BofA Finance Issues $8.4 Million Buffered Digital Return Notes Backed by Bank of America, Linked to Nasdaq-100, Russell 2000, and S&P 500

Note Structure and Underlying Indices

The notes are digital return instruments tied to three price return indices: Nasdaq-100 Technology Sector Index (NDXT), Russell 2000 Index (RTY), and S&P 500 Index (SPX). Each index’s starting value was set on the pricing date—NDXT at 16,620.54, RTY at 2,974.567, and SPX at 7,533.77—and the least performing index at maturity determines the payout. This multi-index setup offers diversification across large-cap, small-cap, and technology sectors but exposes investors to the weakest index’s performance over the 15-month period.

Investors do not benefit from the best-performing indices; only the lowest performing index influences the final payment, creating exposure to the worst-performing market segment among the three.

Digital Payment Terms and Upside Potential

If all three indices finish at or above 80% of their starting values on October 18, 2027, investors receive a fixed digital payment of $1,160.50 per $1,000 principal, equating to a 16.05% return. The 80% threshold acts as a buffer, allowing modest declines without penalty. Threshold values are NDXT at 13,296.43, RTY at 2,379.654, and SPX at 6,027.02.

The payout is binary: investors receive the full digital payment regardless of whether indices just meet or substantially exceed the 80% threshold. The least performing index must not drop more than 20% from its starting value to qualify for this payout; any greater decline triggers downside risk.

Downside Risk and Leveraged Loss Exposure

If any index falls more than 20% below its initial value, investors face leveraged losses linked to the magnitude of the decline beyond that threshold. The redemption amount will be less than principal, with potential for total loss of invested capital. No principal protection exists beyond the 20% buffer.

For example, a 30% drop in the Russell 2000, while other indices remain above 80%, results in leveraged losses on the additional 10% decline. Although specific leverage ratios are not disclosed, investors should understand the risk of accelerated losses tied to the worst-performing index.

Pricing Details and Initial Valuation

BofA Finance priced the notes at $1,000 per $1,000 principal, raising $8.4 million gross. After a $3.00 underwriting discount per $1,000 and other costs, net proceeds were approximately $997 per $1,000 principal, totaling $8,374,800. Some dealers may offer the notes at prices as low as $997 to fee-based advisory clients.

The initial estimated value was $992.80 per $1,000 principal, reflecting Bank of America's internal funding cost and hedging expenses, which reduce the notes’ economic value relative to the public offering price by about $7.20 per $1,000.

Credit Risk and Guarantor Support

All payments depend on the creditworthiness of BofA Finance LLC as issuer and Bank of America Corporation as guarantor. Bank of America provides an unconditional guarantee, but the notes are not FDIC insured nor bank guaranteed. Investors bear credit risk of both entities throughout the term.

The notes are issued under BofA Finance’s senior indenture with Bank of America as guarantor. In default scenarios, payment calculations treat the acceleration date as maturity, with no default interest payable. Investors should assess Bank of America’s financial health before investing, as no principal protection exists independent of the guarantor.

Market-Linked Calculation Methodology

Each index’s return is calculated as (ending value – starting value) / starting value, expressed as a percentage. The valuation date is October 18, 2027, subject to postponements as defined in the product supplement. The least performing index determines the final redemption amount.

BofA Securities, Inc., an affiliate of BofA Finance, acts as calculation and selling agent. The notes are not exchange-listed, carry CUSIP 09712G4S0, and have a minimum denomination of $1,000, issued in whole multiples thereof. They are obligations of BofA Finance, guaranteed by Bank of America, but not direct obligations of the parent company.

Regulatory Filings and Disclosure

The pricing supplement was filed under SEC Rule 424(b)(2) on July 16, 2026. The notes are issued under registration statements 333-290665 and 333-290665-01, with a prospectus dated December 8, 2025, and related supplements. Investors are urged to review all risk disclosures, especially the "Risk Factors" section starting on page PS-6 of the pricing supplement.

The SEC and other regulators have not approved or disapproved these securities or verified the completeness of offering documents. The notes are offered solely based on full disclosure in these filings. Potential investors should understand the differences between these structured notes and conventional debt securities before investing.

Economic Terms and Hedging Impact

The notes’ economic terms reflect Bank of America’s internal funding rate for market-linked notes, typically lower than conventional debt rates, combined with hedging costs from affiliated entities. These factors reduce the notes’ initial estimated value and economic attractiveness.

The $3 underwriting discount and hedging charges further lower the notes’ value relative to the $1,000 public offering price, resulting in a $7.20 valuation gap per $1,000 principal. Investors effectively pay a premium covering Bank of America’s financing and hedging expenses rather than pure economic value.

Investment Considerations and Valuation Dynamics

Unlike traditional bonds, these structured notes can experience significant price fluctuations depending on index performance, time to maturity, interest rates, volatility, and Bank of America’s credit spread. Secondary market liquidity is uncertain, as the notes are not exchange-listed and any secondary trading depends on dealer willingness.

Investors should be prepared to hold the notes to maturity, given the 15-month term and lack of interim interest payments. The product’s payoff is asymmetric: capped upside at 16.05% and potentially total loss if the weakest index declines beyond 20%. This differs markedly from direct index investing or conventional Bank of America debt.

Prospective investors must assess their risk tolerance, market outlook for the Nasdaq-100, Russell 2000, and S&P 500 indices, and the embedded costs reflected in the valuation gap. Alternative investments or direct index exposure may better align with some investors’ objectives.