? (2) Business Combinations ? On December 1, 2017, Private Capital Management LLC, a wholly owned subsidiary of the Bank, entered into an Asset Purchase Agreement with Wagner Wealth Management LLC (Wagner). The transaction, structured as an asset purchase, closed on January 16, 2018 , with the Company paying $ 5,223,000 of cash, in addition to agreeing to make a contingent payment on approximately the one-year anniversary of the acquisition valued at $1,846,000 on January 16, 2018. ? On July 18, 2017, the Company entered into an Agreement and Plan of Reorganization (the Castle Rock Merger Agreement) with Castle Rock Bank Holding Company (Castle Rock), parent company of Castle Rock Bank, a Colorado state chartered bank headquartered in Castle Rock, Colorado whereby Castle Rock would merge into the Company. The transaction closed on October 27, 2017 with an aggregate transaction value of $24,421,000 . The Castle Rock Merger Agreement provided that, subject to certain conditions, Castle Rock shareholders would receive 840,629 shares of Company voting common stock valued at $24,420,000 based on the Companys closing stock price on October 27, 2017 of $29.05 , in addition to approximately $1,000 in cash paid in lieu of the issuance of fractional shares of Company stock. ? The Wagner acquisition increased the Companys market share in the Denver wealth management marketplace and added additional investment advisory expertise. The Castle Rock transaction enhanced the Companys balance sheet liquidity and supported the Companys objective of serving the banking needs of business and consumer customers in Colorados Front Range markets. Wagners and Castle Rocks results of operations subsequent to the respective merger dates have been included in the Companys results of operations; however, it is impractical to provide separate information on Wagner or Castle Rocks revenues and income subsequent to acquisition due to changes in the consolidated balance sheet. Pre-tax merger-related expenses of $75,000 , incurr ed in connection with the Wagner transaction were included in the Companys results of operations in the first quarter 2018. An additional $1,033,000 and $400,000 , respectively, in merger-related expenses were incurred by the Company in the second and third quarter 2018, related to the Independent transaction. Comparatively, no merger related expenses were incurred in 2017 until the third quarter 2017 when $268,000 in merger-related expenses, related to the C astle Rock transaction, were incurred. The Company did not incur debt-issuance or stock-issuance costs in association with the Wagner or Castle Rock transactions. ? Goodwill of $2,811,000 and $8,702,000 , respectively, was recognized in the Wagner and Castle Rock transactions. The recognized goodwill represents expected synergies and cost savings resulting from combining the operations of the acquired institutions with those of the Company. Since the Wagner acquisition was a taxable transaction, tax-deductible goodwill of $2,811,000 will be amortized over a period of 15 years for income tax purposes. The tax-free structure of the Castle Rock transaction precludes the amortization of tax-deductible goodwill for tax purposes. The fair values of assets acquired and liabilities assumed at acquisition are subject to measurement period adjustments, for a period of one-year following the acquisition, should information obtained in a subsequent period shed light on the valuations utilized as of the acquisition date. ? The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the January 16, 2018 transaction with Wagner: ? ? ? ? ? ? Assets acquired: ? (In thousands) ? Goodwill $ 2,811 ? Other intangible assets, net 4,161 ? Premises and equipment, net 24 ? Other assets 188 ? Total assets acquired 7,184 ? ? Liabilities assumed: ? Other liabilities 115 ? Anniversary payment liability 1,846 ? Total liabilities assumed 1,961 ? Net assets acquired $ 5,223 ? The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the October 27, 2017 transaction with Castle Rock: ? ? ? ? Assets acquired: ? (In thousands) ? Cash and cash equivalents $ 21,717 ? Securities available for sale 39,670 ? Bank stocks 705 ? Net Loans 71,052 ? Premises and equipment, net 4,184 ? Other real estate owned 761 ? Goodwill 8,702 ? Other intangible assets, net 1,870 ? Bank owned life insurance 3,371 ? Other assets 1,048 ? Total assets acquired 153,080 ? ? Liabilities assumed: ? Deposits 128,450 ? Other liabilities 209 ? Total liabilities assumed 128,659 ? Net assets acquired $ 24,421 ? The fair value of net assets acquired in the Castle Rock transaction includes fair value adjustments to certain loans that were considered impaired as of the acquisition date. The fair value adjustments were determined using discounted expected cash flows. Acquired loans that evidence credit deterioration since origination, for which the acquirer does not expect to collect all contractual cash flows, are designated as PCI upon acquisition. The gross contractual amount of loans identified as PCI as of the acquisition date totaled $1,644,000 in the Castle Rock transaction. Contractual cash flows not expected to be collected as of acquisition date on these PCI loans totaled $320,000 in the Castle Rock transaction. Additionally, Castle Rock PCI loans had an interest rate fair value adjustment of $41,000 , bringing the net fair value of acquired PCI loans to $1,283,000 in the Castle Rock transaction. The cash flows on the Companys PCI loans cannot be estimated and as a result these loans have been designated as nonaccrual. Loans that were not designated PCI in the Castle Rock transaction had a fair value and contractual balance of $69,769,000 and $72,220,000 as of October 27, 2017. The credit component of the fair value adjustment on non-PCI loans as of acquisition totaled $1,494,000 in the Castle Rock transaction, representing 2.1% of contractual loan balances. No allowance for loan losses related to acquired loans was brought over as a result of the Castle Rock transaction. ? The composition of Castle Rock Banks loan portfolio as of October 27, 2017 is detailed in the table below: ? ? ? ? October 27, ? 2017 ? (In thousands) ? Commercial and residential real estate $ 51,531 ? Construction 6,337 ? Commercial 5,666 ? Agricultural 3,735 ? Consumer 3,783 ? Total gross loans $ 71,052 ? The following tables present unaudited pro-forma financial information as if the Wagner transaction occurred as of January 1, 2017. The unaudited pro-forma information includes adjustments for noninterest income on investment management fees generated, amortization of intangibles arising from the transaction and the related tax effects. The unaudited pro forma financial information has been adjusted to exclude nonrecurring expenses related to the Wagner transaction. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction occurred on January 1, 2017 . ? ? ? ? ? Three Months Ended September 30, Nine Months Ended September 30, ? 2018 2017 2018 2017 ? UNAUDITED (Dollars in thousands, except per share data) ? ? Net interest income $ 32,790 $ 31,334 $ 97,761 $ 89,005 ? Noninterest income 8,272 6,910 22,752 21,214 ? Net income 14,944 10,043 41,837 29,985 ? ? Earnings per common share-basic: $ 0.52 $ 0.36 $ 1.45 $ 1.07 ? Earnings per common share-diluted: $ 0.51 $ 0.36 $ 1.44 $ 1.07 ? Unaudited pro forma net income for the first nine months of 2018 excludes $75,000 in merger-related expenses incurred by the Company during the first quarter 2018. These expenses were excluded since they were nonrecurring in nature and directly attributable to the transaction. For the first nine months of 2017, no merger-related expense adjustments were made to pro forma income. ?