BofA Finance Prices $1.133 Billion Callable Yield Notes Linked to Nasdaq-100 Tech, Russell 2000, and S&P 500 Indices

Terms of Structured Notes and Coupon Details

BofA Finance’s notes, backed by Bank of America Corporation, have a public offering price of $1,000 per note, generating net proceeds of approximately $1.131 billion after underwriting discounts of $1.415 million. The notes’ initial estimated value at pricing is $987.80 per $1,000 principal, reflecting embedded option costs and structural features. The underwriting discount is $7.50 per $1,000 principal, with potential reductions for fee-based advisory accounts, lowering the offering price for certain investors.

The 12.20% annual contingent coupon, paid monthly at $10.167 per $1,000 principal, is contingent on all three indices—the Nasdaq-100 Technology Sector Index, Russell 2000 Index, and S&P 500 Index—remaining at or above 70% of their initial values. If any index falls below this coupon barrier on an observation date, no coupon is paid for that month, penalizing investors for even modest declines in any underlying index.

Index Thresholds and Principal Risk

The notes feature a dual-threshold structure: a 70% coupon barrier and a 60% principal protection threshold, based on starting index levels set at pricing—Nasdaq-100 Technology Sector Index at 16,934.43, Russell 2000 at 2,987.395, and S&P 500 at 7,509.20. Investors receive full principal plus any final coupon if the lowest-performing index finishes above 60% of its starting value. However, if that index falls below 60%, investors incur a 1:1 loss proportional to the index’s decline, risking up to 100% of principal.

This payoff structure caps upside at coupon payments and principal return but exposes investors to significant downside if one index declines more than 40% over the term, especially amid market volatility or sector-specific downturns.

Early Redemption and Call Features

BofA Finance can call the notes starting October 26, 2026, on any monthly payment date thereafter. Early redemption pays $1,000 per $1,000 principal plus any contingent coupon if all indices meet the coupon barrier on the observation date. The issuer must notify the trustee between five business days and 60 calendar days before a call date, providing limited advance notice to investors.

This call option introduces reinvestment risk, as early redemption limits further coupon income and forces investors to reinvest in potentially less favorable market conditions. No premium is paid for early calls, incentivizing the issuer to redeem notes when market performance is strong, thereby capping investor upside while managing issuer risk.

Credit Risk and Guarantees

Payments on the notes—including coupons, principal, and early redemption amounts—depend on the creditworthiness of BofA Finance LLC as issuer and Bank of America Corporation as guarantor. Bank of America’s full, unconditional guarantee reduces counterparty risk but does not eliminate exposure to the financial institution’s systemic, regulatory, or operational risks.

The notes are not FDIC insured nor bank guaranteed products, meaning investor protection is limited to issuer and guarantor credit quality rather than deposit insurance. The offering documents warn that the notes may lose value due to embedded costs, valuation complexities, and potential credit deterioration, urging investors to weigh these factors against the coupon and principal features compared to direct index or fixed-income investments.

Valuation and Calculation Agent Responsibilities

BofA Securities, Inc., an affiliate of BofA Finance, acts as both calculation and selling agent, potentially creating conflicts of interest. It determines index observation values, coupon payments, and redemption amounts but does not disclose detailed calculation methodologies or pro-rata adjustments for early redemption.

The initial estimated value discount of $12.20 per $1,000 principal (totaling about $1.12 million across the offering) reflects embedded option and callable features favoring the issuer. The notes’ valuation depends on future index levels, volatility, and interest rates, making secondary market pricing uncertain. Limited liquidity and potential valuation adjustments may affect investors seeking early exit.

Index Selection and Diversification Impact

Returns are linked to three indices covering different market segments: Nasdaq-100 Technology Sector Index (large-cap tech), Russell 2000 Index (small-cap equities), and S&P 500 Index (broad large-cap U.S. stocks). The requirement that all three indices meet the coupon barrier creates a "weakest link" effect, increasing the chance that coupon payments are missed during market weakness.

Starting index values and thresholds are: NDXT at 16,934.43 (coupon barrier 11,854.10; threshold 10,160.66), RTY at 2,987.395 (coupon barrier 2,091.177; threshold 1,792.437), and SPX at 7,509.20 (coupon barrier 5,256.44; threshold 4,505.52). The differing volatility and sector exposures make these notes suitable primarily for investors with a neutral to moderately bullish outlook across all three segments.

Risks and Potential Losses

The offering highlights risks including the possibility that the worst-performing index falls more than 40%, exposing investors to full principal loss. While such declines are uncommon in normal markets, they can occur rapidly during crises or sector-specific disruptions. Secondary market liquidity is limited, with no exchange listing and potentially wide bid-ask spreads, complicating early sales.

Additionally, reinvestment risk arises as monthly coupon payments must be redeployed at prevailing rates, which may be lower than the 12.20% coupon, especially if interest rates decline during the note term.

Regulatory Filing and Documentation

The notes were registered under Rule 424(b)(2) of the Securities Act of 1933 with registration numbers 333-290665 and 333-290665-01. The pricing supplement references the prospectus and supplements dated December 8, 2025, providing detailed legal and risk disclosures. The SEC has neither approved nor disapproved the notes or verified the completeness of offering documents.

The notes carry CUSIP 09712GQJ6 and are issued in minimum $1,000 denominations, targeting institutional and high-net-worth investors able to bear potential losses. Terms are governed by the senior indenture and related provisions, including Events of Default and Rights of Acceleration outlined in the prospectus.

Distribution and Underwriting Details

BofA Securities, Inc. is the sole selling agent, receiving the full underwriting discount of $7.50 per $1,000 principal (approximately $1.415 million). An affiliate may pay referral fees up to $7.50 per $1,000 principal to other broker-dealers, potentially doubling distribution costs. Fee-based advisory account dealers may waive selling concessions, allowing purchases at prices as low as $992.50 per $1,000 principal.

Distribution efforts focus on institutional investors through BofA Securities and affiliates, with no disclosed secondary market making commitments or liquidity guarantees. The integrated issuance and distribution model creates revenue incentives for Bank of America entities, emphasizing volume over secondary market support or investor suitability.