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RETIREMENT PLANS | 12 Months Ended
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Dec. 31, 2024
Retirement Benefits [Abstract] |
RETIREMENT PLANS | RETIREMENT PLANS Profit Sharing Plan We sponsor the Midland States Bank 401(k) Profit Sharing Plan, which provides retirement benefits to substantially all of our employees. The 401(k) component of the plan allows participants to defer a portion of their compensation ranging from 1% to 100%. Such deferrals accumulate on a tax deferred basis until the participant withdraws the funds. The Company matches 50% of participant contributions up to 6% of their compensation. Total expense recorded for the Company match was $1.9 million, $1.8 million and $1.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. There were no employer discretionary profit sharing contributions made to the 401(k) plan in 2024, 2023 and 2022. Deferred Compensation Arrangements Certain executive officers participate in a nonqualified deferred compensation arrangement. The plan is fully funded in a trust controlled by the Company with the gains and losses recognized in other noninterest income. The trust asset is reflected in the Company's equity securities with the offsetting deferred compensation liability reflected in other liabilities. The change in value associated with the gains and losses, which are due to the employee upon distribution, is recognized in salaries and employee benefits. The following table summarizes the activity in the asset and liability balances of the executive officer nonqualified deferred compensation arrangement for the years ended December 31, 2024, 2023, and 2022:
(dollars in thousands) | 2024 |  | 2023 |  | 2022
Beginning balance, trust asset | $ | 3,580 |  |  | $ | 3,294 |  |  | $ | 3,714 |
Contributions | 268 |  |  | 255 |  |  | 446 |
Gain (loss) on trust assets | 529 |  |  | 427 |  |  | (474) |
Distributions | (504) |  |  | (396) |  |  | (392) |
Ending balance, trust asset | $ | 3,873 |  |  | $ | 3,580 |  |  | $ | 3,294 |
Beginning balance, deferred compensation liability | $ | 3,580 |  |  | $ | 3,294 |  |  | $ | 3,714 |
Employee deferrals | 268 |  |  | 255 |  |  | 446 |
Expense (benefit) on deferred compensation liability | 529 |  |  | 427 |  |  | (474) |
Distributions | (504) |  |  | (396) |  |  | (392) |
Ending balance, deferred compensation liability | $ | 3,873 |  |  | $ | 3,580 |  |  | $ | 3,294 |
Certain directors also participate in a nonqualified deferred compensation arrangement. The deferred compensation liability is reflected in other liabilities with the associated expense recognized in other noninterest expense. The following table summarizes the activity in the liability balance of the director nonqualified deferred compensation arrangement for the years ended December 31, 2024, 2023, and 2022:
(dollars in thousands) | 2024 |  | 2023 |  | 2022
Beginning balance, deferred compensation liability | $ | 6,053 |  |  | $ | 6,137 |  |  | $ | 5,372 |
Deferred compensation | 484 |  |  | 396 |  |  | 532 |
Expense on deferred compensation liability | 345 |  |  | 323 |  |  | 296 |
Distributions | (324) |  |  | (803) |  |  | (63) |
Ending balance, deferred compensation liability | $ | 6,558 |  |  | $ | 6,053 |  |  | $ | 6,137 |
Defined Benefit Pension Plan The Bank participated in the Pentegra Defined Benefit Plan for Financial Institutions, a non-contributory defined benefit pension plan for certain former employees of Heartland Bank who met prescribed eligibility requirements. Benefits under the plan were frozen July 1, 2004. Effective October 1, 2021, the Bank withdrew from the multiple-employer plan by transferring assets and liabilities to a qualified successor plan under actuarial assumptions and methodology determined appropriate by Pentegra. Assets of $16.6 million were transferred to the successor plan on November 30, 2021. Transferred liability excludes the previously allocated orphan liability. On June 30, 2023, we terminated the plan and notified the IRS, seeking a final determination letter. The final determination letter was received in January 2025 and we expect to begin distributing assets to plan participants in early 2025. The following table details the components of the net periodic benefit cost for the years ended December 31, 2024 and 2023:
(dollars in thousands) | 2024 |  | 2023
Service cost | $ | — |  |  | $ | — |
Interest cost | 625 |  |  | 635 |
Expected return on plan assets | (464) |  |  | (511) |
Amortization of transition obligation | — |  |  | — |
Net periodic benefit cost | $ | 161 |  |  | $ | 124 |
Assumptions used to determine net periodic benefit cost:
| 2024 |  | 2023
Discount rate | 4.85 | % |  | 5.05 | %
Expected long-term return on plan assets | 4.85 | % |  | 4.75 | %
Rate of compensation increase | N/A |  | N/A
Previously, costs for administration, shortfalls in funds to maintain the frozen level of benefit coverage and differences of actuarial assumptions related to the frozen benefits were expensed as incurred. The following table provides a comparison of obligations to plan assets:
(dollars in thousands) | December 31, 2024 |  | December 31, 2023
Projected benefit obligation | $ | 12,482 |  |  | $ | 13,353 |
Accumulated benefit obligation | 12,482 |  |  | 13,353 |
Fair value of plan assets | 11,791 |  |  | 12,768 |
The minimum required contribution for 2024 is expected to be zero.

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