Note 18—Net Interest Income

Net interest income is summarized below:


	Quarter ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	(in thousands)
Interest income:
From non-affiliates:
Cash and short-term investments	$	2,894	$	814	$	7,533	$	2,001
Loans held for sale at fair value		35,800		34,941		101,509		95,982
Placement fees relating to custodial funds		43,231		23,397		98,628		55,014
		81,925		59,152		207,670		152,997
From PennyMac Mortgage Investment Trust—Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell		1,527		1,812		5,015		5,686
		83,452		60,964		212,685		158,683

Interest expense:
To non-affiliates:
Assets sold under agreements to repurchase (1)		19,429		4,676		47,709		15,943
Mortgage loan participation purchase and sale agreements		2,304		2,533		7,034		6,450
Notes payable		17,525		21,369		53,559		55,939
Obligations under capital lease		274		122		476		444
Interest shortfall on repayments of mortgage loans serviced for Agency securitizations		12,453		4,883		24,978		14,259
Interest on mortgage loan impound deposits		2,104		1,452		4,967		3,517
		54,089		35,035		138,723		96,552
To PennyMac Mortgage Investment Trust—Excess servicing spread financing at fair value		2,291		3,740		8,124		11,584
		56,380		38,775		146,847		108,136
	$	27,072	$	22,189	$	65,838	$	50,547

(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. The Company included $1.6 million and $12.8 million of such incentives as reductions of Interest expense during the quarter ended September 30, 2019 and 2018, respectively, and $14.7 million and $35.5 million during the nine months ended September 30, 2019 and 2018, respectively. The master repurchase agreement expired on August 21, 2019.