Quarterly report pursuant to Section 13 or 15(d)

Financing Receivables

v3.21.2
Financing Receivables
9 Months Ended
Sep. 30, 2021
Receivables [Abstract]  
Financing Receivables Financing Receivables
Sunlight recognizes receivables primarily related to (a) advances that Sunlight remits to contractors to facilitate the installation of residential solar and home improvement equipment and (b) loans and loan participations. Loans and loan participations primarily include Sunlight’s undivided 5.0% participation in certain Indirect Channel Loans and Indirect Channel Loans purchased from its Bank Partner. The following tables summarize Sunlight’s financing receivables and changes thereto:
Advances(a)
Loans and Loan Participations(b)
Total
September 30, 2021 (Successor)
Amounts outstanding $ 71,310  $ 5,234  $ 76,544 
Unamortized discount —  (445) (445)
Allowance for credit losses —  —  — 
Carrying value $ 71,310  $ 4,789  $ 76,099 
December 31, 2020 (Predecessor)
Amounts outstanding $ 35,401  $ 6,351  $ 41,752 
Unamortized discount —  (893) (893)
Allowance for credit losses (121) (125) (246)
Carrying value $ 35,280  $ 5,333  $ 40,613 
a.Represents advance payments made by Sunlight to certain contractors, generally on a short-term basis, in anticipation of a project’s substantial completion, including a $9.0 million advance to a Sunlight contractor not associated with specific installation projects at September 30, 2021.
b.Represents (i) Sunlight’s 5.0% participation interest in a pool of residential solar loans with an aggregate UPB of $4.9 million and $6.0 million at September 30, 2021 and December 31, 2020, respectively, and (ii) Indirect Channel Loans purchased by Sunlight with an aggregate UPB of $0.3 million and $0.4 million at September 30, 2021 and December 31, 2020, respectively. No loans or loan participations were individually evaluated for impairment at September 30, 2021 or December 31, 2020.

Successor Predecessor
For the Period July 10, 2021 to September 30, 2021 For the Period July 1, 2021 to July 9, 2021 For the Three Months Ended September 30, 2020 For the Period January 1, 2021 to July 9, 2021 For the Nine Months Ended September 30, 2020
Allowance for Credit Losses — Advances
Beginning Balance $ —  $ 211  $ 139  $ 121  $ 215 
Provision for credit losses —  —  (48) 90  (124)
Ending Balance $ —  $ 211  $ 91  $ 211  $ 91 
Allowance for Credit Losses — Loans and Loan Participations
Beginning Balance $ —  $ 111  $ 83  $ 125  $ 96 
Provision for credit losses 254  —  358  1,082  912 
Realized losses (254) —  (343) (1,096) (910)
Ending Balance $ —  $ 111  $ 98  $ 111  $ 98 
Changes in Carrying Value — Loans and Loan Participations
Beginning Balance $ 5,105  $ 4,707  $ 5,544  $ 5,333  $ 5,130 
Purchases, net(a)
254  —  641  1,170  2,128 
Proceeds from principal repayments, net (351) —  (346) (832) (971)
Accretion of loan discount 35  24  123  130 
Provision for credit losses (254) —  (358) (1,082) (912)
Ending Balance $ 4,789  $ 4,712  $ 5,505  $ 4,712  $ 5,505 
a.During the three and nine months ended September 30, 2020, Sunlight purchased (i) 5.0% participation interests in 222 and 887 loans with an aggregate UPB of $0.4 million and $1.4 million as well as (ii) 12 and 36 Indirect Channel Loans with an aggregate UPB of $0.3 million and $0.7 million, respectively. During the periods July 10, 2021 through September 30, 2021, July 1, 2021 through July 9, 2021, and January 1, 2021 through July 9, 2021, Sunlight purchased (i) 5.0% participation interests in 0, 0, and 54 loans with an aggregate UPB of $0.0 million,
$0.0 million and $0.1 million as well as (ii) 8, 0, and 51 Indirect Channel Loans with an aggregate UPB of $0.1 million, $0.0 million and $1.1 million, respectively.

Advances — The following section presents certain characteristics of Sunlight’s advances.

Risk Ratings — As further described in Note 2, management evaluates Sunlight’s advances for impairment using risk ratings assigned on a scale of “1” (low risk) through “5” (higher risk). The following table allocates the advance amount outstanding based on Sunlight’s internal risk ratings:

Total
Risk Tier(a)
Contractors Amount Outstanding % of Amount Outstanding
September 30, 2021 (Successor)
1 Low risk 63  $ 24,451  34.3  %
2 Low-to-medium risk 69  33,146  46.5 
3 Medium risk 13,713  19.2 
4 Medium-to-high risk —  —  — 
5 Higher risk —  —  — 
141  $ 71,310  100.0  %
December 31, 2020 (Predecessor)
1 Low risk 78  $ 18,072  51.0  %
2 Low-to-medium risk 56  16,700  47.2 
3 Medium risk 604  1.7 
4 Medium-to-high risk —  —  — 
5 Higher risk 25  0.1 
141  $ 35,401  100.0  %
a.At September 30, 2021 and December 31, 2020, the average risk rating of Sunlight’s advances was 1.8 (“low-to-medium risk”) and 1.5 (“low-to-medium risk”), weighted by total advance amounts outstanding.

Delinquencies — The following table presents the payment status of advances held by Sunlight:

Payment Delinquency
Amount Outstanding(a)
% of Amount Outstanding
September 30, 2021 (Successor)
Current $ 58,852  94.5  %
Less than 30 days 1,989  3.2 
30 days 737  1.2 
60 days 230  0.4 
90+ days(b)
502  0.7 
$ 62,310  100.0  %
December 31, 2020 (Predecessor)
Current $ 29,132  82.3  %
Less than 30 days 3,137  8.9 
30 days 1,424  4.0 
60 days 672  1.9 
90+ days(b)
1,036  2.9 
$ 35,401  100.0  %
a.Excludes a $9.0 million advance to a Sunlight contractor not associated with specific installation projects at September 30, 2021.
b.As further discussed in Note 2, Sunlight generally evaluates amounts delinquent for 90 days or more for impairment. Advances to contractors may remain outstanding as a result of operational and various other factors that are unrelated to the contractor’s creditworthiness. Sunlight assessed advances 90 days or more, along with other factors that included the contractor’s risk tier and historical loss experience, and established loss allowances of $0.0 million and $0.1 million at September 30, 2021 and December 31, 2020, respectively.
Concentrations — The following table presents the concentration of advances, by counterparty:

Successor Predecessor
September 30, 2021 December 31, 2020
Contractor Amount Outstanding % of Total Amount Outstanding % of Total
1 $ 20,968  29.4  % $ 295  0.8  %
2 13,275  18.6  6,425  18.1 
3 7,253  10.2  10,429  29.5 
4 4,775  6.7  141  0.4 
5 2,706  3.8  437  1.2 
6 2,472  3.5  —  — 
7 2,195  3.1  1,812  5.1 
8 2,074  2.9  —  — 
9 1,996  2.8  36  0.1 
10 1,203  1.7  141  0.4 
Other(a)
12,393  17.3  15,685  44.4 
$ 71,310  100.0  % $ 35,401  100.0  %
a.At September 30, 2021 and December 31, 2020, Sunlight recorded advances receivable from 131 and 131 counterparties not individually listed in the table above with average balances of $0.1 million and $0.1 million, respectively. At December 31, 2020, Sunlight recorded advances receivable from individual counterparties of $2.6 million, $0.7 million, $0.6 million, $0.6 million, and $0.5 million that represent the largest advance concentrations included in “Other,” based on the amount outstanding.

Loans and Loan Participations — The following section presents certain characteristics of Sunlight’s investments in loans and loan participations. Unless otherwise indicated, loan participation amounts are shown at Sunlight’s 5% interest in the underlying loan pool.

Delinquencies — The following table presents the payment status of loans and loan participations held by Sunlight:

Payment Delinquency(a)
Loan Participations Bank Partner Loans Total
Loans UPB Loans UPB Loans UPB % of UPB
September 30, 2021 (Successor)
Current 3,926  $ 4,733  18  $ 341  3,944  $ 5,074  96.9  %
Less than 30 days 95  129  —  —  95  129  2.5 
30 days 12  20  —  —  12  20  0.4 
60 days —  —  0.1 
90+ days —  —  0.1 
4,040  $ 4,893  18  $ 341  4,058  $ 5,234  100.0  %
December 31, 2020 (Predecessor)
Current 4,409  $ 5,760  16  $ 319  4,425  $ 6,079  95.7  %
Less than 30 days 116  174  —  —  116  174  2.7 
30 days 22  38  23  23  61  1.0 
60 days 11  —  —  11  0.2 
90+ days 10  14  12  11  26  0.4 
4,564  $ 5,997  18  $ 354  4,582  $ 6,351  100.0  %
a.As further described in Note 2, Sunlight places loans delinquent greater than 90 days on nonaccrual status. Such Loans had carrying values of $0.0 million and $0.0 million at September 30, 2021 and December 31, 2020, respectively. Sunlight does not consider the average carrying values and interest income recognized (including interest income recognized using a cash-basis method) material.
Loan Collateral Concentrations — The following table presents the UPB of Balance Sheet Loans, including Sunlight’s relevant participation percentage of the Indirect Channel Loans underlying the participation interests held by Sunlight, based upon the state in which the borrower lived at the time of loan origination:

Successor Predecessor
September 30, 2021 December 31, 2020
State UPB % of Total UPB % of Total
Texas $ 994  19.0  % $ 1,203  18.9  %
California 916  17.5  1,111  17.5 
Florida 454  8.7  555  8.7 
New York 340  6.5  403  6.3 
New Jersey 320  6.1  376  5.9 
Arizona 237  4.5  312  4.9 
Pennsylvania 219  4.2  274  4.3 
Massachusetts 205  3.9  223  3.5 
Missouri 190  3.6  228  3.6 
South Carolina 189  3.6  234  3.7 
Other(a)
1,170  22.4  1,432  22.7 
$ 5,234  100.0  % $ 6,351  100.0  %
a.Sunlight only participates in residential solar loans originated within the United States, including 31 and 31 states not individually listed in the table above, none of which individually amount to more than 2.6% and 2.7% of the UPB at September 30, 2021 and December 31, 2020, respectively.