Bank of America Prices $500,000 Auto-Callable Notes Linked to Dow, Nasdaq-100, and Emerging Markets ETF

Detailed Structure and Payoff of the Auto-Callable Notes

The auto-callable notes from BofA Finance are complex structured products designed to deliver enhanced returns for investors accepting risks tied to three major market benchmarks. With a nominal principal amount of $500,000, these notes were priced at $1,000 per note on July 16, 2026, with an underwriting discount of $42.50 per note. The public offering price was $1,000 per note, yielding proceeds of $481,875 after underwriting expenses of $18,125. Notes are issued in minimum $1,000 denominations and multiples and will not be listed on any securities exchange.

The payoff depends on the performance of the Dow Jones Industrial Average, Nasdaq-100, and the iShares MSCI Emerging Markets ETF through maturity on July 21, 2031. If all three close at or above their initial values, investors receive $1,645 per $1,000 principal, a 64.5% total return. However, if any underlying falls below 70% of its initial value, investors face dollar-for-dollar losses based on the worst-performing asset.

Automatic Call Feature and Monthly Observation Dates

Starting July 19, 2027, and monthly thereafter, the notes include an automatic call feature. If on any observation date all three underlyings equal or exceed 100% of their starting values (INDU at 52,552.97, NDX at 29,025.77, and EEM at $64.19), the notes will be called early, and investors receive the call amount on the payment date with no further accrual.

Observation values for INDU and NDX are their closing levels on observation dates. For EEM, the observation value is its closing price multiplied by a price multiplier of 1, subject to adjustments for corporate actions or discontinuance. This monthly review allows for early redemption if market conditions are favorable, limiting upside beyond the call amount but providing downside protection during strong markets. Detailed call dates and amounts are in the pricing supplement starting on page PS-4.

Downside Risk and Redemption Scenarios at Maturity

At maturity, three outcomes depend on the lowest performing underlying. If the least performing asset closes at or above 100% of its starting value, investors receive $1,645 per $1,000 principal. If it closes between 70% and 100%, investors get their $1,000 principal back with no gain. If any underlying falls below 70% (a drop over 30%), investors suffer losses proportional to the decline, potentially losing their entire investment. This 1:1 downside exposure means losses can be significant if markets deteriorate during the five-year term. The notes’ terms specify that in case of default, redemption is calculated as if the acceleration date were maturity, possibly causing losses at unfavorable times.

Underlying Assets and Initial Pricing Values

The three underlyings cover diverse global equity sectors as of July 16, 2026: the Dow Jones Industrial Average (INDU) at 52,552.97 tracking 30 large-cap U.S. companies; Nasdaq-100 (NDX) at 29,025.77 focusing on 100 large non-financial Nasdaq companies weighted toward technology and growth; and iShares MSCI Emerging Markets ETF (EEM) at $64.19 providing exposure to emerging market equities. The notes’ redemption depends on the worst performing asset, emphasizing the importance of diversification. The initial estimated note value was $938.50 per $1,000 principal, below the offering price, reflecting embedded costs and guarantees.

Bank of America Guarantee and Credit Risk Considerations

The notes are fully and unconditionally guaranteed by Bank of America Corporation, making credit risk dependent on the parent company’s financial strength. BofA Finance LLC is the issuer, with Bank of America guaranteeing payments if BofA Finance defaults. However, these notes are not FDIC insured or traditional bank deposits and may lose value. The guarantee transfers credit risk to Bank of America but does not eliminate it.

Payments depend on the creditworthiness of both BofA Finance and Bank of America. In default scenarios defined by the senior indenture, payments are calculated as if the acceleration date were maturity, underscoring the structural credit risk separate from market risk. Investors rely on both index performance and Bank of America’s financial stability for full redemption or early call payments.

Pricing, Underwriting, and Distribution Details

BofA Securities, Inc., an affiliate of BofA Finance, acted as calculation agent and selling agent, which may create conflicts of interest in pricing and performance assessments. The underwriting discount of $42.50 per $1,000 principal (4.25%) totals $18,125 for the $500,000 offering. Additionally, affiliates may pay referral fees up to $6.25 per $1,000 principal to participating broker-dealers.

Dealers selling to fee-based advisory accounts might waive some selling concessions, offering these investors a lower price of $957.50 per $1,000 principal. This pricing reflects standard structured note distribution practices, where fee-based advisors negotiate reduced markups. The underwriting economics disclosure provides transparency on embedded costs, though secondary market values depend on multiple unpredictable factors.

Valuation Date and Anti-Dilution Protections

The valuation date for determining ending values is July 16, 2031, with possible postponements per product supplement provisions. For INDU and NDX, ending values are closing levels on that date. For EEM, the ending value equals closing price times a price multiplier of 1, adjustable for anti-dilution events.

Anti-dilution and discontinuance provisions for EEM, outlined starting page PS-23, protect investors from corporate actions like distributions or reorganizations by adjusting the price multiplier. If EEM is discontinued, the calculation agent may adjust or substitute underlyings, though specific mechanics are not detailed in the reviewed supplement.

Market Context and Index Levels at Pricing

On July 16, 2026, the three underlyings reflected varied sector and geographic performance: INDU at 52,552.97 representing large-cap U.S. equities; NDX at 29,025.77 emphasizing technology and growth stocks; and EEM at $64.19 indicating emerging market exposure. The price multiplier for EEM was set at 1.0 with no initial adjustments.

These starting levels establish the baseline for performance measurement. The 100% call value requires all three assets to return to starting levels by the first call observation for automatic redemption. The 70% threshold allows up to a 30% decline without triggering maximum loss scenarios, provided the least performing asset stays above this level.

Investor Suitability and Risk Profile

These auto-callable structured notes suit investors with advanced knowledge of structured products, market indices, and credit risk. The prospectus filed under Rule 424(b)(2) (registration numbers 333-290665 and 333-290665-01) highlights significant differences from traditional debt securities. Potential buyers should carefully review risk factors starting on page PS-10 of the pricing supplement, PS-3 of the product supplement, S-7 of the prospectus supplement, and page 7 of the prospectus.

The initial estimated value of $938.50 per $1,000 principal indicates the notes trade at a discount due to embedded optionality and guarantees. The non-exchange-listed status means no guaranteed secondary market exists, limiting liquidity for investors seeking early exit.

Regulatory Filings and Offering Information

The pricing supplement was filed with the SEC on July 16, 2026, under Rule 424(b)(2), linked to registration statements 333-290665 and 333-290665-01. It incorporates by reference a prospectus dated December 8, 2025, a Series A prospectus supplement dated the same, and Product Supplement EQUITY-1 also dated December 8, 2025. The notes carry CUSIP 09712CF57, facilitating clearance and settlement identification. These notes are part of a broader registration allowing BofA Finance to issue various equity-linked structured products.

The SEC, state securities commissions, and other regulators have not approved or disapproved these securities nor verified the accuracy of the pricing supplement or related documents, standard for structured product offerings. The disclosure warns that any claim of regulatory approval would be a criminal offense. This regulatory framework is typical for complex structured products issued by major financial institutions to institutional and sophisticated retail investors.