On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the Act). The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and business. For businesses, the Act reduces the corporate federal tax rate from a maximum rate of 35% to a flat rate of 21%. The rate reduction took effect January 1, 2018. Under generally accepted accounting principles, Riverview Financial Corporation uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. As a result of the reduction in the corporate income tax rate to 21%, the Company reduced its deferred tax asset by recording an adjustment in tax expense for $2.5 million during the quarter ended December 31, 2017. The impact of this action to the company’s earnings per common share during the quarter is estimated to be a reduction of approximately $0.28 per share. The company expects to recapture the $2.5 million charge in future periods through the benefit derived from the reduction of the corporate tax rate to 21%.