Net Interest Income

3 Months Ended

Mar. 31, 2019

Note 18—Net Interest Income

Net interest income is summarized below:


	Quarter ended March 31,
	2019		2018
	(in thousands)
Interest income:
From non-affiliates:
Cash and short-term investments	$	1,933	$	608
Mortgage loans held for sale at fair value		31,343		26,607
Placement fees relating to custodial funds		23,261		13,424
		56,537		40,639
From PennyMac Mortgage Investment Trust—Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell		1,796		1,976
		58,333		42,615

Interest expense:
To non-affiliates:
Assets sold under agreements to repurchase (1)		8,635		6,732
Mortgage loan participation purchase and sale agreements		2,311		1,727
Notes payable		17,995		18,222
Obligations under capital lease		66		170
Interest shortfall on repayments of mortgage loans serviced for Agency securitizations		4,311		4,830
Interest on mortgage loan impound deposits		1,159		1,130
		34,477		32,811
To PennyMac Mortgage Investment Trust—Excess servicing spread financing at fair value		3,066		3,934
		37,543		36,745
	$	20,790	$	5,870

(1)

In 2017, the Company entered into a master repurchase agreement that provides the Company with incentives to finance mortgage loans approved for satisfying certain consumer relief characteristics as provided in the agreement. During the quarters ended March 31, 2019 and 2018, the Company included $9.3 million and $10.2 million, respectively, of such incentives as reductions in Interest expense. The master repurchase agreement expires on August 21, 2019, unless terminated earlier at the option of the lender. The Company expects that it will cease to accrue the financing incentives under the repurchase agreement in the second quarter of 2019.