The East Texas economy is "distinctly different" — but not isolated — from the financial worlds of Texas, the nation and the rest of the globe, according to Bob Dyer, vice chairman of the board of Texas Bank and Trust.

He credits the region's abundant natural resources as being a pillar boosting the East Texas Economy, which continues to fare better than many other areas.

"Among the things that make East Texas different are its natural gas, oil, lignite, water and timber resources," he said. "We also have a natural beauty you can't find in lots of places."

For East Texans who want big city amenities that are not available in the immediate region, East Texas is not too far away from Dallas-Fort Worth and Houston.

"We're sitting here in a little bit of economic heaven," said Dyer. The region's vast and economically viable natural resources are a key reason for that buffer between the piney wood curtain and the rest of Texas and nation.

"Combine those natural resources our good climate and and the natural beauty of the water and trees and we are sitting in a pretty good spot," he said.

Dyer has analyzed the region's economy for years and regularly provides updates on how Longview and East Texas are doing.

"Even areas close by in Texas don't have what we have," he said. Dallas, Houston, Austin and San Antonio along with the Texas Hill Country do not have that same combination of resources.

Whether the preferred fuel to power electric generation plants in the future is natural gas or lignite, the region is in a prime spot to capitalize, Dyer said.

"We're faring better than most other areas in this downturn because of those factors combined with the fact we did not have a lot of the sub prime mortgage lending that's impacting a lot of areas and we have not have spikes in our population," Dyer said.

"Our local and area lenders were not involved in the sub-prime loans to begin with," he said. For the large national banks with a presence in our area, East Texas was not even on their radar screen as being viable for those types of loans, Dyer said.

While Longview's population growth has been slow and steady, the city and surrounding area are well situated for the future, he said.

"About 70 percent of the state's population is located north of I-10 and east of I-35," he said.

The downside

Home foreclosures in East Texas are up in recent months, Dyer said. But they are only slightly ahead of levels of recent years.

Dyer said Gregg County has probably been averaging 45 to 50 foreclosures a month while Smith County's average has grown to about 100 a month.

"We've seen some growth in foreclosure numbers but nothing like is taking place elsewhere," he said. East Texas also has not been severely hurt by the plant closings of auto makers and other large industries.

Dyer said an exception to that is the Longview manufacturing plant of Dana Corp., where truck frames are made that are primarily sold to General Motors for production at a Shreveport facility. The GM plant is still in operation, but at a reduced rate.

The Longview Dana payroll is less than half of what it was about a year ago. The plant now employs about 200 workers compared to more than 500 in mid-2009.

While the U.S. Steel plant in Lone Star north of Longview has shuttered production and laid more than 1,000 workers, Dyer said the company has continued to make capital investments at the facility.

"When the economy comes back they will be in good shape to call workers back," he said.

"We're experiencing low to middle single digit unemployment rates and reports we're getting from our customers is that their business is still favorable," he said. That does not mean they have not been negatively impacted by the economy and the recession.

"We're encouraging them to be creative in their operations and to develop new and expanded sources of revenue," Dyer said. "With a combination of being more creative and putting cost controls in place, they can still make money and will be in a good position when things turn around."

Upside

On the positive side of what is going on in the East Texas economy, Dyer cited several school district and other governmental capital construction projects as providing a solid base for contractors and East Texans working in the building trades.

"Just from the school bond projects alone there is about a $500 million economic stimulus to the East Texas economy," Dyer said of construction going on in Longview, Tyler and other school districts.

Other firms, like U.S. Steel, which is among the region's companies pinched by the economic downturn with massive recent layoffs, are well poised to take advantage of business when a rebound takes place. Dyer said the steel mill has had huge sums invested in recent years that should give it a competitive advantage when orders start coming in.

Add in the potential of the Haynesville Shale natural gas formation sitting more than 10,000 feet below part of the region's surface and energy production activity should be ready to meet increased demand when it comes, Dyer said.

"There are skeptics out there who downplay the significance of the Haynesville-Bossier Shale," he said. "But as time has gone by we've heard from many people whose opinions we value who say it has quite a potential."

Dyer said a typical natural gas well in the Haynesville formation under Northeast Louisiana and East Texas can produce as much natural gas in a few months as many of the region's long producing Cotton Valley formation wells have in their lifetime.

"Longview is right on the border of where it appears the formation lies and we have the benefit of being home to folks who live here who will work those jobs," he said.

Dyer said the current downturn for natural gas demand is a symbol of how technology and drilling techniques have made a difference in the industry. Just a few years ago the deep well formations like the Haynesville could not have been tapped economically.

"The up and down cycles have become more contracted," he said. "The wells being drilled are so productive they very quickly satisfy demand and then contribute to excess supply in a much shorter period of time than we've seen in the past."

Dyer said while many regions of the country are experiencing a glut of homes on their markets pushing values down due to over supply, East Texas has not seen much of that problem.

"Our housing market seems to be pretty much in balance with our supply and demand," he said. "Home builders are telling us they're starting to see more work."

Efforts to tap into the retirement housing market kicked off in Longview the past couple of years have been somewhat sidelined by the economic crunch.

"That market is still ripe for East Texas to benefit from," he said. But with many people who may have been thinking of retiring here have taken a 35 percent to 40 percent hit in their retirement accounts in the past year as investments have lost much of their value.

"Many people in the Dallas and Houston areas who may have been thinking of selling their homes and moving to East Texas are probably re-thinking that and may continue working a few more years or postpone making a big move," he said. "But I feel the profile for retirees in our area over the next five to 10 years is still good."

On the financial front, Dyer said the institution he works for and most other community banks in East Texas area continue to do well.

"At Texas Bank and Trust we had our best year ever last year," he said. "And from what we're hearing from our customers, we think they are well positioned to weather this downturn."