Quarterly report pursuant to Section 13 or 15(d)

Financing Receivables

v3.23.1
Financing Receivables
 3 Months Ended
Mar. 31, 2023
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
March 31, 2023
Amounts outstanding $ 20,349  $ 3,707  $ 24,056 
Unamortized discount —  (287) (287)
Allowance for credit losses (2,319) (151) (2,470)
Carrying value $ 18,030  $ 3,269  $ 21,299 
December 31, 2022
Amounts outstanding $ 52,129  $ 3,944  $ 56,073 
Unamortized discount —  (310) (310)
Allowance for credit losses (6,736) (102) (6,838)
Carrying value $ 45,393  $ 3,532  $ 48,925 
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 advances of $1.5 million and $1.5 million, net of allowances of $0.1 million and $0.1 million, to Sunlight contractors not associated with specific installation projects at March 31, 2023 and December 31, 2022, respectively.
b.Represents (i) Sunlight’s 5.0% participation interest in a pool of residential solar loans with an aggregate UPB of $3.4 million and $3.6 million at March 31, 2023 and December 31, 2022, respectively, and (ii) Indirect Channel Loans purchased by Sunlight with an aggregate UPB of $0.3 million and $0.3 million at March 31, 2023 and December 31, 2022, respectively. No loans or loan participations were individually evaluated for impairment at March 31, 2023 or December 31, 2022.

For the Three Months Ended March 31,
2023 2022
Allowance for Credit Losses — Advances
Beginning Balance $ 6,736  $ 238 
Provision for credit losses(a)
(499) 267 
Realized losses(b)
(3,918) — 
Ending Balance $ 2,319  $ 505 
Allowance for Credit Losses — Loans and Loan Participations
Beginning Balance $ 102  $ 148 
Provision for credit losses
 2,209  371 
Realized losses (2,160) (446)
Ending Balance $ 151  $ 73 
Changes in Carrying Value — Loans and Loan Participations
Beginning Balance $ 3,532  $ 4,313 
Purchases, net(c)
2,161  448 
Proceeds from principal repayments, net (237) (307)
Accretion of loan discount 22  43 
Provision for credit losses (2,209) (371)
Ending Balance $ 3,269  $ 4,126 
a.Includes an adjustment of $0.5 million to provision for credit losses during the three months ended March 31, 2023 upon adoption of ASC 326.
b.Sunlight charged-off advances totaling $3.9 million for the three months ended March 31, 2023, mostly attributable to one of Sunlight’s contractors.
c.During the three months ended March 31, 2023 and 2022, Sunlight purchased 80 and 24 Indirect Channel Loans with an aggregate UPB of $2.5 million and $0.5 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
March 31, 2023
1 Low risk 77  $ 5,833  28.7  %
2 Low-to-medium risk 101  8,962  44.0 
3 Medium risk 43  1,282  6.3 
4 Medium-to-high risk 24  4,072  20.0 
5 Higher risk 8  200  1.0 
253  $ 20,349  100.0  %
December 31, 2022
1 Low risk 130  $ 14,585  28.0  %
2 Low-to-medium risk 152  23,686  45.4 
3 Medium risk 70  3,868  7.4 
4 Medium-to-high risk 28  9,793  18.8 
5 Higher risk 8  197  0.4 
388  $ 52,129  100.0  %
a.At March 31, 2023 and December 31, 2022, the average risk rating of Sunlight’s advances was 2.2 (“low-to-medium risk”) and 2.2 (“low-to-medium risk”), weighted by total advance amounts outstanding, respectively.

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

Payment Delinquency
Amount Outstanding(a)
% of Amount Outstanding
March 31, 2023
Current $ 8,933  47.4  %
Less than 30 days 912  4.8 
30 days 1,163  6.2 
60 days 1,336  7.1 
90+ days(b)
6,505  34.5 
$ 18,849  100.0  %
December 31, 2022
Current $ 27,257  53.8  %
Less than 30 days 7,456  14.7 
30 days 5,197  10.3 
60 days 3,099  6.1 
90+ days(b)
7,620  15.1 
$ 50,629  100.0  %
a.Excludes advances of $1.5 million and $1.5 million to Sunlight contractors not associated with specific installation projects and was not delinquent at March 31, 2023 and December 31, 2022, respectively.
b.As further discussed in Note 2, Sunlight generally evaluates amounts delinquent for 90 days or more for impairment. 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 $2.0 million and $2.0 million at March 31, 2023 and December 31, 2022, respectively.
Concentrations — The following table presents the concentration of advances, by counterparty:

March 31, 2023 December 31, 2022
Contractor Amount Outstanding % of Total Amount Outstanding % of Total
1 $ 3,412  16.8  % $ 4,326  8.3  %
2 2,804  13.8  7,348  14.1 
3 2,054  10.1  4,098  7.9 
4 565  2.8  554  1.1 
5 504  2.5  1,004  1.9 
6 504  2.5  2,711  5.2 
7 372  1.8  992  1.9 
8 271  1.3  83  0.2 
9 253  1.2  416  0.8 
10 243  1.2  511  1.0 
Other(a)
9,367  46.0  30,086  57.6 
$ 20,349  100.0  % $ 52,129  100.0  %
a.At March 31, 2023 and December 31, 2022, Sunlight recorded advances receivable from 243 and 378 counterparties not individually listed in the table above with average balances of $0.0 million and $0.1 million, respectively. At December 31, 2022, Sunlight recorded advances receivable from individual counterparties of $3.9 million, $1.4 million, $0.9 million and $0.8 million that represent the largest advance concentrations included in “Other,” based on the amount outstanding.

Vintage — The following table presents the amortized cost basis by year of origination and credit quality indicators of advances held by Sunlight at March 31, 2023:

Year of Origination(a)
2023 2022 2021 Prior Total
Risk Tier
1 Low risk $ 4,028  $ 1,279  $ 26  $ —  $ 5,333 
2 Low-to-medium risk 6,985  1,935  42  —  8,962 
3 Medium risk 775  507  —  —  1,282 
4 Medium-to-high risk 74  2,775  77  146  3,072 
5 Higher risk 19  181  —  —  200 
$ 11,881  $ 6,677  $ 145  $ 146  $ 18,849 
Payment Delinquency
Current $ 8,933  $ —  $ —  $ —  $ 8,933 
Less than 30 days 847  65  —  —  912 
30 days 1,011  152  —  —  1,163 
60 days 1,090  247  —  —  1,337 
90+ days(b)
—  6,213  145  146  6,504 
$ 11,881  $ 6,677  $ 145  $ 146  $ 18,849 
Current-period gross write-offs(c)
$ 373  $ 3,890  $ —  $ 182  $ 4,445 
a.Excludes advances of $1.5 million and $1.5 million to Sunlight contractors not associated with specific installation projects and was not delinquent at March 31, 2023 and December 31, 2022, respectively.
b.As discussed in Note 2, Sunlight generally evaluates amounts 90 days or more past due for impairment. Sunlight assessed advances 90 days or more past due, along with other factors that included the contractor’s risk tier and historical loss experience, and established loss allowances of $2.0 million and $2.0 million at March 31, 2023 and December 31, 2022, respectively.
c.Excludes $0.5 million of recoveries during the three months ended March 31, 2023.

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 5.0% 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
March 31, 2023
Current 3,226  $ 3,320  15  $ 238  3,241  $ 3,558  96.0  %
Less than 30 days 73  82  1  32  74  114  3.1 
30 days 18  19  —  —  18  19  0.5 
60 days 4  6  —  —  4  6  0.2 
90+ days 6  10  —  —  6  10  0.2 
3,327  $ 3,437  16  $ 270  3,343  $ 3,707  100.0  %
December 31, 2022
Current 3,302  $ 3,502  14  $ 240  3,316  $ 3,742  94.9  %
Less than 30 days 89  101  3  69  92  170  4.3 
30 days 15  17  —  —  15  17  0.4 
60 days 6  9  —  —  6  9  0.2 
90+ days 6  6  —  —  6  6  0.2 
3,418  $ 3,635  17  $ 309  3,435  $ 3,944  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 March 31, 2023 and December 31, 2022, 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:

March 31, 2023 December 31, 2022
State UPB % of Total UPB % of Total
Texas $ 696  18.8  % $ 732  18.6  %
California 662  17.9  698  17.7 
Florida 315  8.5  371  9.4 
New York 255  6.9  269  6.8 
New Jersey 245  6.6  256  6.5 
Arizona 172  4.6  178  4.5 
Massachusetts 170  4.6  174  4.4 
Pennsylvania 147  4.0  159  4.0 
South Carolina 130  3.5  137  3.5 
Missouri 105  2.8  111  2.8 
Other(a)
810  21.8  859  21.8 
$ 3,707  100.0  % $ 3,944  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 2.7% and 2.6% of the UPB at March 31, 2023 and December 31, 2022, respectively.
Vintage — The following table presents the amortized cost basis by year of origination and credit quality indicators of Loans and Loan Participations held by Sunlight at March 31, 2023:

Year of Origination
2023 2022 2021 Prior Total
FICO
780 and greater $ —  $ —  $ 14  $ 899  $ 913 
720-779 —  —  3  1,293  1,296 
660-719(a)
—  —  6  1,133  1,139 
600-659 —  —  —  72  72 
Less than 600 —  —  —  —  — 
$ —  $ —  $ 23  $ 3,397  $ 3,420 
Current-period gross write-offs(b)
$ —  $ 1,883  $ 224  $ 53  $ 2,160 
a.This bucket includes all Bank Partner Loans (originated prior to 2021).
b.Includes gross write-offs of $0.0 million related to Sunlight’s 5.0% participation interest in a pool of residential solar loans and $2.1 million related to Indirect Channel Loans during the three months ended March 31, 2023.