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BofA Finance LLC has submitted preliminary pricing documents for Contingent Income Issuer Callable Yield Notes linked to the State Street SPDR S&P Regional Banking ETF and the Technology Select Sector SPDR ETF, targeting an expected pricing date of August 7, 2026. These notes, guaranteed by Bank of America Corporation, offer a contingent annual coupon rate of 15.50%, paid monthly, provided both ETFs stay above 70% of their initial values. The notes feature a callable structure with approximately an 18-month maturity and expose investors to full downside risk based on the worst-performing ETF if either declines more than 30% from its starting level.
Key Points
- NYSE: MER-PK
- BofA Finance announced preliminary pricing for callable structured notes linked to the State Street SPDR S&P Regional Banking ETF and Technology Select Sector SPDR ETF, expected to price on August 7, 2026, and issue on August 12, 2026
- Contingent coupon rate of 15.50% per annum (1.2917% monthly) payable only if both ETFs trade above 70% of their starting values; principal repayment carries 1:1 downside exposure if either ETF falls more than 30%
- Notes callable monthly by issuer starting November 13, 2026; maturity date February 10, 2028; public offering price $1,000 per note with a $2.50 underwriting discount
Pricing Details and Structure Overview
The preliminary pricing supplement reveals the Notes are expected to price on August 7, 2026, and issue on August 12, 2026, maturing on February 10, 2028. The public offering price is $1,000 per note with a $2.50 underwriting discount, resulting in net proceeds of $997.50 per $1,000 principal amount. Notes will be issued in minimum denominations of $1,000 and whole multiples. Initial estimated value at pricing is projected between $915 and $965 per $1,000 principal, below the public offering price.
Certain dealers selling to fee-based advisory accounts may waive some or all selling concessions, potentially lowering the public offering price to $997.50 per $1,000 principal for those accounts. Additionally, a BofA Finance affiliate will pay referral fees up to $6.75 per $1,000 principal for distribution to other registered broker-dealers. The Notes will not be exchange-listed and carry CUSIP 09712GJR6.
Monthly Contingent Coupon Payment Terms
The Notes offer a 15.50% annual contingent coupon, paid monthly at 1.2917%, conditional upon both ETFs maintaining at least 70% of their starting values on each monthly Observation Date. If either the Regional Banking ETF or Technology ETF falls below 70%, no coupon is paid for that period, though principal remains invested. Coupon payments occur on specified Contingent Payment Dates, including Call Payment Dates and maturity, with $12.917 paid per $1,000 principal when conditions are met.
Callable Feature and Early Redemption Rights
Starting November 13, 2026, BofA Finance may redeem all outstanding Notes on any monthly Call Payment Date. Early redemption amounts equal $1,000 per $1,000 principal plus any applicable contingent coupon if both ETFs meet the coupon barrier on the observation date. Redemption notice must be provided between five business days and 60 calendar days before the call date.
This callable option allows BofA Finance to manage the investment duration, potentially calling the Notes when ETFs perform well and coupons are paid, thus ending future payments. Investors should note that once called, no further coupons will be paid, limiting the full 18-month coupon stream.
Downside Risk and Principal Loss Scenarios
If the Notes are not called, and either ETF declines more than 30% from its starting value by maturity, investors face 1:1 downside exposure to the worst-performing ETF’s decline, risking up to 100% principal loss. If the least performing ETF remains at or above 70% of its starting value, full principal repayment occurs at maturity. The filing highlights that if the ETF falls below this threshold, redemption amounts excluding final coupons will be less than 70% of principal, with potential total loss of investment.
Final contingent coupon payments at maturity are also contingent on the least performing ETF being at or above the 70% coupon barrier.
Underlying ETFs and Performance Calculations
The Notes link to State Street SPDR ETFs: the S&P Regional Banking ETF (Bloomberg: KRE) and the Technology Select Sector SPDR ETF (Bloomberg: XLK). Starting Values are based on closing prices on August 7, 2026. Observation Values are closing prices on observation dates multiplied by a Price Multiplier of 1, subject to adjustments.
Ending Values are Observation Values on February 7, 2028, or postponed as specified. The least performing ETF is the one with the lowest return, determining the final redemption amount and creating an asymmetric payoff where the poorer performing ETF directly impacts investor returns.
Guarantee and Credit Risk
Payments on the Notes depend on the creditworthiness of BofA Finance LLC as issuer and Bank of America Corporation as guarantor. BAC provides a full, unconditional guarantee, substituting its credit risk for BofA Finance’s. However, the Notes are not FDIC insured or bank guaranteed in the traditional sense and may lose value.
Investors bear credit risk related to BAC’s financial condition. In an Event of Default, acceleration payments will equal the Redemption Amount as if the acceleration date were maturity.
Anti-Dilution Provisions and Calculation Agent Role
The Notes include anti-dilution and discontinuance adjustments for the ETFs, with the Price Multiplier subject to change due to corporate actions or other events as detailed in the product supplement (page PS-23). BofA Securities, Inc., an affiliate of BofA Finance, acts as Calculation Agent, responsible for determining values and payments, presenting a potential conflict of interest.
Risk Factors and Structural Details
Potential investors are urged to review risk disclosures starting on page PS-9 of the pricing supplement and related prospectus sections. The Notes differ significantly from conventional debt securities, with valuation influenced by ETF performance, volatility, interest rates, and guarantor credit quality.
Regulatory Filing and Distribution
The preliminary pricing supplement is filed under Rule 424(b)(2) of the Securities Act of 1933, relating to Registration Statement Nos. 333-290665 and 333-290665-01. It references a Prospectus dated December 8, 2025, Series A Prospectus Supplement dated December 8, 2025, and Product Supplement EQUITY-1 dated December 8, 2025. The document is marked preliminary and subject to completion.
BofA Securities, Inc. serves as selling agent. The filing includes standard regulatory disclaimers noting no approval or disapproval by the SEC or other regulators, and that any contrary representation is a criminal offense.
