Bank of America Finance Launches Callable Yield Notes Linked to S&P 500 Index

Structured Note Terms and Contingent Payment Framework

The notes issued by BofA Finance LLC and fully guaranteed by Bank of America Corporation feature a contingent income structure tied to the performance of the S&P 500 Index. The contingent coupon payment of $35.00 per $1,000.00 in principal amount, representing 3.50% semi-annually or 7.00% annually, will be paid on contingent payment dates only if the S&P 500 Index closing level meets or exceeds 70.00% of its starting value on the applicable observation date. This conditional payment mechanism distinguishes the notes from traditional fixed-income securities and introduces a performance-dependent income element that investors must evaluate carefully.

The notes will be valued initially between $925.00 and $975.00 per $1,000.00 in principal amount as of the pricing date, representing a discount to the $1,000.00 public offering price. Observation dates occur semi-annually, with the first observation date scheduled for February 16, 2027, and subsequent dates every six months thereafter, culminating in the valuation date of August 14, 2029. The closing level of the underlying index on each observation date determines whether investors receive the contingent coupon payment on the corresponding contingent payment date, creating a direct linkage between market performance and investor income.

Callable Redemption and Early Redemption Rights

Beginning February 19, 2027, BofA Finance holds the right to redeem the notes semi-annually at the early redemption amount, which equals $1,000.00 per note in principal plus the applicable contingent coupon payment if the observation value of the underlying on the corresponding observation date exceeds the coupon barrier. The issuer must provide notice to the trustee at least five business days but no more than 60 calendar days before any call payment date. This embedded call option gives the issuer significant flexibility to manage interest rate risk and market conditions throughout the note's approximate three-year term.

The early redemption feature means investors face reinvestment risk if market conditions become favorable and the issuer exercises its call option. If called, no further payments will be made beyond the early redemption amount, and the note will terminate prior to its stated maturity date of August 17, 2029. Investors purchasing these notes should understand that the callable nature potentially limits upside participation if the underlying index performs strongly, as the issuer may redeem the notes to minimize its obligations. The call payment dates align with contingent payment dates, creating predetermined windows when redemption becomes possible.

Downside Protection Thresholds and Maturity Payoff Structure

The notes incorporate a threshold value mechanism that determines redemption amounts at maturity based on the S&P 500 Index performance. If the ending value of the underlying index at maturity equals or exceeds 70.00% of the starting value, investors receive full principal repayment of $1,000.00 per note. However, if the ending value falls below 70.00% of the starting value, meaning the index has declined more than 30% from its initial level, investors face full downside exposure at a 1:1 ratio, with potential losses up to 100% of the principal amount invested.

This structure creates a significant risk asymmetry. While investors benefit from contingent income if the index remains above the coupon barrier on observation dates, protection of principal depends entirely on the index level remaining above the threshold value at maturity. A decline of 30% or more in the S&P 500 Index from its August 14, 2026 starting value would result in proportional losses to principal. Additionally, even if the index closes above the threshold at maturity, investors receive a final contingent coupon payment only if the ending value exceeds 70.00% of the starting value, further tying redemption proceeds to index performance.

Pricing, Distribution, and Underwriting Arrangements

The notes are priced at $1,000.00 per $1,000.00 in principal amount, with an underwriting discount of $15.00 per note, resulting in proceeds to BofA Finance of $985.00 per note before expenses. BofA Securities, Inc., an affiliate of BofA Finance, serves as both the calculation agent and selling agent for the offering. Minimum denominations are $1,000.00, with whole multiples of $1,000.00 available for investors seeking larger positions. The filing notes that certain dealers purchasing notes for fee-based advisory accounts may forgo some or all of selling concessions, with possible adjusted pricing as low as $985.00 per note for such accounts.

An affiliate of BofA Finance will pay a referral fee of up to $4.50 per $1,000.00 in principal amount to other registered broker-dealers participating in the distribution. These fee arrangements reflect standard market practice for structured note offerings and incentivize broad distribution across the dealer network. The notes will not be listed on any securities exchange, meaning they represent a non-exchange-traded security available primarily through the issuer's dealer network and affiliated advisors. The CUSIP number 09712GNV2 identifies the notes for trading and settlement purposes.

Credit Risk and Guarantee Structure

All payments on the notes are subject to the credit risk of BofA Finance LLC as the direct issuer and Bank of America Corporation as the unconditional guarantor. This guarantee structure provides investors with a claim on Bank of America Corporation if BofA Finance fails to meet its obligations under the notes. However, the guarantee does not eliminate credit risk; instead, it transfers that risk to the credit quality of Bank of America Corporation. The filing explicitly states that the notes are not Federal Deposit Insurance Corporation insured and are not bank guaranteed in the traditional sense, despite the full guarantee from Bank of America Corporation.

Investors purchasing these notes assume both market risk tied to S&P 500 Index performance and credit risk tied to Bank of America Corporation's ability to pay. In the event of an event of default by BofA Finance, the redemption amount would be calculated as if the acceleration date were the maturity date, with the valuation date deemed to be the third trading day prior to acceleration. Any final contingent coupon payment in an acceleration scenario would be prorated to reflect the length of the final contingent payment period. The notes will not bear a default interest rate if payment defaults occur at maturity or upon acceleration.

Registration and Regulatory Framework

The pricing supplement was filed pursuant to Rule 424(b)(2) under the Securities Act of 1933, relating to effective Registration Statement Nos. 333-290665 and 333-290665-01. The offering is structured as a preliminary pricing supplement subject to completion, relating to a base prospectus dated December 8, 2025, Series A Prospectus Supplement dated December 8, 2025, and Product Supplement EQUITY-1 dated December 8, 2025. This multi-layered prospectus structure ensures that investors receive comprehensive disclosure regarding the notes, the underlying index, and material risks associated with the investment.

The filing emphasizes that neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the notes or determined whether the disclosure documents are truthful or complete. The pricing supplement contains an explicit warning that no such regulatory approval occurs, and any contrary representation constitutes a criminal offense. Potential purchasers are directed to review risk factors beginning on page PS-9 of the pricing supplement, page PS-3 of the product supplement, page S-7 of the prospectus supplement, and page 7 of the base prospectus for comprehensive discussion of risks specific to these structured notes.

Market Context and Investor Considerations

The offering emerges during an environment where structured notes continue to attract investors seeking yield enhancement beyond traditional fixed-income securities. The 7.00% annual coupon rate on these contingent income notes represents an attractive yield for investors willing to accept the conditional nature of income payments and the downside risk to principal. However, the contingent structure introduces complexity; investors receive the full coupon only when market conditions remain favorable, meaning income is not guaranteed regardless of underlying performance.

The callable feature adds another layer of complexity, potentially limiting upside participation if equity markets advance significantly. Investors should carefully consider whether the yield enhancement justifies acceptance of principal risk, conditional income, and reinvestment uncertainty. The notes appeal primarily to investors with medium-term horizons who expect the S&P 500 Index to remain relatively stable or experience modest declines, but not to exceed a 30% decline over the approximate three-year holding period. Investors considering this offering should evaluate their risk tolerance, return objectives, and liquidity needs against the specific terms and contingencies embedded in the note structure.

Observation Dates and Payment Schedule

The notes establish a regular semi-annual observation and payment schedule running through maturity. Observation dates occur on February 16, August 16 (2027–2028), and February 14, August 14 (2028–2029), with corresponding contingent payment dates two to five business days later. The final observation and valuation date is August 14, 2029, approximately three years after the pricing date of August 14, 2026, with the maturity date falling on August 17, 2029. This schedule provides a clear timeline for investors to monitor underlying performance and understand when income payments will be assessed.

Each observation date determines whether a contingent coupon payment is earned on the corresponding contingent payment date based on the S&P 500 Index closing level relative to the coupon barrier. Investors receive the $35.00 per note semi-annual payment only if the index closes at or above 70.00% of its August 14, 2026 starting value. Additionally, the observation dates serve as call payment dates beginning February 19, 2027, allowing the issuer to redeem all outstanding notes on any of these semi-annual dates. The regular cadence of observation dates means that index performance is assessed precisely every six months, providing investors with predictable checkpoints for evaluating income prospects and early redemption risk.

Underlying Index Mechanics and Exposure

The S&P 500 Index serves as the underlying for these notes, linking investor returns directly to the price performance of 500 large-capitalization U.S. corporations. The index operates as a price return index according to the filing, meaning that dividend payments on constituent stocks do not factor into index level calculations. The starting value is established on the pricing date of August 14, 2026, with subsequent observation values measured on predetermined dates through maturity. This approach creates a straightforward linkage between headline index movement and investor payoff, though the price return methodology excludes the dividend yield component that actual index investors typically receive.

Investors gain positive exposure to S&P 500 Index appreciation only through the contingent income component, as principal is protected only if the index does not decline more than 30%. There is no stated participation rate for index appreciation beyond the contingent coupon income, meaning investors do not participate in index gains above the coupon barrier level. Conversely, if the index declines between 0% and 30%, investors receive full principal protection but may receive no contingent income on observation dates when the index falls below 70% of starting value. If the index declines more than 30%, investors experience full downside exposure, creating an asymmetric risk-return profile that may not suit all investors.