BofA Finance Launches $1.22 Million Auto-Callable Notes Linked to Apple, Lockheed Martin, and Eli Lilly Stocks

Market-Linked Notes Structure and Payment Details

BofA Finance’s notes are structured as complex financial instruments designed to deliver enhanced yields in exchange for exposure to equity market fluctuations and principal risk. Unlike traditional bonds, these notes do not guarantee fixed interest or principal repayment at maturity. Instead, payments depend exclusively on the performance of the lowest-performing stock among Apple Inc., Lockheed Martin Corporation, and Eli Lilly and Company. The disclosure clarifies that investors will not benefit from better-performing stocks and will be adversely impacted if any underlying stock performs poorly, regardless of others’ performance.

The contingent coupon offers monthly payments of approximately $15.83 per $1,000 principal (19.00% annual rate divided by 12), payable only if the lowest-performing stock closes at or above 70% of its initial price on each monthly calculation date. If the lowest-performing stock falls below this threshold on any calculation day, no coupon is paid for that month. Should the lowest-performing stock remain below the 70% barrier throughout the three-year term, investors will receive no coupon payments despite holding the notes to maturity.

Automatic Call Features and Early Redemption Risks

These notes include an automatic call provision allowing the issuer to redeem early if the lowest-performing stock closes at or above its initial price on any monthly calculation date from January 2027 through June 2029. Once triggered, investors receive their principal plus a final coupon payment on the call settlement date. The notes cannot be called before the sixth calculation day, approximately six months after issuance on July 21, 2026.

This call feature caps investor returns in strong market conditions. While investors benefit from 19% annualized coupons if the lowest-performing stock stays above the coupon barrier, they do not participate in any stock price appreciation beyond the initial price. The filing states explicitly that investors will not receive dividends or gains from any underlying stock, effectively limiting maximum returns to coupon payments plus any received before an automatic call.

Principal Risk and Downside Exposure

The primary risk disclosed is potential principal loss if the notes are not called and the lowest-performing stock closes below 60% of its initial price at maturity. In such a scenario, investors could lose more than 40% of their principal, potentially all of it, reflecting full downside exposure to the worst-performing stock.

The filing underscores this asymmetrical risk-return profile: if not called, investors bear full downside risk relative to the lowest-performing stock’s closing price at maturity but gain no upside participation or dividends. For example, a noteholder purchasing at $1,000 who holds to maturity with the lowest-performing stock declining to 55% of its initial price would incur a loss of approximately $450, alongside any contingent coupons received if the stock stayed above the coupon barrier during the term.

Underlying Stocks and Performance Dependency

The notes are linked to three major stocks across sectors: Apple Inc. (technology), Lockheed Martin Corporation (defense and aerospace), and Eli Lilly and Company (pharmaceuticals). The return depends solely on the lowest-performing stock measured as a percentage of its initial price on each calculation date, meaning strong performance by the other two stocks provides no benefit.

This structure concentrates risk on the weakest performer at any time. For instance, if Apple and Eli Lilly appreciate while Lockheed Martin declines, returns are determined entirely by Lockheed Martin’s relative performance. This approach diversifies issuer risk but centralizes investment risk on the single lowest-performing stock.

Pricing, Valuation, and Underwriting Details

Priced at $1,000 per note on July 16, 2026, the offering raised gross proceeds of $1,220,000. The underwriting discount totaled $23.25 per note, amounting to $28,365, resulting in net proceeds of $1,191,635 before expenses. Wells Fargo Securities, LLC and BofA Securities, Inc. acted as principal selling agents. Additionally, BofA Securities or affiliates may pay up to $3.00 per note to selected dealers for marketing and distribution.

The initial estimated value was $983.70 per note, below the $1,000 offering price, reflecting embedded features such as the contingent coupon, automatic call, and downside risk. The filing notes that actual security values fluctuate and are complex to predict due to multiple embedded options.

Credit Risk and Guarantor Information

Payments on these notes depend on the creditworthiness of both BofA Finance LLC as issuer and Bank of America Corporation as guarantor. The filing states all payments are subject to the credit risk of both entities, which belong to the same financial institution. While the guarantor adds credit protection, it does not eliminate counterparty risk.

Investors should conduct due diligence on Bank of America Corporation’s financial condition, as the filing does not provide specific details on capital requirements or credit ratings for either entity.

Calculation Dates, Postponement, and Administrative Terms

Monthly calculation days determine stock closing prices for coupon payments, automatic call triggers, and principal repayment. Coupon payments occur on the third business day after each calculation date, with the final coupon paid at maturity on July 19, 2029. The maturity date may be postponed due to market disruptions, though specific postponement conditions are not detailed.

Notes are issued in $1,000 denominations and multiples thereof, suitable for institutional and individual investors. Investors cannot force early redemption, contrasting with the issuer’s automatic call right, creating an asymmetrical optionality favoring the issuer.

Distribution and Market Liquidity

The notes will not be listed on any securities exchange and will trade, if at all, over-the-counter through selling agents or dealers. This limits liquidity for investors wishing to exit before maturity or automatic call. Secondary market pricing may reflect wide bid-ask spreads due to instrument complexity and issuer credit risk.

Wells Fargo Securities, LLC and BofA Securities, Inc. distribute the notes directly to clients without a traditional syndicate, with potential dealer compensation up to $3.00 per note indicating extended marketing or distribution efforts.

Regulatory Status and Risk Disclosures

The filing clarifies that neither the SEC nor any state securities commission has approved or disapproved these notes or verified the completeness of the pricing supplement and related documents. The supplement was filed under SEC Rule 424(b)(2) using registration statements 333-290665 and 333-290665-01, under a prospectus dated December 8, 2025.

Supporting documents include product supplement No. WF-1, a Series A prospectus supplement, and a base prospectus, which collectively provide detailed risk factors and structural information. "Selected Risk Considerations" begin on page PS-9 of the pricing supplement, with further risks outlined in accompanying materials.

Investment Suitability and Risk Considerations

The pricing supplement emphasizes the complexity and unique risks of these securities compared to conventional debt, advising potential investors to review all risk disclosures carefully. The 19% annual contingent coupon may appeal to yield-seeking investors, especially in low-interest environments, but the principal-at-risk feature and capped upside make these notes unsuitable for conservative portfolios or those requiring principal protection.

These securities are best suited for investors who accept equity market risk in exchange for enhanced income and understand the embedded automatic call and downside exposure mechanics.