5. NET TRADING

Net trading consisted of the following in the periods presented.


NET TRADING
(Dollars in Thousands)

		Three Months Ended
		March 31, 2020		March 31, 2019
Net realized gains (losses) - trading inventory	$	10,443	$	6,295
Net unrealized gains (losses) - trading inventory		(440)		559
Net gains and losses		10,003		6,854

Interest income- trading inventory		2,477		1,615
Interest income - residential transition loans		-		15
Interest income-receivables under resale agreements		41,485		37,483
Interest income		43,962		39,113

Interest expense-securities sold under agreements to repurchase		(34,766)		(36,381)
Interest expense-LegacyTexas Credit Facility		(39)		(5)
Interest expense-margin payable		(599)		(857)
Interest expense		(35,404)		(37,243)

Net trading	$	18,561	$	8,724

Trading inventory includes investments classified as investments-trading as well as trading securities sold, not yet purchased. See note 7.

During 2019, RTLs were accounted for at lower of cost or market and included as a component of other assets and the interest income related to those loans was shown separately in the table above. Effective January 1, 2020, in connection with the adoption of ASC 326, the Company began accounting for RTLs at fair value and including them as a component of investments-trading. Therefore, income earned on RTLs is included in interest income-trading inventory in the table above effective January 1, 2020.

Also, see note 10 for discussion of receivables under resale agreements and securities sold under agreements to repurchase. See note 6 for discussion of margin payable. See note 17 for discussion of LegacyTexas Credit Facility.