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BofA Finance LLC, a subsidiary of Bank of America Corporation, has announced a preliminary pricing supplement for Enhanced Return Notes tied to the lesser performing of the Nasdaq-100 Futures Excess Return Index and the S&P 500 Futures Excess Return Index. The notes are expected to price on July 15, 2026, and issue on July 20, 2026. These structured notes feature an approximate seven-year term, maturing on July 20, 2033, and are fully and unconditionally guaranteed by Bank of America Corporation. Investors will benefit from a 355.00% upside participation rate on gains in the least performing index at maturity, while facing potential losses of up to 100% of principal if either index declines more than 35% from its initial value. Investors monitoring NASDAQ: MER-PK and related Bank of America structured products should carefully examine the terms, risks, and initial estimated value detailed in the preliminary supplement.
Key Points
- Issuer: BofA Finance LLC, guaranteed by Bank of America Corporation (BAC), ticker NASDAQ: MER-PK
- Expected pricing date: July 15, 2026; issue date: July 20, 2026; maturity date: July 20, 2033
- Offers a 355.00% upside participation if both underlying indexes finish above their starting values; principal is fully at risk if either index falls more than 35% below its starting value
- Initial estimated value ranges from $891.30 to $961.30 per $1,000 principal, below the $1,000 public offering price
Enhanced Return Notes Structure and Underlying Indexes Explained
The Notes are linked to two indexes: the Nasdaq-100 Futures Excess Return Index (Bloomberg symbol "NDXNQER") and the S&P 500 Futures Excess Return Index (Bloomberg symbol "SPXFP"). The maturity payout depends on the performance of the least performing index over the roughly seven-year term, a "worst-of" structure. This means even if one index performs strongly, the payout is based solely on the index with the poorer performance.
Issued in minimum denominations of $1,000, additional purchases must be in whole multiples of $1,000. The Notes will not be listed on any securities exchange, implying no organized secondary market for resale post-issuance. The Notes carry CUSIP 09712G6M1. BofA Securities, Inc., an affiliate of BofA Finance, serves as both Calculation Agent and Selling Agent.
Understanding the 355% Upside Participation at Maturity
Investors will receive 355.00% of any gain in the least performing underlying index, provided both indexes close above their respective starting values on the valuation date of July 15, 2033. The starting value is the closing level on the pricing date, July 15, 2026. If the least performing index ends at or above its starting value but below the threshold, investors receive the $1,000 principal per note, forfeiting the upside participation if either index does not finish positively.
Principal Protection Threshold and Downside Risk Details
The Notes include a threshold set at 65.00% of the starting value for each underlying index. Full principal repayment occurs only if neither index declines more than 35% from its starting value. Should either index fall below this threshold, redemption is calculated on a 1:1 basis relative to the decline of the least performing index, with no minimum floor protection.
The filing warns that if either underlying breaches the threshold, "the Redemption Amount will be less than 65.00% of the principal amount and you could lose up to 100.00% of your investment in the Notes." Unlike conventional fixed-income securities, these Notes carry no FDIC insurance or bank guarantee and may lose significant value.
Initial Estimated Value Below Offering Price: Implications for Investors
The preliminary supplement estimates the initial value of the Notes between $891.30 and $961.30 per $1,000 principal, indicating investors pay a premium above the issuer’s estimated fair value at purchase. This premium ranges from approximately $38.70 to $108.70 per note depending on the final valuation within the range.
This difference arises from Bank of America Corporation’s internal funding rate, which is generally lower than conventional debt rates, along with underwriting discounts and hedging costs. The underwriting discount may be up to $2.50 per $1,000 principal, meaning net proceeds to BofA Finance could be as low as $997.50 per note before expenses. The final pricing supplement will confirm the exact initial estimated value.
Credit Risk and Bank of America Guarantee
Payments on the Notes depend on the creditworthiness of BofA Finance LLC as issuer and Bank of America Corporation as guarantor. The full and unconditional guarantee by Bank of America Corporation aims to bolster investor confidence in timely payments.
In the event of default or acceleration, the redemption amount will be calculated as if the acceleration date were the maturity date, with the valuation date set three trading days prior. The Notes do not accrue default interest, differing from some traditional debt instruments.
No Periodic Interest and Fee-Based Advisory Pricing Considerations
The Notes do not provide periodic interest payments during the seven-year term. Investors receive returns solely through the lump-sum payment at maturity, contingent on index performance. This structure differs from typical fixed-income products that offer regular income.
For investors purchasing via fee-based advisory accounts, some dealers may waive selling concessions or commissions, potentially lowering the public offering price to as low as $997.50 per $1,000 principal. This reflects industry trends where fee-based advisors receive reduced pricing compared to standard public offerings.
Valuation, Maturity Dates, and Postponement Clauses
The valuation date is July 15, 2033, with maturity on July 20, 2033. However, the valuation date may be postponed due to market disruptions as outlined under "Description of the Notes — Certain Terms of the Notes — Events Relating to Calculation Days" in the product supplement. Such postponements could affect the maturity date.
Both the pricing and issue dates in July 2026 are subject to change. Investors should consult the final pricing supplement for confirmed dates, starting values, and initial estimated value, as the preliminary supplement remains subject to revision.
Registration and Disclosure Documentation
The Notes are offered under an effective Registration Statement under the Securities Act of 1933 (Registration Nos. 333-290665 and 333-290665-01). The preliminary pricing supplement is accompanied by a Product Supplement (EQUITY-1 dated December 8, 2025), a Series A Prospectus Supplement dated December 8, 2025, and a Prospectus dated December 8, 2025, which together provide the full disclosure framework.
Risk factors are detailed across multiple documents: starting on page PS-6 of the pricing supplement, page PS-3 of the product supplement, page S-7 of the prospectus supplement, and page 7 of the prospectus. This extensive disclosure highlights the product’s complexity and the range of potential investment outcomes.
Preliminary Filing Status and Investor Guidance
The filing states the pricing supplement "is not complete and may be changed," and clarifies it does not constitute an offer to sell in jurisdictions where not permitted. These are standard disclosures for preliminary filings ahead of structured note offerings. Final terms will be established on the pricing date.
Prospective investors are urged to review all accompanying documents thoroughly before investing. The filing emphasizes differences from conventional debt securities and notes that the Notes’ value post-issuance is influenced by multiple factors and cannot be precisely predicted. No immediate impact on related securities’ share prices was observable at the time of this report.
