EXHIBIT 99.1

UNION BANKSHARES REPORTS INCREASE IN 4th QUARTER AND ANNUAL EARNINGS

FOR IMMEDIATE RELEASE (Bowling Green, Virginia) — Union Bankshares (NASDAQ: UBSH - News) reports net income for the quarter ended December 31, 2004 of $5.3 million, up 26.4% from $4.2 million for the same period in 2003. Earnings per share on a diluted basis increased 11.1%, from $.54 to $.60 for the quarter. Return on average equity for the quarter ended December 31, 2004 was 13.13%, while return on average assets for the same period was 1.27%, compared to 14.32% and 1.36% respectively, for the quarter ended December 31, 2003.

Net income for the year 2004 was $17.9 million, up 7.6% from $16.7 million for the same period in 2003. Over this same period, earnings per share on a diluted basis decreased from $2.17 to $2.11 largely as a result of new shares issued in the Company’s acquisition of Guaranty Financial. Return on average equity for the year ended December 31, 2004 was 12.18%, while return on average assets for the same period was 1.19%, compared to 14.88% and 1.42% respectively, for the year ended December 31, 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 year ended December 31, 2004 were $.62 and $2.19 as compared to $0.56 and $2.22 in the comparable periods a year ago. Cash basis return on equity for the quarter and year ended December 31, 2004 were 18.32% and 15.78% as compared to 15.42% and 16.09% in the comparable periods a year ago.

“We are very pleased to report fourth quarter financial results that highlight a year underscored by growth initiatives and market opportunities,” said G. William Beale, President of Union Bankshares Corporation. “This past year was the most significant year of growth in our Company’s history, punctuated by the acquisition of Guaranty Financial Corporation on May 1, 2004, the opening of five branches and strong growth within existing branches and markets.

Guaranty Financial Corporation has been fully integrated into our organization and we are very pleased with the results. We did not experience the customer runoff typically experienced in business acquisitions and, in fact, achieved strong growth in both deposits and loans in the eight months since that acquisition. Likewise, we are very pleased with the employees and board members who joined our organization and

have made significant contributions to our success. Costs savings anticipated in the acquisition were realized and we believe opportunities exist for additional synergies that may be achieved in this attractive market.

During the fourth quarter we continued our internal expansion with the opening of our Bell Creek branch at Pole Green Road near I-295 in Hanover County. This represents the sixth branch in the Greater Richmond market since December 2003. We also opened our third location of the Bank of Williamsburg on Monticello Road in Williamsburg in January 2005. 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.

Loan demand in the fourth quarter remained strong, increasing by almost $32 million from the third quarter, principally in commercial real estate, construction and commercial business lending. We believe this is reflective of the growth and the economic strength of the markets we serve, though we do anticipate such growth to moderate in response to rising interest rates.

The relative stability of historically low long-term interest rates continued to support strong mortgage loan production of over $136 million for the fourth quarter, up 49% over last year’s fourth quarter. Mortgage loan production for the year was down 7%, but decreasing profit margins in the mortgage sector resulted in a 43% decrease in net income for our mortgage banking segment for the year. This margin tightening is due largely to a shift in product mix from fixed rate to adjustable rate products and increasing competitive pressures. Industry experts anticipate declining volumes in 2005, though not as significant as the decline from 2003 to 2004. We are focused on expanding our mortgage presence throughout our markets, particularly Charlottesville and Richmond, and continuing to strengthen operating efficiencies to enhance our earnings in this segment.”

Operating results for the quarter and the year ended December 31, 2004 reflect the impact on earnings from the Company’s acquisition activity. The Company acquired Guaranty Financial Corporation (Guaranty) on May 1, 2004 which it operated as a separate subsidiary until September 13, 2004, when the operations of Guaranty were merged with and into the Company’s largest subsidiary, Union Bank and Trust Company. Guaranty-related charges include approximately $439 thousand in amortization of core deposit intangibles for the year and $164 thousand for the fourth quarter. In addition, interest expense for the quarter and year included $272 thousand and $755 thousand, respectively, on the Trust Preferred Security Pool used to fund the Guaranty acquisition. Other merger-related expenses, including data and systems conversion, marketing, communications and other integration costs totaled approximately $134 thousand and $343 thousand for the quarter and the year ended December 31, 2004.

In addition, the expansion of the Company’s branch network has impacted results for both the quarter and the year. Five branches were opened in 2004, and one of the Company’s convenience store branches was relocated to a larger traditional banking facility. The costs associated with these branches will typically be greater than the revenue generated in the first 18-24 months.

On a linked quarter basis (current quarter to most recent prior quarter), net income increased 18.8% from $4.5 million in the third quarter of 2004 to $5.3 million in the fourth quarter. The Company’s return on average equity and return on average assets increased to 13.13% and 1.27% from 11.42% and 1.09%, respectively, in the third quarter of 2004.

Net income in the fourth quarter for the community banking segment was $4.9 million, an increase of $896 thousand or 22.4% from $4.0 million in the fourth quarter of 2003. Fourth quarter net income for the mortgage banking segment was $395 thousand, an increase of $213 thousand or 117% from $182

thousand in the same quarter of 2003. Net income for the community banking segment increased by $839 thousand, or 18.8% in the fourth quarter of 2004 from the third quarter of 2004, while net income for the mortgage banking segment increased by $41 thousand, or 11.6% over the same period. For the year ended December 31, 2004, net income for the community bank segment increased 16.4% to $16.5 million from $14.2 million for 2003, while net income for the mortgage banking segment decreased 43% to $1.4 million from $2.5 million for 2003.

Net interest income increased $4.8 million, or 43.8%, from the fourth quarter of 2003. Average earning assets for the quarter grew to $1.53 billion compared to $1.15 billion a year earlier providing the Company with a higher earnings base. Volume growth combined with an increase of 24 basis points in the net interest margin (FTE) (which increased to 4.23% in the fourth quarter of 2004, up from 3.99% in the same quarter of 2003) provided an $11.8 million increase in net interest income year over year.

For the quarter ended December 31, 2004, the provision for loan losses was $520 thousand, up from $372 thousand a year earlier. This is reflective of net chargeoffs totaling $153 thousand for the quarter compared to net recoveries of $82 thousand during the same quarter a year ago. At December 31, 2004, nonperforming assets totaled $11.2 million, including a single credit relationship totaling $10.9 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 additional 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 fourth quarter of 2004 was up 18.5% to $6.2 million compared to a year ago. This change includes an increase of $874 thousand, or 36%, in gains on the sales of mortgage loans, $439 thousand in other service charges and $89 thousand in service charges on deposit accounts. This was partially offset by smaller gains from securities transactions of $125 thousand, other real estate owned and bank premises of $188 thousand in addition to other income of $113 thousand. Mortgage loan production for the fourth quarter of 2004 totaled $136.3 million as compared to $91.3 million in the fourth quarter of 2003 and $123.4 million in the third quarter of 2004. Noninterest income for the year ended December 31, 2004 increased $462 thousand or 2%. Service charges on deposit accounts, other service charges, partially offset by lower gains from mortgage loan sales contributed to the overall net increase. Mortgage loan production for the year ended December 31, 2004 totaled $496.2 million as compared to $535.5 million in 2003.

Noninterest expense for the fourth quarter 2004 increased by $3.7 million or 36.6% compared to the same quarter a year ago. On a year to date basis, noninterest expense increased by $10.5 million or 25.8% 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 approximately $1.5 million and $4.7 million for the quarter and year ended December 31, 2004, respectively. In addition, expenses were up due to branch expansion efforts which added approximately $337 thousand from the same quarter a year ago and $893 thousand for the year. Other expenses related to the overdraft privilege service, not recurring after this year, contributed $36 thousand of the quarterly increase and $576 thousand of the increase for the year. Director expenses also increased by $58 thousand for the quarter and $231 thousand for the year as the Company enhanced its director compensation structure and responded to the additional requirements of Sarbanes-Oxley. The outsourcing of data processing services in September 2003 also contributed approximately $626 thousand to the increase in noninterest expense in 2004. The Company’s decision to outsource this function reflects the changing face of technology and the Company’s commitment to maintain the appropriate operating foundation for future growth.

Loans at December 31, 2004 increased 44% or $386.6 million from December 31, 2003 and 2.6% or $31.6 million from September 30, 2004. The acquisition of Guaranty represents $171.2 million of the growth from December 31, 2003. The remaining growth during the year of $215.4 million is attributable 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 earning assets increased from 6.01% during the fourth quarter of 2003 to 6.05% for the fourth quarter of 2004 which was up from 5.93% in the third quarter 2004. The cost of funds also declined, from 2.46% in the fourth quarter of 2003 to 2.21% in the fourth quarter of 2004. The cost of funds in the fourth quarter of 2004 was up from 2.15% in the third quarter of 2004.

Deposit levels increased $313.8 million, or 31.4%, from the fourth quarter of 2003 and $18.1 million, or 1.4%, from the third quarter of 2004. The acquisition of Guaranty represents $196 million at acquisition of the growth in deposits from December 31, 2003. The remaining growth in deposits of $117.8 million represents an 11.8% increase from a year earlier.

At December 31, 2004 total assets were $1.67 billion, up 35.5%, or $438 million from $1.23 billion at December 31, 2003. The Guaranty acquisition represents $251.6 million at acquisition of this growth. Securities decreased to $233.5 million at December 31, 2004 compared to $240.1 million a year earlier. The Company’s capital position remains strong with an equity-to-assets ratio of 9.73%.

In December 2004, The Company expanded its relationship with Nationwide Money Services through the addition of 31 ATMs, principally in Fas Mart convenience stores, to its remote ATM network. This expansion of the Company’s delivery channels is intended to enhance customer access and increase market exposure in a cost efficient manner.

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 (31 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 ( 3 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.

Key Financial Data

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

Comparative Balance Sheets

Union Bankshares Corporation

Comparative Income Statements

This Quarter vs. Same Quarter Last Year