In banking, growth and expansion don’t have to mean scouting other cities and markets for ideal spots on which to set up new brick-and-mortar locations.

Frazer Gieselmann is senior vice president at Magna Bank, which is funding many construction projects around the state.

(Memphis News/Andrew J. Breig)

Such locations, in fact, are particularly costly propositions at a time when customers are visiting the drive-thrus and bank tellers at such locations increasingly less as mobile options proliferate. But just because a bank’s physical location doesn’t expand outside of its core market, it doesn’t mean the bank’s deal flow is confined to the same area.

Magna Bank, for example, is based in Memphis but is at the moment funding things like a plethora of home construction projects around the state. Those projects include the Hampton on the Lake and Hampton Creek subdivisions in Chattanooga, where Magna’s customer is River Birch Homes.

The lots already are selling fast there, and in addition to Chattanooga, Magna’s construction financing extends to other projects in cities like Nashville and Knoxville. In each case, Magna was brought into the project through connections made in Memphis, with each new project helping them learn a new market.

The bank is still a locally focused community bank, in other words, but it’s continuing to build a stronger Memphis presence at the same time as its relationships are leading to projects throughout the state.

To get an idea about just how much, 15 percent of Magna’s real estate-secured loan portfolio is in the Nashville market, according to Magna’s chairman, president and CEO Kirk Bailey.

“We like for some portion of our loan portfolio to be outside of Memphis to limit market concentration concerns,” Bailey said. “We will also work with Memphis-based customers who develop properties in markets outside of Tennessee. We currently have loans with Memphis-based developers in multiple states.”

Magna senior vice president Frazer Gieselmann, who joined the bank about a year and a half ago, said the strategy has been a great way for the bank to grow outside Memphis, and that Magna has found markets like Nashville and Chattanooga to be particularly robust at the moment.

“This is a great way to get into a market without having to open a branch,” Gieselmann said. “I’ve got a deal in Florida where we followed a Memphis customer doing a project down there, three in Nashville, another couple in Chattanooga – we’ve done a few things in the last 60 days there.

“We’ve got another deal in Knoxville and a couple down in Mississippi. Our deal in Nashville is we actually have a mortgage presence there, and until 2011 we had a full-service bank branch in Nashville. We’ve also got board members with deep ties to Nashville, and as we’ve been growing, Nashville has definitely been on our radar.”

The bottom line in all this, he adds, is that a bank like Magna has options for moving into new areas that don’t have to rest on opening a physical location. They can extend their deal activity to new areas, for example, or even just open something like a loan production office.

It all points to the possibility of another strong year for Magna, which ended 2013 with net income up 40 percent over 2012 and assets that grew to $532 million last year. The bank at the time said it expects 2014 to see more growth from consumer and business loans, as well as deposit growth from businesses as corporate cash flow improves.