Released from the constraints of bank ownership, 1-800-East-West Mortgage Co. is now free to expand its business, and bring its viral radio jingle, into new turf at a faster clip than what otherwise might have been allowed.

East-West recently announced it will separate from Worcester-based parent Commerce Bank & Trust Co., in a split both parties described as amicable.

“I may choose to grow a little more aggressively than the bank would have wanted me to,” David Bernotas, president of East-West and future owner after the sale’s completion, told Banker & Tradesman. “From my perspective, they’ve given me and my team a huge opportunity.”

Commerce has owned the high-profile East-West Mortgage since 2001, including through a scandal-ridden period involving kickback accusations in the middle of the decade.

The move opens a new chapter for East-West. Bernotas is looking to expand into states beyond East-West’s current footprint of New England and Florida, including Pennsylvania or New Jersey.

Both he and Commerce CEO Brian Thompson described the decision in low-drama terms, saying it would be largely “business as usual” at both institutions once the split is complete.

An Easy Decision

From Thompson’s perspective, it sounds simple. Some unnamed investors, including management of East-West, approached the bank to make a purchase – for an undisclosed sum – and the bank agreed. Bernotas described the split as a collaboration, with both sides arranging to cut ties.

Thompson acknowledged that the two companies are very different: East West is a high-volume, multi-state mortgage company, with its distinctive advertising jingles and colorful history, owned by the locally focused $1.2 billion Worcester bank.

Both have always operated independently, and selling East-West won’t have much impact on Commerce as it focuses on the business of banking in Central Massachusetts, Thompson said.

Analysts said it made sense for Commerce to say goodbye to its subsidiary.

“It’s not surprising to me,” said Suzanne Moot, owner of M&M Consulting in Milford. “It makes sense for those two to separate from each other.”

It’s rare for community banks to have a subsidiary as large and separate as East-West, she said. Oftentimes the differences between the two types of companies are just too vast: Mortgage origination is a very volatile business, which means companies have to be able to rapidly expand and contract in reaction to the market.

Banks, with their more stable environment, can sometimes find that difficult to reconcile, Moot said.

If Commerce’s goal is to grow its banking operations, then selling off a large subsidiary can open the door to do just that, said Stanley V. Ragalevsky, partner with the Boston office of law firm K&L Gates. Additionally, if they’re looking to sell themselves to a bigger bank, a prospective buyer likely wouldn’t see a large mortgage subsidiary with a shaky regulatory background as much of a selling point.

Although East-West isn’t under any regulatory review, it endured serious public scandal in 2005 when federal and state regulators fined the company for a host of problems, including taking kickbacks for business referrals and reneging on promised interest rates.

Bernotas, who joined the company in 2005 and says he was specifically ordered to clean house, said the business has improved since then. As of 2008, it is no longer under a cease-and-desist order from state and federal regulators.

Headed The Other Way

Despite Commerce’s move away from its subsidiary, other banks are headed in the opposite direction. South Shore Savings Bank, based in Weymouth, purchased Cambridge Mortgage in 2008. In June, Lowell Cooperative Bank announced that it was buying the assets of Sudbury’s Omega Mortgage Corp.

But Richard E. Bolton Jr., president and CEO of Lowell Coop, said his bank’s plan will look far different from Commerce’s relationship with East-West. Omega spans several states, but it’s smaller and emphasizes more “high-touch” customer service than East-West’s larger, more advertising and web-focused approach, he said.

And importantly, Omega will be an incorporated division of Lowell Coop, while East-West is an independently operated subsidiary.

Bolton said now is a good time to embark upon a plan like his. With the mortgage industry still recovering from the troubles of the past few years and community banks enjoying relatively strong capital levels, now’s a good time to buy.

Omega, like East-West, intends to grow, he said – but it will be growing as a part of the bank, and mostly within the bank’s Massachusetts footprint.