National mortgage lender promised 300-plus jobs in Cary. Then interest rates rose.
North Carolina terminated four economic incentive agreements Tuesday, including a 2021 grant for the national mortgage lender PennyMac Financial Services to create 322 jobs in Cary.
In a Dec. 19 letter to the North Carolina Department of Commerce, PennyMac executive vice president Janis Allen named higher interest rates as the chief reason her company would not meet its hiring commitment.
“Due to the cyclical nature of the mortgage industry, we were hopeful that the duration of elevated interest rates would not be long lasting,” Allen wrote. “Unfortunately, we do not see this change taking place with the base period (of the grant).
In early 2021, PennyMac pledged to add 300-plus jobs in the Triangle by the end of the following year. The lender made this announcement at a moment of “significant growth” for the company, Allen told the Commerce Department.
“Three years ago, PennyMac opened its doors in Cary, North Carolina, as a strategic, growth-oriented investment that benefited both our employees and the community,” she wrote. “Fueled by record-low interest rates and a surging economy in 2021.”
However, the California-based company has seen its nationwide headcount shrink after recent layoffs. According to its latest annual public filings, PennyMac’s U.S. workforce went from 6,900 employees at the end of fiscal 2021 to only “over 4,000” a year later.
North Carolina made a single payment of $23,882 to PennyMac in the grant’s first year. The state awards money through job development investment grants, or JDIGs, once grant-recipient companies create jobs. Incentives are then realized through payroll tax rebates. PennyMac could have received more than $1.9 million from the state had it met its hiring goals.
The company retains a Cary office, south of Lake Crabtree, where it employed 68 full-time workers as of December. Allen told the state PennyMac has invested $1.5 million to improvement its Triangle office, short of the $4.3 million it anticipated spending.
NC ends three other incentive deals
Most economic projects backed by JDIG incentives never meet their initial jobs targets, data on the 20-year-old program shows. Commerce Department spokesperson David Rhoades contends the program is “working as designed” with the grants structured to have a “safety net” to protect taxpayer dollars.
During the Economic Investment Council meeting Tuesday, North Carolina canceled three other JDIG awards.
An agreement with North American Aerospace Industries to create 380 jobs in Eastern North Carolina’s Lenoir County ended after the company failed to file annual reports to the state. No taxpayer dollars were awarded through this grant.
Earlier this month, the U.S. division of the Taiwanese textile company Everest asked the Commerce Department to terminated its JDIG for its operations in the Western North Carolina town of Forest City. Everest cited COVID, automation and workforce shortages for why it fell short of hiring 550 workers. The company said it currently had 120 workers at its Forest City site.
The fourth JDIG to end was for the Wilmington-area software company Vantaca. The company informed the state it plans to “expand its operations and grow its headcount” in Southeastern North Carolina, but that a change to its parent company necessitated an end to its agreement to add 94 jobs.
Open Source
Do you enjoy Triangle tech news? Subscribe to Open Source, The News & Observer's weekly technology newsletter and look for it in your inbox every Friday morning. Sign up here.
