BofA Finance Unveils Auto-Callable Yield Notes Backed by Energy, Utilities, and Semiconductor ETFs

Details on Structure and Pricing of Contingent Income Notes

The Contingent Income Auto-Callable Yield Notes are structured debt instruments issued by BofA Finance LLC and fully backed by Bank of America Corporation. The notes are expected to price on July 28, 2026, and be issued on July 31, 2026, with a term of roughly three years unless called earlier. They will be issued in minimum increments of $1,000.00 and multiples thereof, carrying the CUSIP 09712GVD3.

Each note is offered at a public price of $1,000.00 per $1,000 principal amount. After deducting an underwriting discount of $28.00 per note, BofA Finance will net $972.00 before expenses. Dealers selling through fee-based advisory accounts may waive some or all selling concessions, potentially lowering the effective purchase price to $972.00 per $1,000 principal. Additionally, BofA Finance affiliates may pay referral fees up to $3.00 per $1,000 principal to participating registered broker-dealers.

Underlying ETFs and Contingent Coupon Payment Structure

The notes’ performance is tied to the least performing of three ETFs: State Street Energy Select Sector SPDR ETF (XLE), State Street Utilities Select Sector SPDR ETF (XLU), and VanEck Semiconductor ETF (SMH). The initial reference value for each ETF is its closing price on the pricing date, July 28, 2026. Investors should be aware that payments depend on the individual and collective performance of these sector-specific ETFs.

Contingent coupon payments of $13.75 per $1,000 principal (1.375% monthly or 16.50% annually) are payable monthly if, on each observation date, all three ETFs maintain at least 70% of their starting values and the notes have not been called. This means all three ETFs must stay above their respective 70% coupon barriers for investors to receive monthly coupon payments. Payments commence following the first observation date.

Automatic Call Features and Early Redemption Terms

The notes include an automatic call feature beginning January 28, 2027. If on any call observation date all three ETFs are at or above 100% of their initial values, the notes will be automatically redeemed early. Investors will receive $1,000 principal plus the applicable contingent coupon payment, with no further payments thereafter.

This automatic call provision allows investors to exit early at par value if market conditions favor the underlying ETFs. Monthly call observation dates provide multiple opportunities for early redemption if all three ETFs appreciate simultaneously. Call observation and payment dates are predetermined throughout the notes’ lifespan.

Downside Risks and Principal Exposure at Maturity

Investors face significant downside risk. If any underlying ETF falls more than 50% below its initial value at maturity, investors will incur 1:1 downside exposure relative to the worst-performing ETF, risking up to the full principal amount. For example, if the weakest ETF declines below 50% of its starting value by July 30, 2029, the redemption could be substantially less than the original principal.

If the least performing ETF remains at or above 50% of its initial value at maturity, investors will receive full principal back, subject to a final contingent coupon if the ETF is also above the 70% coupon barrier. This structure exposes investors to asymmetric risk focused on the ETF with the poorest performance over the term.

Valuation and Initial Pricing Insights

The filing estimates the initial value of the notes on pricing date between $837.90 and $937.90 per $1,000 principal, below the $1,000 public offering price. This valuation difference reflects issuer costs, profit margins, and embedded option values. Specific valuation methodologies were not disclosed in the supplement.

Actual note values will fluctuate based on multiple factors and cannot be precisely forecasted. The notes are not exchange-listed, limiting liquidity for investors wishing to sell before maturity. Secondary market prices may vary significantly from offering and estimated values, influenced by ETF performance, volatility, credit spreads, and overall structured product market conditions.

Credit Risk and Guarantee Details

Payments on the notes depend on the creditworthiness of BofA Finance LLC as issuer and Bank of America Corporation as guarantor. The notes are fully and unconditionally guaranteed by Bank of America Corporation, making the Bank of America group’s financial health critical for principal and coupon payments. The filing does not provide updated credit ratings but emphasizes the guarantee supports note obligations.

These notes are not bank deposits and lack FDIC insurance. They are not guaranteed as bank deposits and may lose value. Investors should carefully assess issuer and guarantor credit risk and review the "Risk Factors" sections in the pricing supplement and related documents for full risk disclosures.

Anti-Dilution Adjustments and Calculation Agent Role

The price multiplier for each ETF is initially set at 1 but may be adjusted for corporate actions or other events affecting the ETFs, as outlined in anti-dilution and discontinuance provisions referenced in the product supplement. These adjustments ensure the notes’ economics remain consistent despite structural ETF changes.

BofA Securities, Inc., an affiliate of BofA Finance, acts as both calculation agent and selling agent. It determines observation and ending values, as well as coupon payments, based on closing ETF prices on specified dates. This dual role underscores BofA’s integrated involvement in structuring and managing the notes, which investors should consider regarding potential conflicts of interest.

Regulatory Registration and Compliance

The notes are offered under a preliminary pricing supplement filed pursuant to Rule 424(b)(2) of the Securities Act of 1933. The filing references registration statements 333-290665 and 333-290665-01, with an effective prospectus dated December 8, 2025, including a Series A prospectus supplement and Product Supplement EQUITY-1 dated the same day. This indicates SEC registration through an effective registration statement.

The preliminary supplement is subject to change before finalization. The filing includes disclaimers noting that the SEC, state securities commissions, and other regulators have not approved or disapproved the securities or confirmed the completeness or accuracy of disclosure. Final documentation will supersede the preliminary supplement upon pricing and issuance.

Investor Considerations for Structured Note Purchases

These structured notes are complex and differ significantly from traditional debt securities. The filing highlights important distinctions and directs investors to detailed risk factor disclosures starting on page PS-11 of the pricing supplement, page PS-3 of the product supplement, page S-7 of the prospectus supplement, and page 7 of the prospectus. Risks include market, credit, liquidity, and structural risks related to the contingent income and automatic call features.

The tri-sector underlying exposure to energy, utilities, and semiconductors means investors face correlated yet sector-specific risks. Divergent sector performance could cause significant variation among the ETFs. The contingent coupon requires all three ETFs to exceed coupon barriers for payments, creating a "worst-of" risk concentrated on the lowest-performing ETF. These factors make the notes suitable primarily for sophisticated investors comfortable with sector-specific market and structured product risks.