Bank of America Launches $500,000 Auto-Callable Notes Linked to Three Market Indexes

Structure and Payoff Mechanics of the Structured Notes

The auto-callable notes issued by BofA Finance represent a complex structured product designed to provide enhanced returns for investors willing to accept specific risks tied to the performance of three major market benchmarks. The notes carry a nominal principal amount of $500,000 and were priced at $1,000.00 per note on July 16, 2026, with an underwriting discount of $42.50 per note. The public offering price equaled $1,000.00 per note, with proceeds to BofA Finance before expenses totaling $481,875.00 after deducting underwriting costs of $18,125.00. The notes are issued in minimum denominations of $1,000.00 and multiples thereof, and they will not be listed on any securities exchange.

The payoff structure contains multiple scenarios depending on how the three underlying indexes and the emerging markets ETF perform through the maturity date of July 21, 2031. If all three underlyings close at or above their starting values on the maturity date, investors receive $1,645.00 per $1,000.00 in principal—a 64.5 percent total return. However, this base-case scenario represents only one of three possible redemption outcomes. The structure incorporates a threshold value set at 70 percent of each underlying's starting value, creating a floor below which investors absorb losses on a dollar-for-dollar basis with the worst-performing index or fund.

Automatic Call Feature and Observation Mechanics

A key feature of these notes is the automatic call provision, which begins on the July 19, 2027 observation date and continues monthly thereafter. The notes will be automatically called in their entirety if, on any call observation date, the observation value of each of the three underlyings equals or exceeds its respective call value. The call value for each underlying equals 100 percent of its starting value: INDU at 52,552.97, NDX at 29,025.77, and EEM at $64.19. If this condition is met and the notes are called, investors receive the applicable call amount on the designated call payment date, and no further payments accrue on the notes.

The observation value differs slightly by underlying asset. For the INDU and NDX indexes, the observation value is simply the closing level on the call observation date. For the EEM exchange-traded fund, the observation value equals its closing market price multiplied by a price multiplier of 1, subject to adjustment for certain corporate actions or discontinuance events affecting the ETF. This monthly checking mechanism means investors could see their notes redeemed early if market conditions remain favorable, limiting upside participation beyond the call amount but also providing downside protection during strong market periods. The call observation dates and corresponding call amounts are detailed in the pricing supplement's terms table beginning on page PS-4 of the disclosure.

Downside Risk and Loss Scenarios at Maturity

The redemption structure at maturity creates three distinct outcomes based on the performance of the least performing underlying—defined as the underlying with the lowest return calculation. If the ending value of the least performing underlying is at or above its redemption barrier (100 percent of starting value), the investor receives the full $1,645.00 per $1,000.00 principal return. If the ending value falls below the redemption barrier but remains at or above the threshold value of 70 percent, the investor receives only the principal amount of $1,000.00 back, with no enhancement.

The most severe risk scenario occurs if any underlying declines by more than 30 percent from its starting value, placing the least performing underlying below 70 percent of its starting value. In this case, the redemption amount per note will be less than 70 percent of principal, and investors could lose up to 100 percent of their investment. This 1:1 downside exposure means that losses below the 70 percent threshold are magnified, creating substantial principal-at-risk scenarios if market conditions deteriorate significantly during the five-year holding period. The disclosure explicitly states that if an event of default occurs, the redemption amount is calculated as though the acceleration date were the maturity date, potentially triggering loss realization at an unfavorable time.

Underlying Assets and Starting Values on Pricing Date

The three underlying assets selected for these notes represent diverse segments of the global equity market as of the July 16, 2026 pricing date. The Dow Jones Industrial Average, tracked by the INDU Bloomberg symbol, closed at 52,552.97 and serves as a price return index tracking 30 large-capitalization U.S. companies. The Nasdaq-100 Index, identified by Bloomberg symbol NDX, closed at 29,025.77 and tracks 100 of the largest non-financial corporations on the Nasdaq exchange, with heavier weightings in technology and growth sectors. The iShares MSCI Emerging Markets ETF, tracked by Bloomberg symbol EEM, closed at $64.19 and provides exposure to equity markets in developing economies across multiple regions.

By linking to all three underlyings simultaneously and using the least performing asset to determine redemption amounts, BofA Finance created a structure where geographic and sector diversification matters significantly to investor outcomes. An investor requires all three assets to perform well to achieve the full 64.5 percent return, but only the worst performer determines whether the investor receives principal protection, partial principal recovery, or faces losses. The initial estimated value of the notes as of the pricing date was $938.50 per $1,000.00 in principal amount, which is less than the public offering price of $1,000.00, indicating embedded costs related to the structural features and bank guarantees.

Credit Support Through Bank of America Guarantee

The notes are fully and unconditionally guaranteed by Bank of America Corporation, making the credit quality of the notes dependent on the creditworthiness of one of the world's largest financial institutions. BofA Finance LLC, the issuer, is a subsidiary of Bank of America Corporation, and the guarantee structure ensures that if BofA Finance defaults, Bank of America remains obligated to make all payments to noteholders. However, the disclosure emphasizes that the notes are not FDIC insured, not bank guaranteed in the traditional deposit sense, and may lose value, making clear that the Bank of America guarantee does not eliminate credit risk but rather transfers it to the parent company.

Any payment on the notes remains subject to the credit risk of both BofA Finance as issuer and Bank of America as guarantor. In the event of an event of default, as defined in the senior indenture governing the notes, the amount payable upon acceleration equals the redemption amount calculated as though the acceleration date were the maturity date. This credit risk represents a structural consideration distinct from market risk, meaning investors depend not only on the performance of the three indexes but also on the ongoing financial stability of Bank of America to honor all redemption amounts at maturity or upon early call.

Pricing and Underwriting Economics

BofA Securities, Inc., an affiliate of BofA Finance, served as both the calculation agent and the selling agent for these notes, creating potential conflicts of interest in pricing and performance determinations. The underwriting discount of $42.50 per $1,000.00 in principal amount represents 4.25 percent of the face value and totals $18,125.00 for the entire $500,000 offering. In addition to this underwriting discount, an affiliate of BofA Finance may pay a referral fee of up to $6.25 per $1,000.00 in principal amount to other registered broker-dealers participating in the distribution.

Certain dealers purchasing the notes for sale to fee-based advisory accounts may forgo some or all of their selling concessions, fees, or commissions, potentially offering these investors a lower price of $957.50 per $1,000.00 in principal amount. This pricing structure reflects standard practice in structured note distribution, where financial advisors managing fee-based accounts can negotiate lower markups. The disclosure of underwriting economics provides transparency regarding the costs embedded in the offering, though the actual secondary market value of the notes will depend on many factors and cannot be predicted with accuracy, as the supplement states.

Valuation and Anti-Dilution Provisions

The valuation date for determining the ending values of the underlyings is July 16, 2031, subject to postponement in certain circumstances as described in the product supplement's section on events relating to observation dates. For the INDU and NDX indexes, the ending value is simply the closing level on the valuation date. For the EEM emerging markets ETF, the ending value equals its closing market price on the valuation date multiplied by the price multiplier of 1, which is subject to adjustment for anti-dilution events.

The product supplement details anti-dilution and discontinuance adjustment provisions relating to the EEM ETF beginning on page PS-23 of the disclosure. These provisions protect noteholders from corporate actions affecting the ETF, such as distributions, subdivisions, or reorganizations, by adjusting the price multiplier to preserve the economic impact of the notes' terms. If the EEM ETF is discontinued or becomes unavailable, the calculation agent has discretion to make appropriate adjustments or substitutions, though the specific mechanics of such adjustments are not detailed in the pricing supplement reviewed in this article.

Market Conditions and Index Performance on Pricing Date

The pricing of these notes on July 16, 2026 occurred in a market environment where the three underlying assets reflected distinct performance patterns across their respective sectors and geographies. The INDU at 52,552.97 represented the Dow Jones Industrial Average's level at pricing, while the Nasdaq-100 at 29,025.77 reflected technology and growth-focused equity valuations. The emerging markets ETF at $64.19 per share represented investor appetite for exposure to developing market equities, with the price multiplier set at 1.0 indicating no initial adjustments to the ETF pricing methodology.

These starting values establish the baseline against which all subsequent performance is measured. The call value of 100 percent for each underlying means that all three assets would need to return to at least their starting values within one month of the first call observation date for automatic redemption to be triggered. The threshold values of 70 percent establish a floor where each underlying can decline by as much as 30 percent without triggering maximum loss scenarios, provided the least performing asset does not fall below this level.

Investor Considerations and Risk Profile

These auto-callable structured notes represent a complex investment suitable primarily for investors with sophisticated understanding of structured products, market indexes, and credit risk. The prospectus filed pursuant to Rule 424(b)(2) and related to registration statement numbers 333-290665 and 333-290665-01 emphasizes significant differences between these notes and conventional debt securities. Potential purchasers are directed to review the risk factors beginning on page PS-10 of the pricing supplement, page PS-3 of the product supplement, page S-7 of the prospectus supplement, and page 7 of the prospectus for comprehensive risk disclosure.

The initial estimated value of $938.50 per $1,000.00 principal indicates that the notes trade at a discount to their offering price, reflecting the embedded costs of the optionality features and guarantee structure. Investors should recognize that the actual value of the notes at any time will reflect many factors and cannot be predicted with accuracy. The non-listed status of the notes on any securities exchange means there is no guaranteed secondary market for investors wishing to exit positions prior to maturity or automatic call.

Regulatory Filing and Distribution Details

The pricing supplement was filed pursuant to Securities and Exchange Commission Rule 424(b)(2) on July 16, 2026, relating to registration statement numbers 333-290665 and 333-290665-01. The filing incorporates by reference a prospectus dated December 8, 2025, a Series A prospectus supplement dated December 8, 2025, and a Product Supplement EQUITY-1 also dated December 8, 2025. The CUSIP number assigned to the notes is 09712CF57, enabling identification of the securities in clearance and settlement systems. These notes represent a specific tranche of a broader registration statement framework allowing BofA Finance to issue various structured products linked to equity underlyings.

The Securities and Exchange Commission, state securities commissions, and other regulatory bodies have not approved or disapproved these securities or determined whether the pricing supplement and related documents are truthful or complete, as is customary for structured product offerings. The disclosure emphasizes that any representation that such regulatory approval has been obtained would constitute a criminal offense. This regulatory framework reflects the standardized approach for complex structured products issued by major financial institutions to institutional and sophisticated retail investors.