BofA Finance Introduces 13-Month Auto-Callable Yield Notes Linked to Nasdaq-100 Tech and S&P 500 Indices

Dual-Index Exposure and Monthly Coupon Payments

The notes track the Nasdaq-100 Technology Sector Index (NDXT) and the S&P 500 Index (SPX). Coupon payments depend on both indices maintaining at least 80% of their starting values on monthly observation dates. The fixed contingent coupon rate is 11.15% annually, equating to $9.292 per $1,000 principal monthly, payable only if both indices meet the threshold.

This dual-index condition requires both benchmarks to sustain performance levels for coupon eligibility. If either index falls below 80% on any observation date, no coupon is paid that month. This structure links investor income directly to the performance of both the technology sector and broader equity markets, differentiating these notes from single-index structured products.

Automatic Call Features and Early Redemption

From February 1, 2027, the notes are subject to automatic monthly calls. If on any call observation date both indices close at or above their initial levels, the notes will be called early. Investors receive principal plus the applicable contingent coupon for that period upon call.

This call feature caps returns at principal plus monthly coupon payments, limiting upside if indices rise significantly. No further payments occur after a call, reflecting a typical structured product design where issuers retain benefits of strong market gains while providing investors with predetermined income.

Principal Risk and Worst-Performing Index Impact at Maturity

At maturity, if the worst-performing index declines more than 20% from its starting value, investors face 1:1 downside exposure, risking up to full principal loss. Losses are calculated based on the index with the lowest return, creating an asymmetric risk profile.

If both indices remain at or above 80% at maturity, full principal is repaid. Additionally, a final contingent coupon is paid if both indices meet the 80% threshold on the last observation date. The 80% level thus determines coupon eligibility, while the 20% decline threshold governs principal protection.

Pricing, Valuation, and Discounts

The notes are offered at $1,000 per $1,000 principal with a $21.50 underwriting discount. Dealers serving fee-based advisory accounts may waive some selling concessions, allowing purchases as low as $978.50 per $1,000 principal. BofA Finance affiliates may pay referral fees up to $6.50 per $1,000 principal to participating broker-dealers.

Estimated initial note value ranges from $915 to $965 per $1,000 principal, below the offering price. This reflects embedded costs, issuer profit margins, and the value of the automatic call feature. The actual note value will fluctuate based on multiple factors and cannot be precisely predicted, underscoring the product's complexity.

Credit Guarantees and Issuer Details

Payments are fully and unconditionally guaranteed by Bank of America Corporation, BofA Finance LLC’s parent. Investors bear credit risk of both entities. This dual-layer guarantee offers recourse to a major U.S. financial institution but does not eliminate credit risk.

If BofA Finance defaults, Bank of America Corporation must fulfill payments. However, these notes are not FDIC insured nor traditionally bank guaranteed, and may lose value. The guarantee is contractual, not backed by federal deposit insurance or typical bank protections.

Timeline and Settlement Information

Pricing occurs July 31, 2026, with issuance on August 5, 2026, after a five-business-day settlement. Maturity is September 3, 2027, providing about a 13-month term if not called early. The valuation date for final redemption is August 31, 2027, subject to postponement per product terms.

Monthly observation dates for coupons begin September 2026 through maturity. Call observation dates start February 1, 2027, also monthly, with corresponding payment dates. This monthly schedule offers frequent assessment points for coupons and call eligibility, unlike quarterly or annual observation notes.

Calculation Agent and Administration

BofA Securities, Inc., an affiliate of BofA Finance, acts as calculation and selling agent. It determines observation and ending values, coupon payments, call events, and final redemption amounts. The least-performing underlying is identified as the index with the lowest return.

Using an affiliate as calculation agent may pose conflicts of interest, as it controls determinations affecting investor returns. Detailed calculation methodologies and agent responsibilities are in the product supplement and prospectus. The preliminary pricing supplement does not specify dispute resolution or error correction procedures, so investors should review full documentation carefully.

Default Events and Payment Acceleration

Upon default, payments are accelerated and calculated as if the acceleration date were maturity, with valuation three trading days prior. The calculation agent decides on final coupon payments based on index levels at this valuation date, pro-rated for the payment period.

This mechanism ensures redemption reflects index levels near acceleration. Specific default triggers are defined in the senior indenture and prospectus, which investors should consult to understand all acceleration conditions and payment calculations.

Market Environment and Structural Risks

The filing highlights key differences from traditional debt securities and advises investors to consider risks carefully. The notes will not be exchange-listed, limiting liquidity and potentially causing price discounts or premiums in secondary markets.

The dual-index and contingent coupon design add complexity beyond the headline 11.15% annual rate. Coupons are paid only if both indices exceed 80% monthly; any month with either below 80% results in no coupon. Investors should model multiple market scenarios to assess potential returns and losses before investing.