EXHIBIT 99.1

October 25, 2004                 11:00 a.m.                 Traded: NASDAQ                 Symbol: UBSH

UNION BANKSHARES REPORTS INCREASE IN 3rd QUARTER EARNINGS

FOR IMMEDIATE RELEASE (Bowling Green, Virginia) — Union Bankshares (NASDAQ: UBSH - News) reports net income for the third quarter 2004 of $4.5 million, up 6.2% from $4.2 million for the same period in 2003. Over this same period, earnings per share on a diluted basis decreased from $.55 to $.51. Return on average equity for the quarter ended September 30, 2004 was 11.42%, while return on average assets for the same period was 1.09%, compared to 14.66% and 1.37% respectively, for the quarter ended September 30, 2003.

As a supplement to Generally Accepted Accounting Principles (“GAAP”), the Company also uses certain non-GAAP financial measures to review its operating performance. Earnings per share on a cash basis for the quarter and nine months ended September 30, 2004 were $0.54 and $1.59 as compared to $0.56 and $1.68 in the comparable periods a year ago. Cash basis return on equity for the quarter and nine months ended September 30, 2004 were 16.64% and 15.17% as compared to 16.14% and 16.47% in the comparable periods a year ago.

“As expected, operating results for our organization in the third quarter and for the year to date continue to be highlighted by internal growth initiatives and market opportunities,” said G. William Beale, President of Union Bankshares Corporation. “The integration of Guaranty Financial Corporation into our organization was completed in mid-September as Guaranty Bank was merged into Union Bank & Trust Company. We have seen significant synergies in this combination and are very pleased with the results to date. Customer and market reaction have been very positive and are reflected in both deposit and loan growth in that region. Our employees in that market and throughout the organization worked diligently as a team to achieve these results. Costs savings anticipated in the acquisition are on target and most are expected to be achieved by the end of 2004.

Strategic expansion continued in the third quarter with the move of the Mechanicsville convenience store location to a new, larger branch located nearby. This represents the fifth new branch in the Greater Richmond market since last December. One additional branch opening is planned for early December on Pole Green Road near I-295 in Hanover County. While these initiatives have slowed 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.

The third quarter provided continued loan demand, principally in commercial real estate, construction and commercial business lending. We believe this is reflective of the growth and economic strength of the markets we serve, though we do see such growth moderating in the near-term.

Slight declines in long-term interest rates provided moderate mortgage loan production for the third quarter, but still trailed last year’s third quarter and year to date production by 28% and 20%, respectively. The outlook for mortgage production in the fourth quarter is modest, but should exceed the levels attained in the fourth quarter of 2003. We continue to seek opportunities to expand our mortgage reach to attractive markets, including deeper penetration of our existing bank markets.”

Operating results for the third quarter and first nine months of 2004 reflect the impact on earnings from the Company’s acquisition activity. Effective September 13, 2004, the operations of Guaranty Financial Corporation (Guaranty) were merged with and into the Company’s largest subsidiary, Union Bank and Trust Company. Operating results for 2004 include net income from Guaranty of $825 thousand year to date (period from May 1, 2004 through September 30, 2004) and $491 thousand for the quarter ended September 30, 2004. These results also include approximately $274 thousand in amortization of core deposit intangibles year to date and $164 thousand for the third quarter. In addition, Union’s interest expense for the quarter and year to date included $233 thousand and $482 thousand, respectively, in interest expense on the Trust Preferred Security Pool used to fund the Guaranty acquisition.

In addition, the expansion of the Company’s branch network has impacted both the quarter and nine month results. Four de novo branches have been opened in 2004, with one additional de novo branch to open in December. In addition, one of the Company’s convenience store branches has been relocated to a larger traditional banking facility near-by. The costs associated with these branches will typically be greater than the revenue generated in the first 18-24 months. Expenses for the quarter and first nine months exceeded revenue generated by $316 thousand and $565 thousand, respectively. Other merger-related expenses, including data and systems conversion, marketing, communications and other integration costs totaled $191 thousand and $216 thousand for the quarter and the nine months ended September 30, 2004.

On a linked quarter basis (current quarter to most recent prior quarter), net income decreased 2.3% from $4.6 million in the second quarter of 2004 to $4.5 million in the third quarter. The Company’s return on average equity and return on average assets decreased to 11.42% and 1.09% from 12.13% and 1.23%, respectively, in the second quarter of 2004.

For the nine months ended September 30, 2004, net income increased slightly to $12.6 million from $12.5 million for the same period a year ago. Over this same period, earnings per share on a diluted basis decreased 8% from $1.63 to $1.51. Return on average equity for the nine months ended September 30, 2004 was 11.82%, while return on average assets for the same period was 1.16%, compared to 15.08% and 1.43% respectively, for the nine months ended September 30, 2003.

For the third quarter net income for the community banking segment was $4.1 million, an increase of $738 thousand or 21.9% from $3.4 million for the third quarter of 2003. Third quarter net income for the mortgage banking segment was $354 thousand, a decline of $476 thousand or 57.3% from $830 thousand in the same quarter of 2003. For the nine months ended September 30, 2004, net income for

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the community bank segment increased 14.1% to $11.6 million from $10.2 million for same period of 2003, while net income for the mortgage banking segment decreased 55.7% to $1 million from $2.3 million for the same period of 2003.

Net interest income was up $3.9 million, or 35.5%, from the third quarter of 2003. Average earning assets for the quarter grew to $1.49 billion compared to $1.14 billion a year earlier providing the Company with a higher earnings base. The acquisition of Guaranty Bank contributed $130 million to average earning assets. This volume growth combined with an increase of 10 basis points in the net interest margin (FTE) (which increased to 4.14% in the third quarter of 2004, up from 4.04% in the same quarter of 2003) caused the increase in net interest income.

For the quarter ended September 30, 2004, the provision for loan losses was $895 thousand, down slightly from $903 thousand a year earlier. This is reflective of net recoveries of previously charged off loans totaling $312 thousand for the quarter. At September 30, 2004, nonperforming assets totaled $11.3 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 third quarter of 2004 was down 8.8% to $6.1 million compared to a year ago. This includes a decline of $1.1 million, or 26.2% in gains on the sales of mortgage loans, which was partially offset by increases of $128 thousand in service charges on deposit accounts, $167 thousand in other service charges, and $157 thousand in other operating income. There was little change in noninterest income, as compared to the second quarter of 2004. Mortgage loan production for the third quarter of 2004 totaled $123.4 million as compared to $171.3 million in the third quarter of 2003 and $148.7 million in the second quarter of 2004.

Noninterest expense for the third quarter 2004 increased by $3.0 million or 27.7% compared to the same quarter a year ago, and for the nine months ended September 30, 2004, noninterest expense increased by $6.8 million or 22.1% compared to the same period in 2003. These increases are largely attributable to the Company’s expansion efforts and infrastructure costs. Noninterest expense related to the operation of the former Guaranty branches amounted to $1.8 million and $3.2 million for the quarter and nine months ended September 30, 2004, respectively. Expenses were up due to branch expansion efforts in Richmond which added approximately $306 thousand in expenses from the same quarter a year ago and $556 thousand year to date. Other expenses related to the new overdraft privilege service contributed $149 thousand of the quarterly increase in expenses and $502 thousand of the year to date increase. Director expenses also increased by $33 thousand for the quarter and $266 thousand 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 $217 thousand to the quarterly increase and $684 thousand to the year to date increase, as the Company maintains the appropriate operating foundation for future growth.

Loans at September 30, 2004 increased 47.3% or $396.3 million from September 30, 2003 and 4.9% or $57.8 million from June 30, 2004. The acquisition of Guaranty Bank represents $171.2 million of the growth from September 30, 2003. The remaining growth of $225.1 million was attributed largely to increases in commercial and construction real estate loans, as well as commercial business loans.

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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 6.45% during the third quarter of 2003 to 6.01% for the third quarter of 2004 which was up slightly from 6.00% in the second quarter 2004. The cost of funds also declined, from 2.53% in the third quarter of 2003 and 2.18% for the second quarter of 2004 to 2.15% in the third quarter of 2004. Loan yields increased by 1 basis point during the third quarter of 2004 while the cost of funds declined by 3 basis points resulting in a relatively stable margin. Deposit levels were up $307.1 million, or 31%, from the third quarter of 2003 and $23.3 million, or 1.8%, from the second quarter of 2004. The acquisition of Guaranty Bank represents $196 million of the growth in deposits from September 30, 2003. The remaining growth in deposits of $111.1 million represents an 11.2% increase from a year earlier.

At September 30, 2004 total assets were $1.64 billion, up 35.3%, or $429 thousand from $1.22 billion at September 30, 2003. The Guaranty acquisition represents $251.6 million of this growth. Securities increased to $240.2 million at September 30, 2004 compared to $239.4 million a year earlier. The Company’s capital position remains strong with an equity-to-assets ratio of 9.8 %.

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 (30 locations in the counties of Albemarle, Caroline, Chesterfield, Fluvanna, Hanover, Henrico, King George, King William, Nelson, Spotsylvania, Stafford, Westmoreland and the Cities of Charlottesville and Fredericksburg), Northern Neck State Bank (9 locations in the counties of Richmond, Westmoreland, Essex, Northumberland and Lancaster), 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.

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Key Financial Data

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UNION BANKSHARES CORPORATION

Comparative Balance Sheets

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