RETIREMENT PLANS

12 Months Ended

Dec. 31, 2025

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 $1.8 million, $1.9 million and $1.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. There were no employer discretionary profit sharing contributions made to the 401(k) plan in 2025, 2024 and 2023.

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, 2025, 2024, and 2023:


(dollars in thousands)	2025		2024		2023
Beginning balance, trust asset	$	3,873	$	3,580	$	3,294
Contributions	72		268		255
Gain (loss) on trust assets	294		529		427
Distributions	(882)		(504)		(396)
Ending balance, trust asset	$	3,357	$	3,873	$	3,580

Beginning balance, deferred compensation liability	$	3,873	$	3,580	$	3,294
Employee deferrals	72		268		255
Expense (benefit) on deferred compensation liability	294		529		427
Distributions	(882)		(504)		(396)
Ending balance, deferred compensation liability	$	3,357	$	3,873	$	3,580

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, 2025, 2024, and 2023:


(dollars in thousands)	2025		2024		2023
Beginning balance, deferred compensation liability	$	6,558	$	6,053	$	6,137
Deferred compensation	471		484		396
Expense on deferred compensation liability	407		345		323
Distributions	(237)		(324)		(803)
Ending balance, deferred compensation liability	$	7,199	$	6,558	$	6,053

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 distributed assets to plan participants totaling $0.5 million in 2025.

There was no net periodic benefit cost for the year ended December 31, 2025. The following table details the components of the net periodic benefit cost for the year ended December 31, 2024:


(dollars in thousands)	2024
Service cost	$	—
Interest cost	625
Expected return on plan assets	(464)
Amortization of transition obligation	—
Net periodic benefit cost	$	161

Assumptions used to determine net periodic benefit cost in 2024:


	2024
Discount rate	4.85	%
Expected long-term return on plan assets	4.85	%
Rate of compensation increase	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 in 2024:


(dollars in thousands)	December 31, 2024
Projected benefit obligation	$	12,482
Accumulated benefit obligation	12,482
Fair value of plan assets	11,791

- Definition

The entire disclosure for retirement benefits.

+ References

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+ Details

Midland States Bancorp, Inc. 10-K