Colony Bankcorp buys Ellerbee Agency, renews M&A trend

Bucking a two-year trend that saw more than a dozen banks exit the insurance field, Colony Bankcorp has moved to expand its operation, paying $3.5 million to acquire the Ellerbee Agency in Monroe, Georgia. 

The $3.1 billion-asset Colony, headquartered in Fitzgerald, Georgia,  entered the insurance field in 2021 when it bought the Barnes Agency in Macon. Acquiring Ellerbee is expected to add two cents to Colony’s 2026 earnings per share while offering the opportunity to cross sell banking products to the insurer’s 7,000 customers. 

“This acquisition supports our strategy of efficient growth and scalable expansion,” Colony CEO Heath Fountain said in a recent press release. “The addition of experienced talent, strong customer relationships, and new markets positions us well for continued success.”

Fountain did not respond to a request for comment.

Historically, banks were active insurance acquirers, buying more agencies than they sold each year on an industrywide basis. The past two years saw that trend reverse. Divestitures outnumbered agency buys in 2023 and equaled them in 2024. More than 20 banks sold their agencies in that span, with many receiving eye-catching sums from buyers backed by publicly traded and private equity investors. 

“Valuations have been so high, driven up by the private equity buyers, that they created an opportunity for banks to basically monetize their investments in insurance and deploy them in other areas, including acquisitions,” Wayne Walkotten, executive vice president at MarshBerry, a Cleveland-based provider of financial services and consulting, told American Banker on Friday. 

The fundamentals behind insurance’s attraction for banks has remained constant. Institutions that operate successful agencies generate significant levels of noninterest income. Insurance commissions generated $1.8 million of fee income for Colony in 2024. They’ll likely double with the addition of the Ellerbee Agency, Janney Montgomery Scott Research Director Christopher Marinac wrote in a research note after the merger was announced.   

Walkotten, however, warned that banks can’t expect top-tier results unless they continue to invest in their insurance operations. “They can’t just put the agency on autopilot,” Walkotten said. “You must continue to invest, growing producers and working to grow your market share and grow your revenue.”

Colony has agreed to add Sean Ellerbee, the Ellerbee Agency’s owner and founder, to the Colony Insurance management team. 

“Sean and his team bring deep experience and a commitment to personalized service that aligns seamlessly with our culture,” Colony Insurance President Jason Barnes said in the press release. 

Colony has no presence in Monroe, Greensboro and Lake Oconee, where Ellerbee maintains offices. That gives the bank the chance to forge loan and deposit relationships, as well as deepen the existing insurance footprint, Hovde analyst David Bishop wrote Wednesday in a research note. 

While Colony’s last bank acquisition came in 2021, with its purchase of the $716 million-asset SouthCrest Financial Group in Woodstock, Georgia, the company remains interested in M&A. It noted in an investor presentation published Tuesday that the Ellerbee purchase price “does not inhibit” its ability to seek other bank deals. 

Bishop wrote Colony “could re-enter the acquisition arena this year” and has discussed targeting community banks in its Georgia-Alabama-Florida footprint.