LORAIN — A group of Lorain National Bank shareholders who once sought control of the bank’s board of directors has agreed to put its plans on hold after entering into an agreement with bank officials to seat two of their own on the board.

Under the terms of the agreement, AMG Investments — a company which, under the direction of Lake County businessman and banker Richard Osborne, owns about 9 percent of LNB stock — has agreed to discontinue plans to move ahead with its own shareholder proxy at next month’s annual shareholder meeting, as well as dismiss all claims in a pending lawsuit against LNB.

In exchange, LNB has agreed to immediately add two new members to its 13-member board of directors, bringing the total to 15. Daniel G. Merkel and Thomas P. Perciak — both AMG Investments’ recommendations — will immediately join the board.

Merkel is a former regional president of Republic Bancorp Inc., and Perciak is the mayor of Strongsville and the former CEO of Emerald Financial Corp., the parent company of Strongsville Savings Bank.

LNB officials hope the deal will signal to shareholders that the $1.1 billion company is poised to continue moving forward with the support of its largest shareholder.

“By working together, we can better focus our resources on our strategy for growth and expansion of LNB for the future,” board Chairman James R. Herrick and President and CEO Daniel E. Klimas said in a joint statement.

“We welcome Mr. Perciak and Mr. Merkel to the board of directors and look forward to working with them to build shareholder value. We also sincerely appreciate the patience and understanding of our shareholders throughout this process.”

With the announcement Tuesday that an agreement has been reach, AMG has said it will comply with “standstill” restrictions in respect to LNB for a period of 18 months.

“We believe this settlement is in the best interest of all shareholders, and we look forward to working with management and the board of directors of LNB to enhance shareholder value,” Osborne said. “We believe that the extensive banking experience of Mr. Merkel and Mr. Perciak will add significant value to the LNB board and are pleased that they have accepted these new roles.”

The agreement comes weeks after a special board meeting at LNB headquarters on Broadway at which bank officials and Osborne squared off over the future of the bank. At that time, Osborne called for the replacement of all LNB directors except for Daniel Batista, J. Martin Erbaugh and Lee Howley, and for the number of directors to be reduced from 13 to nine. Osborne wanted three AMG board nominees, including himself, to assume board responsibilities.

Shareholders voted on the issues, and 10 days later, results revealed that all issues were soundly rejected by shareholders who favored the current leadership of the financial institution. Osborne at that time vowed to continue his fight.

Contact Lisa Roberson at 329-7121 or lroberson@chroniclet.com.

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