Corporation does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

In management’s opinion, cash basis earnings are useful to investors because by excluding non-operating adjustments stemming from the consolidation of our organization, they allow investors to see clearly the combined economic results of our multi-bank company. These non-GAAP disclosures should not, however, be viewed in direct comparison with non-GAAP measures of other companies.

UNION BANKSHARES CORPORATION

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Union Bankshares Corporation

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