Bank of America Finance Launches Three-Year Contingent Income Notes Linked to Dow Jones and S&P 500

Offering Structure and Pricing Terms

BofA Finance LLC announced the pricing of Contingent Income Issuer Callable Yield Notes on July 15, 2026, representing a $730 million offering with an issuance date of July 20, 2026. The notes carry a three-year approximate term, maturing on July 19, 2029, unless redeemed early by the issuer. The public offering price was set at $1,000.00 per note, with no underwriting discount applied to the offering. BofA Securities, Inc., an affiliate of BofA Finance, served as the selling agent for the distribution of these notes to registered broker-dealers.

The notes are fully and unconditionally guaranteed by Bank of America Corporation, providing investors with the credit support of one of the nation's largest financial institutions. The initial estimated value of the notes as of the pricing date was $980.70 per $1,000.00 in principal amount, reflecting a discount to the public offering price. Minimum denominations for the notes are $1,000.00, with whole multiples of $1,000.00 available in excess of the minimum. The notes will not be listed on any securities exchange and carry a CUSIP number of 09712G5H3 for tracking and settlement purposes.

Monthly Contingent Coupon Mechanism

The notes feature a contingent coupon payment structure designed to provide income only when specific performance thresholds are met by both underlying indices. The contingent coupon rate is established at 7.50 percent per annum, translating to $6.25 per $1,000.00 in principal amount paid monthly. This monthly coupon of 0.625 percent is payable only if the closing level of each underlying index on the applicable observation date is greater than or equal to 70.00 percent of its respective starting value on any given month.

The starting values used as reference points for the contingent coupon calculations are the Dow Jones Industrial Average at 52,658.64 and the S&P 500 Index at 7,572.40, both established on the pricing date. For the Dow Jones, the coupon barrier is set at 36,861.05, representing exactly 70.00 percent of its starting value, while the S&P 500 coupon barrier is established at 5,300.68, also representing 70.00 percent of its starting value. The filing specifies that contingent payment dates begin on August 20, 2026, with observation dates commencing on August 17, 2026, establishing a monthly rhythm of coupon assessments and payments throughout the note term.

Issuer Call Rights and Early Redemption

BofA Finance retains the right to redeem all of the outstanding notes prior to maturity beginning on July 20, 2027, exercising this option on any monthly call payment date at its discretion. When the issuer exercises this early redemption right, holders will receive the early redemption amount, which equals $1,000.00 per note in principal amount plus any applicable contingent coupon payment if the observation value of each underlying on the corresponding observation date is greater than or equal to its coupon barrier. The issuer must provide notice to the trustee at least five business days but not more than 60 calendar days before the applicable call payment date.

The optional early redemption feature eliminates the possibility of further coupon payments following exercise of the call option, as no amounts remain payable after redemption occurs. This provision gives BofA Finance significant control over the investment's duration and creates reinvestment risk for note holders if the issuer chooses to call the notes during periods of favorable market conditions. Call payment dates align with the contingent payment dates established in the offering, creating a regular schedule of potential redemption opportunities for the issuer every month beginning in July 2027.

Maturity Redemption and Principal Return Scenarios

At maturity on July 19, 2029, assuming the notes have not been called prior to that date, the redemption amount depends entirely on the performance of the least performing underlying index. The "Least Performing Underlying" is determined by comparing the underlying returns of both the Dow Jones Industrial Average and the S&P 500 Index, with the index showing the lowest return designated as the performance benchmark for maturity calculations.

If the ending value of the least performing underlying is greater than or equal to its threshold value of 70.00 percent of the starting value, note holders will receive the full principal amount of $1,000.00 per note. However, if the ending value of the least performing underlying declines to less than 70.00 percent of its starting value, meaning either index falls more than 30 percent from its starting value, the notes provide 1:1 downside exposure to decreases in the value of the least performing underlying, with up to 100 percent of the principal amount at risk. At maturity, holders also receive a final contingent coupon payment if the closing level of each underlying on the valuation date is greater than or equal to its coupon barrier.

Credit Support and Guarantee Structure

All payments on the notes remain subject to the credit risk of BofA Finance LLC as the issuer of the notes and Bank of America Corporation as the full and unconditional guarantor. This dual-layer credit structure means that while BofA Finance issues the notes, investors have recourse to Bank of America's creditworthiness if BofA Finance encounters financial difficulties. The guarantee ensures that all principal and coupon payments flow through Bank of America's commitment to meet the obligations, providing credit protection equivalent to Bank of America's own credit rating and financial position.

The notes are not FDIC insured, are not bank guaranteed in the conventional deposit sense, and carry explicit warnings that they may lose value. The credit enhancement provided by Bank of America's guarantee does not eliminate market risk associated with the contingent coupon structure or the principal-at-risk feature if either underlying index declines more than 30 percent from its starting value. Investors are explicitly advised to consider the information provided in the risk factors section of the pricing supplement before purchasing these notes.

Underlying Index Components and Performance Tracking

The notes are linked to two major U.S. equity market indices: the Dow Jones Industrial Average, tracking 30 large-capitalization U.S. companies, and the S&P 500 Index, representing 500 large-capitalization U.S. stocks. Both indices are established price return indices, meaning they track changes in the prices of their constituent securities. The Dow Jones started at 52,658.64 on the pricing date, while the S&P 500 started at 7,572.40, establishing the baseline values against which all coupon and redemption calculations are measured.

BofA Securities, Inc., serving as the calculation agent, monitors the closing levels of both indices on each observation date to determine whether contingent coupon payments are due and to calculate the final redemption amount at maturity. The use of the "least performing underlying" mechanism means that even if one index performs well, if the other index underperforms, investors may lose the contingent coupon payment for that month and face principal loss at maturity. This dual-index structure introduces correlation risk, as negative performance in either major index impacts the overall note performance and income stream.

Observation and Payment Schedule Through Maturity

The disclosure establishes a complete schedule of observation dates and corresponding contingent payment dates extending from August 17, 2026, through the maturity date of July 19, 2029. Observation dates are scheduled mid-month, ranging from dates such as August 17, 2026, through December 15, 2026, in the first year, with contingent payment dates following approximately three calendar days later. This monthly assessment and payment schedule continues throughout the note's life, providing regular opportunities for coupon distributions if index performance meets the established barriers.

The schedule reflects a disciplined monthly assessment methodology, with observation dates generally clustered around the 15th to 17th of each month and contingent payment dates occurring within three to five business days thereafter. Call payment dates begin on July 20, 2027, coinciding with the earliest date the issuer may exercise its redemption right, and continue monthly thereafter on the same schedule as contingent payment dates. This consistent framework allows investors to anticipate payment timing and enables clear tracking of coupon eligibility as observation dates occur throughout the note's three-year term.

Risk Factors and Investment Considerations

The filing explicitly cautions investors about the differences between these contingent notes and conventional debt securities, directing potential purchasers to detailed risk factor information contained within the pricing supplement, product supplement, prospectus supplement, and prospectus. The contingent coupon mechanism creates a scenario where investors receive no monthly income if either underlying index closes below its coupon barrier, regardless of the other index's performance. The principal-at-risk feature for declines exceeding 30 percent means that in severe market downturns, investors could recover substantially less than their initial investment.

The issuer's call right introduces reinvestment risk, as the issuer may redeem the notes when it is disadvantageous for investors, such as when interest rates have declined or market conditions have improved for the issuer. The linked structure to the least performing index ensures that even if one index performs well, negative performance in the other index determines both coupon and redemption outcomes. Market conditions affecting both large-cap equities and the specific constituent stocks of each index directly impact the probability of meeting coupon barriers and achieving principal recovery at maturity.

Distribution and Market Access

BofA Securities, Inc., as the selling agent, distributes the notes to other registered broker-dealers participating in the offering. The filing discloses that an affiliate of BofA Finance will pay a referral fee of up to $10.00 per $1,000.00 in principal amount of notes in connection with distribution to other registered broker-dealers. This compensation structure incentivizes broader distribution of the notes across the broker-dealer community, though it represents an additional cost factored into the notes' valuation relative to their public offering price.

The notes are not listed on any securities exchange, meaning they must be traded in the over-the-counter secondary market through registered broker-dealers. Liquidity in the secondary market may be limited, and investors seeking to sell notes prior to maturity may encounter wide bid-ask spreads or limited buyer interest. The absence of exchange listing also means that real-time pricing information and transparent market data may not be as readily available as for listed securities, potentially making it more difficult for investors to assess current market values or execute trades efficiently.

Valuation Methodology and Calculation Framework

The valuation date for determining the final ending values of each underlying index is July 16, 2029, subject to postponement if the day is not a trading day. This valuation date, occurring three calendar days before the maturity date of July 19, 2029, establishes the final measurement point for determining whether investors receive full principal recovery or face downside exposure. The filing specifies that BofA Securities, Inc., serves as the calculation agent responsible for determining observation values, ending values, underlying returns, and the least performing underlying throughout the note term.

All redemption amount calculations exclude any final contingent coupon payment, which is added separately only if the ending value of the least performing underlying is greater than or equal to its coupon barrier at the valuation date. In the event of an acceleration due to default, the redemption amount is calculated as though the acceleration date were the maturity date, and the valuation date is deemed to be the third trading day prior to acceleration. Any final contingent coupon payment in such circumstances is prorated to reflect the length of the final contingent payment period, ensuring equitable treatment of investors in default scenarios.