Bank of America Finance Issues Three-Year Contingent Income Notes Linked to Multiple Equity Indices

Structure and Contingent Coupon Mechanics of the Equity-Linked Notes

The Contingent Income Issuer Callable Yield Notes represent a structured debt product issued by BofA Finance LLC with an unconditional guarantee from Bank of America Corporation. The notes carry a contingent coupon rate of 11.00% per annum, paid monthly in installments of 0.9167% per month, but only if the closing level of each of the three underlying indices—the Nasdaq-100 Index, Russell 2000 Index, and S&P 500 Index—remains at or above 70.00% of its starting value on each monthly observation date. The starting value is determined by the closing level of each underlying on the pricing date of July 30, 2026. This structure creates a conditional income stream where the full coupon payment depends on all three indices meeting the specified barrier simultaneously.

The notes feature an approximate three-year maturity term with an issue date of August 4, 2026, and a maturity date of August 2, 2029, subject to earlier redemption at the issuer's option. The contingent payment structure means investors must carefully monitor performance across all three indices, as failure of any single index to maintain the 70% threshold would result in no coupon payment for that observation period. The filing indicates that observation dates are set on a monthly basis, creating twelve potential payment dates per year if conditions are met, plus a final contingent coupon payment at maturity if the ending values of all indices exceed the threshold.

Pricing Details and Initial Valuation Parameters

The notes were priced with a public offering price of $1,000.00 per note in minimum denominations of $1,000.00 and whole multiples thereof. BofA Finance LLC received $992.00 in proceeds per $1,000.00 in principal amount, after deducting the underwriting discount of $8.00 per note. The filing indicates that certain dealers purchasing notes for sale to fee-based advisory accounts could reduce the investor's purchase price to as low as $992.00 per $1,000.00 in principal amount. Additionally, an affiliate of BofA Finance agreed to pay a referral fee of up to $3.00 per $1,000.00 in principal amount to other registered broker-dealers participating in the distribution.

The initial estimated value of the notes as of the pricing date was expected to range between $930.00 and $980.00 per $1,000.00 in principal amount, reflecting a discount to the public offering price. The filing explicitly states that the actual value of the notes at any time cannot be predicted with accuracy and will reflect many factors beyond those disclosed in the pricing document. The CUSIP number assigned to the notes is 09712CRL9, and the filing notes that the notes will not be listed on any securities exchange, limiting secondary market liquidity and trading opportunities for investors.

Downside Risk and Principal Protection Provisions at Maturity

Investors face significant downside risk exposure under the terms disclosed in the pricing supplement. If any of the three underlying indices declines by more than 30% from its starting value by the maturity date, the investor will experience 1:1 downside exposure to the performance of the least performing underlying index. In such scenarios, the redemption amount could fall below 70% of the original principal amount, and investors could lose up to 100% of their investment in the notes. The filing explicitly states this risk in its redemption amount schedule, which provides that if the ending value of the least performing underlying is less than its threshold value (70% of starting value), the redemption amount excluding the final contingent coupon payment would be less than 70% of principal.

Conversely, if all three underlying indices maintain closing levels at or above 70% of their starting values on the final valuation date, investors will receive the full principal amount of $1,000.00 per note at maturity. A final contingent coupon payment would also be payable at maturity under this favorable scenario. The determination of principal repayment and coupon eligibility depends on the performance of the least performing of the three indices, meaning that even if two indices perform well, weakness in a single index could trigger downside exposure or eliminate coupon payments. This feature concentrates risk on the weakest-performing index among the three underlyings.

Optional Early Redemption Rights and Call Features

Beginning on August 4, 2027, one year after issuance, BofA Finance LLC holds the right to redeem all of the notes at its discretion on any monthly call payment date. The early redemption amount equals the principal amount of $1,000.00 per note plus any applicable contingent coupon payment if the observation values of all underlying indices on the corresponding observation date exceed or equal the coupon barrier of 70% of starting values. The issuer must provide notice to the trustee at least five business days but not more than 60 calendar days before any call payment date on which it intends to exercise this redemption right. Once the notes are redeemed, no further payments will be made to investors, effectively terminating the note investment regardless of remaining time to maturity.

This optional early redemption feature benefits the issuer by allowing it to manage interest rate risk and call away the notes if market conditions become unfavorable from the issuer's perspective. From an investor standpoint, this feature introduces reinvestment risk, as early redemption would require investors to redeploy capital in potentially different market conditions. The call right applies to all notes or none, meaning the issuer cannot selectively redeem portions of the outstanding principal amount. Call payment dates coincide with contingent payment dates on a monthly basis, providing the issuer with regular opportunities to exercise this right throughout the three-year term.

Credit Risk Concentration and Guarantee Structure

All payments on the notes, including principal repayment and contingent coupon payments, are fully subject to the credit risk of both BofA Finance LLC as the issuer and Bank of America Corporation as the unconditional guarantor. The guarantee from Bank of America Corporation provides investors with recourse to a systemically important financial institution, though this does not eliminate credit risk entirely. In the event of an event of default by either the issuer or guarantor, investors would become unsecured creditors competing with other senior debt holders and general creditors of these entities.

The filing emphasizes that these notes are not FDIC-insured and are not bank-guaranteed despite being issued by a banking organization affiliate. This distinction is critical for investors accustomed to deposit protections, as the notes are general unsecured debt obligations backed only by the promise and credit quality of Bank of America Corporation. In the event of acceleration following an event of default, the redemption amount would be calculated as though the acceleration date were the maturity date, with the valuation date set as the third trading day prior to acceleration. Any final contingent coupon payment in a default scenario would be prorated to reflect the actual length of the final contingent payment period.

Index Selection and Least Performing Underlying Methodology

The notes are linked to three major market indices: the Nasdaq-100 Index (Bloomberg symbol NDX), the Russell 2000 Index (Bloomberg symbol RTY), and the S&P 500 Index (Bloomberg symbol SPX). Each index is described in the filing as a price return index, meaning the calculation reflects only price appreciation or depreciation without dividend distributions. The selection of these three indices creates exposure across different market capitalizations—the Nasdaq-100 captures large-cap technology and growth stocks, the Russell 2000 represents small-cap stocks, and the S&P 500 encompasses large-cap equities across all sectors.

The note's return structure depends on identifying the least performing underlying, which is defined as the underlying with the lowest underlying return. This methodology means that the most poorly performing index among the three determines whether investors receive full principal protection at maturity or face downside exposure. For contingent coupon payments, however, all three indices must simultaneously meet the coupon barrier threshold, creating an asymmetry where one weak index can eliminate all coupon payments but the return of principal depends on which single index performs worst. This structure effectively creates a "worst of" link to the three underlyings for purposes of principal determination.

Registration and Regulatory Filing Details

BofA Finance LLC filed this pricing supplement on July 20, 2026, pursuant to Securities and Exchange Commission Rule 424(b)(2), relating to effective registration statement numbers 333-290665 and 333-290665-01. The pricing supplement supplements an existing prospectus dated December 8, 2025, a Series A prospectus supplement dated December 8, 2025, and Product Supplement EQUITY-1 also dated December 8, 2025. The preliminary nature of the pricing supplement indicates that terms and conditions remained subject to completion and potential changes prior to final pricing and issuance.

The filing documents the regulatory status that neither the SEC, any state securities commission, nor any other regulatory body has approved or disapproved the securities or determined whether the pricing supplement and accompanying documents are truthful or complete. The SEC characterizes any representation to the contrary as a criminal offense. These regulatory disclaimers underscore the nature of structured notes as complex products that operate within the securities regulatory framework but do not receive the same level of governmental approval or investor protection as other registered securities.

Valuation Methodology and Calculation Agent Role

The calculation agent for these notes is BofA Securities, Inc., an affiliate of BofA Finance LLC, which determines valuation dates, observation values, and all calculations related to contingent coupon payments and redemption amounts. The valuation date is scheduled as July 30, 2029, subject to postponement under circumstances described in the product supplement. Observation dates occur monthly throughout the term, with each observation date establishing the closing level of each underlying index for purposes of determining coupon eligibility and, ultimately, principal repayment at maturity.

The starting value for each underlying is its closing level on the July 30, 2026 pricing date, while the ending value is the observation value on the final valuation date. The underlying return for each index is calculated based on these values, and the least performing underlying is identified through comparison of these returns. Having an affiliate of the issuer serve as calculation agent creates potential conflicts of interest, though this structure is common in structured note offerings. The filing makes no disclosure regarding how disputes over calculation might be resolved or whether independent verification of valuations occurs.

Market Conditions and Investor Considerations for Structured Products

The timing of this note issuance on July 20, 2026, reflects market conditions and issuer decisions regarding the demand for structured income products at that point in the market cycle. The 11.00% per annum coupon rate represents the yield being offered to compensate investors for bearing the outlined risks, including contingency of payments, downside exposure, credit risk, and illiquidity. The substantial gap between the $1,000.00 public offering price and the estimated value range of $930.00 to $980.00 reflects pricing adjustments for the various embedded options and risks within the note structure.

Investors in these notes should recognize that the contingent nature of coupon payments means that the actual yield received may be zero if any single underlying index falls below the coupon barrier on any observation date. The potential for total capital loss distinguishes these notes from traditional fixed-income securities and aligns them more closely with equity investments despite their debt classification. The monthly observation and call dates create ongoing valuation uncertainty throughout the three-year holding period, requiring active monitoring of the three underlying indices. The lack of secondary market listing further constrains investor options for exiting the position prior to maturity or early redemption by the issuer.