We will deliver the notes in book-entry form only through The
Depository Trust Company on or about July 5, 2023 against payment in immediately available funds.
SUMMARY
The Cash-Settled Equity Linked Notes Linked
to the Common Stock of Amazon.com, Inc. due July 2, 2026 (the “notes”) are our senior debt securities. Any payment on the
notes is fully and unconditionally guaranteed by BAC. The notes and the related guarantee are not insured by the Federal Deposit Insurance
Corporation or secured by collateral. The notes will rank equally in right of payment with all of our other unsecured and unsubordinated
obligations, except obligations that are subject to any priorities or preferences by law. The related guarantee will rank equally in right
of payment with all of BAC’s other unsecured and unsubordinated obligations, except obligations that are subject to any priorities
or preferences by law, and senior to its subordinated obligations. Any payment due on the notes, including any repayment of the principal
amount, will be subject to the credit risk of BofA Finance, as issuer, and BAC, as guarantor. The notes will mature on July 2, 2026.
Payments on the notes depend on the credit
risk of BofA Finance, as issuer, and BAC, as guarantor, and on the performance of the Underlying Stock. The economic terms of the notes
are based on BAC’s internal funding rate, which is the rate it would pay to borrow funds through the issuance of market-linked notes,
and the economic terms of certain related hedging arrangements BAC’s affiliates enter into. BAC’s internal funding rate is
typically lower than the rate it would pay when it issues conventional fixed or floating rate debt securities. This difference in funding
rate, as well as the hedging related charges described below, will reduce the economic terms of the notes to you and the initial estimated
value of the notes. Due to these factors, the public offering price you pay to purchase the notes may be greater than the initial estimated
value of the notes as of the pricing date.
The initial estimated value range of the notes
is set forth on the cover page of this preliminary pricing supplement. The final pricing supplement will set forth the initial estimated
value of the notes as of the pricing date. For more information about the initial estimated value and the structuring of the notes, see
“Risk Factors” beginning on page PS-7 and “Structuring the Notes” on page PS-16.
| General: |
|
| Issuer: |
BofA Finance LLC (“BofA Finance”) |
| Guarantor: |
Bank of America Corporation (“BAC”) |
| Term: |
Approximately 3 years |
| Pricing Date: |
June 28, 2023, subject to change |
| Issue Date: |
July 5, 2023, subject to change |
| Valuation Date: |
June 29, 2026, subject to postponement as described under “Description of the Notes—Certain Terms of the Notes—Events Relating to Calculation Days” in the accompanying product supplement, with references to "calculation day" therein being deemed to be references to "Valuation Date". |
| Maturity Date: |
July 2, 2026, subject to change |
| Underlying Stock: |
The common stock of Amazon.com, Inc. (Nasdaq Global Select Market symbol: AMZN). See the section entitled “The Underlying Stock.” We refer to Amazon.com, Inc. as the “Underlying Company.” |
|
Interest Payments: |
|
| Interest Rate: |
4.00% per annum, payable semi-annually and calculated on a 30/360 basis from, and including, the issue date to, but excluding, the maturity date. |
| Interest Payment Dates: |
Interest on the notes will be payable semi-annually in arrears on January 5 and July 5 of each year during the term of the notes (each such day, an “Interest Payment Date”), commencing on January 5, 2024 and ending on, and including, the maturity date. |
| |
|
| Determining the Value of the Underlying Stock: |
| Threshold Price: |
Expected to be between [120% - 130%] (to be determined on the pricing date) of the Initial Reference Price (as defined below), rounded to two decimal places. |
| Initial Reference Price: |
The price
of one share of the Underlying Stock on the pricing
date, as determined in good faith and in the sole discretion of the calculation agent. The Initial Reference |
| |
Price will likely differ from the official Closing Market Price of the Underlying Stock on the pricing date. The calculation agent is
under no obligation to consider your interests as a holder of the notes in taking any actions, including the determination of the Initial
Reference Price, that may affect the value of your notes. Please see “Risk Factors—Conflict-related Risks” beginning
on page PS-7 of this pricing supplement. |
| Final Stock Price: |
The Closing Market Price of the Underlying Stock on the Valuation Date multiplied by the Price Multiplier on that date. |
| Price Multiplier: |
The Price Multiplier will be set to 1.0 on the pricing date, and will be subject to adjustment upon the occurrence of certain corporate events affecting the Underlying Stock, including, but not limited to, an adjustment to take into account any Ordinary Dividend that is higher or lower than the Base Dividend. See “Description of the Notes — Additional Anti-Dilution Adjustments” beginning on page PS-11 of this pricing supplement and “Description of the Notes — Anti-Dilution Adjustments” beginning on page PS-23 in the accompanying product supplement. |
Ordinary
Dividend: |
The regular quarterly cash dividend per one share of the Underlying Stock paid by the Underlying Company. |
| Base Dividend: |
From the issue date to the maturity date of the notes, $0.00 per calendar quarter per share of the Underlying Stock. See “Description of the Notes — Additional Anti-Dilution Adjustments” beginning on page PS-11 of this pricing supplement and “Description of the Notes — Anti-Dilution Adjustments” beginning on page PS-23 in the accompanying product supplement. |
| |
|
| Payment of the Notes at Maturity: |
| Redemption Amount: |
Your payment at maturity for each $1,000 in principal amount of
the notes, in addition to any accrued but unpaid interest, will be the greater of:
· $1,000;
and
· the
Alternative Settlement Amount (as defined below) |
| |
Alternative Settlement Amount: |
An amount calculated as follows:
$1,000 × (Final Stock Price / Threshold Price). |
| |
|
| Additional Information: |
| Calculation Agent: |
BofAS, an affiliate of BofA Finance. |
| Selling Agent: |
BofAS |
The pricing date, issue date and other
dates set forth above are subject to change, and will be set forth in the final pricing supplement relating to the notes.
You should read carefully this entire pricing
supplement, and the accompanying product supplement, prospectus supplement, and prospectus, to understand fully the terms of the notes,
as well as the tax and other considerations important to you in making a decision about whether to invest in the notes. In particular,
you should review carefully the section in this pricing supplement entitled “Risk Factors,” which highlights a number of risks
of an investment in the notes, to determine whether an investment in the notes is appropriate for you. If information in this pricing
supplement is inconsistent with the product supplement, prospectus supplement or prospectus, this pricing supplement will supersede those
documents. You are urged to consult with your own attorneys and business and tax advisors before making a decision to purchase any of
the notes.
The information in this “Summary”
section is qualified in its entirety by the more detailed explanation set forth elsewhere in this pricing supplement and the accompanying
product supplement, prospectus supplement and prospectus. You should rely only on the information contained in this pricing supplement
and the accompanying product supplement, prospectus supplement and prospectus. We have not authorized any other person to provide you
with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
None of us, the Guarantor or any selling
agent is making an offer to sell these notes in any jurisdiction where the offer or sale is not
permitted. You should assume that the information in this pricing supplement, the accompanying product supplement, prospectus supplement,
and prospectus is accurate only as of the date on their respective front covers.
Certain terms used but not defined in this
pricing supplement have the meanings set forth in the accompanying product supplement, prospectus supplement and prospectus. Unless otherwise
indicated or unless the context requires otherwise, all references in this pricing supplement to “we,” “us,” “our,”
or similar references are to BofA Finance, and not to BAC (or any other affiliate of BofA Finance).
The above-referenced prospectus, prospectus supplement
and product supplement may be accessed at the links set forth on the cover page of this pricing supplement.
Hypothetical Redemption Amount on the Notes
The following table is for purposes of illustration
only. It is based on hypothetical values and shows hypothetical returns on the notes. The table illustrates the calculation
of the Redemption Amount (excluding interest payable on the maturity date) based on a hypothetical Initial Reference Price of $50, a hypothetical
Threshold Price of $62.50 (equal to 125.00% (the midpoint of the Threshold Price range of between [120% - 130%]) of the hypothetical Initial
Reference Price) and a range of hypothetical Final Stock Prices as set forth below. The actual amount you receive and the total resulting
return, excluding any interest payments, will depend on the actual Initial Reference Price, Threshold Price and Final Stock Price of the
Underlying Stock, the actual price you paid for the notes and whether you hold the notes to maturity. The numbers appearing in the
table set forth below have been rounded for ease of analysis, and do not take into account any tax consequences from investing in the
notes.
For recent actual prices of the Underlying Stock,
see “The Underlying Stock” section below. The Final Stock Price of the Underlying Stock will not include any income generated
by dividends paid on the Underlying Stock, which you would otherwise be entitled to receive if you invested in the Underlying Stock directly.
In addition, all payments on the notes are subject to issuer and Guarantor credit risk.
|
Final Stock
Price |
Percentage Change
from
Initial Reference Price
to
Final Stock Price
|
Alternative
Settlement Amounts
|
Final Payment at
Maturity (excluding
interest payable on the
maturity date)
|
| $95.00 |
90.00% |
$1,520.00 |
$1,520.00 |
| $90.00 |
80.00% |
$1,440.00 |
$1,440.00 |
| $85.00 |
70.00% |
$1,360.00 |
$1,360.00 |
| $80.00 |
60.00% |
$1,280.00 |
$1,280.00 |
| $75.00 |
50.00% |
$1,200.00 |
$1,200.00 |
| $70.00 |
40.00% |
$1,120.00 |
$1,120.00 |
| $65.00 |
30.00% |
$1,040.00 |
$1,040.00 (1) |
| $62.50 |
25.00% |
$1,000.00 |
$1,000.00 |
| $55.00 |
10.00% |
$880.00 |
$1,000.00(2) |
| $50.00 |
0.00% |
$800.00 |
$1,000.00 |
| $45.00 |
-10.00% |
$720.00 |
$1,000.00 |
| $40.00 |
-20.00% |
$640.00 |
$1,000.00 |
| $35.00 |
-30.00% |
$560.00 |
$1,000.00 |
| $30.00 |
-40.00% |
$480.00 |
$1,000.00 |
| $25.00 |
-50.00% |
$400.00 |
$1,000.00 |
| $20.00 |
-60.00% |
$320.00 |
$1,000.00 |
| $15.00 |
-70.00% |
$240.00 |
$1,000.00 |
| $10.00 |
-80.00% |
$160.00 |
$1,000.00 |
| $5.00 |
-90.00% |
$80.00 |
$1,000.00 |
| $0.00 |
-100.00% |
$0.00 |
$1,000.00 |
(1) As set forth above, the payment at maturity will exceed the principal
amount only if the Final Stock Price exceeds the Threshold Price.
(2) As set forth above, the payment
at maturity cannot be less than the principal amount.
risk factors
Your investment in the notes entails significant
risks, many of which differ from those of a conventional debt security. Your decision to purchase the notes should be made only after
carefully considering the risks of an investment in the notes, including those discussed below, with your advisors in light of your particular
circumstances. The notes are not an appropriate investment for you if you are not knowledgeable about significant elements of the notes
or financial matters in general. You should carefully review the more detailed explanation of risks relating to the notes in the “Risk
Factors” sections beginning on page PS-5 of the accompanying product supplement, page S-6 of the accompanying prospectus supplement
and page 7 of the accompanying prospectus.
Structure-related Risks
Your return on the notes may be less than
the yield on a conventional debt security of comparable maturity. Any return that you receive on the notes may be less than the return
you would earn if you purchased a conventional debt security with the same maturity date. As a result, your investment in the notes may
not reflect the full opportunity cost to you when you consider factors, such as inflation, that affect the time value of money.
You will not participate in the full appreciation
of the Underlying Stock. If the Final Stock Price is greater than the Threshold Price, the payment on the notes at maturity will reflect
only appreciation of the Underlying Stock in excess of the Threshold Price. For example, assuming a hypothetical Threshold Price of 125.00%
of the hypothetical Initial Reference Price of $50 and a hypothetical Final Stock Price equal to 130% of the hypothetical Initial Reference
Price, the payment on the notes would be only approximately $1,040.00 per $1,000 in principal amount of the notes, for a return (excluding
interest) of approximately 4.00%, even though the Underlying Stock appreciated 30% from the Initial Reference Price.
In contrast, a direct investment in the Underlying
Stock would allow you to receive the benefit of any appreciation in its value.
All payments on the notes are subject to
our credit risk and the credit risk of the Guarantor, and actual or perceived changes in our or the Guarantor’s creditworthiness
are expected to affect the value of the notes. The notes are our senior unsecured debt securities. All payments on the notes will
be fully and unconditionally guaranteed by the Guarantor. The notes are not guaranteed by any entity other than the Guarantor. As a result,
your receipt of any payment on the notes will be dependent upon our ability and the ability of the Guarantor to repay our respective obligations
under the notes on the applicable payment date, regardless of how the Underlying Stock performs. No assurance can be given as to what
our financial condition or the financial condition of the Guarantor will be at any time after the pricing date of the notes. If we and
the Guarantor become unable to meet our respective financial obligations as they become due, you may not receive the amount(s) payable
under the terms of the notes.
In addition, our credit ratings and the credit
ratings of the Guarantor are assessments by ratings agencies of our respective abilities to pay our obligations. Consequently, our or
the Guarantor’s perceived creditworthiness and actual or anticipated decreases in our or the Guarantor’s credit ratings or
increases in the spread between the yield on our respective securities and the yield on U.S. Treasury securities (the “credit spread”)
prior to the maturity date may adversely affect the market value of the notes. However, because your return on the notes depends upon
factors in addition to our ability and the ability of the Guarantor to pay our respective obligations, such as the price of the Underlying
Stock, an improvement in our or the Guarantor’s credit ratings will not reduce the other investment risks related to the notes.
We are a finance subsidiary and, as such,
have no independent assets, operations or revenues. We are a finance subsidiary of the Guarantor, have no operations other than
those related to the issuance, administration and repayment of our debt securities that are guaranteed by the Guarantor, and are dependent
upon the Guarantor and/or its other subsidiaries to meet our obligations under the notes in the ordinary course. Therefore, our
ability to make payments on the notes may be limited.
Valuation- and Market-related Risks
The notes may be sold to you at an initial
public offering price that represents a premium to their principal amount, which would result in a lower return on investment than would
have applied if the public offering price were equal to the principal amount of the notes. The initial public offering price of the
notes may be greater than the principal amount of the notes. If the notes are
sold
at a premium to their principal amount, your return on investment will be lower than the return that would have applied if the same notes
were sold at a public offering price that is equal to their principal amount. For example, if the Final Stock Price of the Underlying
Stock is less than the Threshold Price, your payment at maturity, for each $1,000 in principal amount of the notes, in addition to any
accrued but unpaid interest, would be an amount in cash equal to the principal amount of such notes, but your initial investment would
have been greater than the principal amount of such notes.
The public offering price you are paying
for the notes may exceed their initial estimated value. The range of initial estimated values of the notes that is provided on the
cover page of this preliminary pricing supplement, and the initial estimated value as of the pricing date that will be provided in the
final pricing supplement, are estimates only, determined as of a particular point in time by reference to our and our affiliates’
pricing models. These pricing models consider certain assumptions and variables, including our credit spreads and those of the Guarantor,
the Guarantor’s internal funding rate, mid-market terms on hedging transactions, expectations on interest rates, dividends and volatility,
price-sensitivity analysis, and the expected term of the notes. These pricing models rely in part on certain forecasts about future events,
which may prove to be incorrect. If you attempt to sell the notes prior to maturity, their market value may be lower than the price you
paid for them and lower than their initial estimated value. This is due to, among other things, changes in the price of the Underlying
Stock, changes in the Guarantor’s internal funding rate, and the inclusion in the public offering price of the hedging related charges,
all as further described in “Structuring the Notes” below. These factors, together with various credit, market and economic
factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market
and will affect the value of the notes in complex and unpredictable ways.
The initial estimated value does not represent
a minimum or maximum price at which we, BAC, BofAS or any of our other affiliates would be willing to purchase your notes in any secondary
market (if any exists) at any time. The value of your notes at any time after issuance will vary based on many factors that cannot
be predicted with accuracy, including the performance of the Underlying Stock, our and BAC’s creditworthiness and changes in market
conditions.
We cannot assure you that a trading market
for your notes will ever develop or be maintained. We will not list the notes on any securities exchange. We cannot predict how the
notes will trade in any secondary market or whether that market will be liquid or illiquid.
Conflict-related Risks
Trading and hedging activities by us, the
Guarantor and any of our other affiliates, including BofAS, may create conflicts of interest with you and may affect your return on the
notes and their market value. We, the Guarantor or one or more of our other affiliates, including BofAS, may buy or sell shares of
the Underlying Stock, or futures or options contracts or exchange traded instruments on the Underlying Stock, or other instruments whose
value is derived from the Underlying Stock. We, the Guarantor or one or more of our other affiliates, including BofAS, may execute such
purchases or sales for our own or their own accounts, for business reasons, or in connection with hedging our obligations under the notes.
These transactions may present a conflict of interest between your interest in the notes and the interests we, the Guarantor and our other
affiliates, including BofAS, may have in our or their proprietary accounts, in facilitating transactions, including block trades, for
our or their other customers, and in accounts under our or their management. These transactions may adversely affect the price of the
Underlying Stock in a manner that could be adverse to your investment in the notes. On or before the date the Initial Reference Price
is determined, any purchases or sales by us, the Guarantor or our other affiliates, including BofAS or others on our or their behalf (including
those for the purpose of hedging some or all of our anticipated exposure in connection with the notes), may affect the price of the Underlying
Stock. Consequently, the price of the Underlying Stock may change subsequent to the pricing date and the determination of the Initial
Reference Price, which may adversely affect the market value of the notes.
We, the Guarantor or one or more of our other
affiliates, including BofAS, also expect to engage in hedging activities that could affect the price of the Underlying Stock on or before
the date the Initial Reference Price is determined. In addition, these hedging activities, including the unwinding of a hedge, may decrease
the market value of your notes prior to maturity, and may affect the amounts to be paid on the notes. We, the Guarantor or one or more
of our other affiliates, including BofAS, may purchase or otherwise acquire a long or short position in the notes and may hold or resell
the notes. For example, BofAS may enter into these transactions in connection with any market making activities in which it
engages. We
cannot assure you that these activities will not adversely affect the price of the Underlying Stock, the market value of your notes prior
to maturity or the amounts payable on the notes.
There may be potential conflicts of interest
involving the calculation agent, which is an affiliate of ours. We have the right to appoint and remove the calculation agent. One
of our affiliates will be the calculation agent for the notes and, as such, will make a variety of determinations relating to the notes,
including the amounts that will be paid on the notes. Under some circumstances, these duties could result in a conflict of interest between
its status as our affiliate and its responsibilities as calculation agent.
The Initial Reference Price will be determined
in the sole discretion of the calculation agent. Although the calculation agent will make all determinations and will take all actions
in relation to establishing the Initial Reference Price and, in turn, the Threshold Price, in good faith, it should be noted that such
discretion could have an impact (positive or negative) on the value of your notes. The calculation agent is under no obligation to consider
your interests as a holder of the notes in taking any actions, including the determination of the Initial Reference Price and, in turn,
the Threshold Price, that might affect the value of your notes.
Underlying Stock-related Risks
You will have no rights in the Underlying
Stock. As a holder of the notes, you will not have any ownership interest or rights in the Underlying Stock, such as voting rights
or rights to receive cash dividends or other distributions. Your notes will be paid in cash and you have no right to receive delivery
of shares of the Underlying Stock. In addition, the Underlying Company will not have any obligation to consider your interests as a holder
of the notes in taking any corporate action that might affect the value of the Underlying Stock and, therefore, the value of the notes.
There are risks associated with an
investment linked to a single Underlying Stock. The price of the Underlying Stock can fall sharply due to factors specific to the
Underlying Stock and the Underlying Company, such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory
developments, management changes and decisions and other events, as well as general market factors, such as general stock market volatility
and levels, interest rates and economic and political conditions.
The anti-dilution adjustments for the
Underlying Stock will be limited. The calculation agent may adjust the Price Multiplier for the Underlying Stock and other terms of
the notes to reflect certain corporate actions, as described in this pricing supplement and in the accompanying product supplement. The
calculation agent will not be required to make an adjustment for every event that may affect the Underlying Stock, and will have broad
discretion to determine whether and to what extent an adjustment is required.
Tax-related Risks
The U.S. federal income tax consequences of
an investment in the notes are uncertain, and may be adverse to a holder of the notes. No statutory, judicial, or administrative authority
directly addresses the characterization of the notes or securities similar to the notes for U.S. federal income tax purposes. As a result,
significant aspects of the U.S. federal income tax consequences of an investment in the notes are not certain. We intend to treat the
notes as debt instruments for U.S. federal income tax purposes. Accordingly, you should consider the tax consequences of investing in
the notes, aspects of which are uncertain. See the section entitled “U.S. Federal Income Tax Summary.”
You may be required to include income on the
notes over their term in excess of the interest payments based on the comparable yield for the notes. The notes will be considered
to be issued with original issue discount. You will be required to include income on the notes over their term based upon a comparable
yield. You are urged to review the section entitled “U.S. Federal Income Tax Summary” and consult your own tax advisor.
You
are urged to consult with your own tax advisor regarding all aspects of the U.S. federal income tax consequences of investing in the notes.
DESCRIPTION OF THE NOTES
General
The notes will be part of a series of medium-term
notes entitled “Senior Medium-Term Notes, Series A” issued under the senior indenture, as amended and supplemented from time
to time, among us, the Guarantor and The Bank of New York Mellon Trust Company N.A., as trustee. The senior indenture is described more
fully in the accompanying prospectus supplement and prospectus. The following description of the notes supplements and, to the extent
is inconsistent with, supersedes the description of the general terms and provisions of the notes and debt securities set forth under
the headings “Description of the Notes” in each of the accompanying product supplement and prospectus supplement and “Description
of Debt Securities of BofA Finance LLC” in the accompanying prospectus. These documents should be read in connection with this pricing
supplement. If any information in this pricing supplement is inconsistent with the information in the product supplement, prospectus supplement
and prospectus, you should rely on the information in this pricing supplement.
Our payment obligations on the notes are fully
and unconditionally guaranteed by the Guarantor. The notes will rank equally in right of payment with all of our other unsecured and unsubordinated
obligations from time to time outstanding, except obligations that are subject to any priorities or preferences by law. The guarantee
of the notes will rank equally in right of payment with all other unsecured and unsubordinated obligations of the Guarantor, except obligations
that are subject to any priorities or preferences by law, and senior to its subordinated obligations. Any payments due on the notes, including
any repayment of principal, are subject to our credit risk, as issuer, and the credit risk of BAC, as guarantor.
The notes will be issued in minimum denominations
of $1,000 and whole multiples of $1,000. You may transfer the notes only in whole multiples of $1,000.
The notes will mature on July 2, 2026, subject
to change based on the actual date the notes are priced. Prior to maturity, the notes are not repayable at our option or your option.
The notes are not subject to a sinking fund.
If any scheduled interest payment date or the
maturity date is not a business day, the payment will be postponed to the next business day, and no additional interest will be payable
as a result of that postponement.
Interest Calculation
The notes will bear interest at a rate of 4.00%
per annum, payable semi-annually in arrears for each semi-annual interest period during the period from and including, the issue date
to, but excluding, the maturity date. Interest will be payable on January 5 and July 5 of each year during the term of the notes (each
such day, an “Interest Payment Date”), commencing on January 5, 2024 and ending on, and including, the maturity date.
Each interest payment on the notes will be calculated
as follows:
$1,000 × interest rate × (number
of days in the interest period / 360),
where the number of days in each interest period will be calculated
on the basis of a year of 360 days with 12 months of 30 days each and where an “interest period” is (a) the period beginning
on, and including, the original issue date and ending on, but excluding, the first Interest Payment Date and (b) each successive period
beginning on, and including, an Interest Payment Date and ending on, but excluding, the next succeeding Interest Payment Date or, in the
case of the final interest period, the maturity date.
For book-entry only notes, the record date for
any interest payment date will be one business day in New York, New York prior to the applicable interest payment date. If notes are not
held in book-entry only form, the record date for an interest payment date will be the fifteenth calendar day preceding such interest
payment date, whether or not such record date is a business day.
Payment at Maturity
At maturity, subject to our credit risk as issuer
of the notes and the credit risk of the Guarantor as guarantor of the notes, you will be entitled to receive the Redemption Amount per
note that you hold, denominated in U.S. dollars, equal to the greater of:
| · | The Alternative Settlement Amount. |
In each case above, you will also receive any accrued but
unpaid interest.
The “Alternative Settlement Amount” will be
calculated as follows:
| $1,000 |
x |
Final Stock Price |
| Threshold Price |
The “Threshold Price” of the Underlying
Stock will be between [120% - 130%] (to be set on the pricing date) of its Initial Reference Price, rounded to two decimal places.
Determining the Initial Reference Price and the Final Stock Price
of the Underlying Stock
The
“Initial Reference Price” will be the price of
one share of the Underlying Stock on the pricing date, as determined in good faith and in the sole discretion of the calculation agent.
The Initial Reference Price will likely differ from the official Closing Market Price of the Underlying Stock on the pricing date. The
calculation agent is under no obligation to consider your interests as a holder of the notes in taking any actions, including the determination
of the Initial Reference Price, that may affect the value of your notes.
The “Final Stock Price” will be the
Closing Market Price of the Underlying Stock on the Valuation Date multiplied by the Price Multiplier on that date.
The “Valuation Date” is set forth
on page PS-3 of this pricing supplement.
“Price Multiplier” is defined on page
PS-4 of this pricing supplement.
Additional Anti-Dilution Adjustments
The following provisions will apply to the notes
in addition to those set forth under “Description of the Notes—Anti-Dilution Adjustments” in the accompanying product
supplement:
Cash Dividends or Distributions
If the Underlying Company pays a dividend or makes
a distribution consisting exclusively of cash to all or substantially all holders of shares of the Underlying Stock (other than any dividend
or distribution in connection with the liquidation, dissolution or winding up of the Underlying Company), then, once the dividend or distribution
has become effective and the shares of the Underlying Stock are trading ex-dividend, the Price Multiplier will be adjusted so that the
new Price Multiplier will equal the product of:
| · | the
prior Price Multiplier, and |
| · | a fraction, the numerator of which is the Closing Market Price per share
of the Underlying Stock on the trading day immediately preceding the ex-dividend date for the distribution (the “Ex-Dividend Closing
Market Price”) and the denominator of which is the amount by which the Ex-Dividend Closing Market Price exceeds the difference of
(i) the Ordinary Dividend minus (ii) the Base Dividend. |
The Base Dividend is subject to adjustment in
a manner inversely proportional to adjustments to the Price Multiplier; provided that no adjustment will be made to the Base Dividend
for any adjustment to the Price Multiplier as described above.
The “Ordinary Dividend” means the
regular quarterly cash dividend per one share of the Underlying Stock paid by the Underlying Company.
The “Base Dividend” means, from
the original issue date to the maturity date of the notes, $0.00 per calendar quarter per share of the Underlying Stock.
Events of Default and Rights of Acceleration
If an Event of Default, as defined in the senior
indenture relating to the notes and in the section entitled “Description of Debt Securities of BofA Finance LLC—Events of
Default and Rights of Acceleration; Covenant Breaches” on page 54 of the accompanying prospectus, with respect to the notes occurs
and is continuing, the amount payable to a holder of the notes upon any acceleration permitted under the senior indenture will be equal
to the amount described above under “—Payment at Maturity,” calculated as though the Valuation Date were the third trading
day prior to the date of acceleration. In case of a default in the payment of the notes, the notes will not bear a default interest rate.
Listing
The notes will not be listed on any securities
exchange.
THE UNDERLYING STOCK
We have derived the following information on
the Underlying Stock and the Underlying Company from publicly available documents. Because the Underlying Stock is registered under the
Securities Exchange Act of 1934, as amended, the Underlying Company is required to file periodically certain financial and other information
specified by the SEC. Information provided to or filed with the SEC by the Underlying Company can be located through the SEC’s web
site at sec.gov by reference to the CIK number set forth below.
This document relates only to the offering of
the notes and does not relate to any offering of Underlying Stock or any other securities of the Underlying Company. None of us, the Guarantor,
BofAS or any of our other affiliates has made any due diligence inquiry with respect to the Underlying Company in connection with the
offering of the notes. None of us, the Guarantor, BofAS or any of our other affiliates has independently verified the accuracy or completeness
of the publicly available documents or any other publicly available information regarding the Underlying Company and hence makes no representation
regarding the same. Furthermore, there can be no assurance that all events occurring prior to the date of this pricing supplement, including
events that would affect the accuracy or completeness of these publicly available documents that could affect the trading price of the
Underlying Stock, have been or will be publicly disclosed. Subsequent disclosure of any events or the disclosure of or failure to disclose
material future events concerning the Underlying Company could affect the price of the Underlying Stock and therefore could affect your
return on the notes. The selection of the Underlying Stock is not a recommendation to buy or sell the Underlying Stock.
Amazon.com, Inc.
Amazon.com, Inc. is an online retailer that offers
a wide range of products. The company products include books, music, computers, electronics and numerous other products. Amazon offers
personalized shopping services, Web-based credit card payment, and direct shipping to customers. Amazon also operates a cloud platform
offering services globally. This Underlying Stock trades on the Nasdaq Global Select Market under the symbol "AMZN." The company's
CIK number is 0001018724.
The following graph sets forth the daily historical
performance of AMZN based on its Closing Market Price per share on its primary exchange in the period from January 2, 2018 through June
22, 2023. On June 22, 2023, the Closing Market Price of AMZN was $130.15.
We obtained the historical data in the graph above
from the Bloomberg Professional® service (“Bloomberg”). We have not independently verified the accuracy or
completeness of the information obtained from Bloomberg. This data may have been adjusted by Bloomberg for corporate actions such as stock
splits, public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy.
Before investing in the notes, you should consult
publicly available sources for the Closing Market Prices and trading pattern of AMZN.
SupplementAL
Plan of Distribution; Role of BofAS
and Conflicts
of Interest
BofAS, a broker-dealer affiliate of ours, is a
member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling agent in the distribution
of the notes. Accordingly, the offering of the notes will conform to the requirements of FINRA Rule 5121. BofAS may not make sales in
this offering to any of its discretionary accounts without the prior written approval of the account holder.
We will deliver the notes against payment therefor
in New York, New York on a date that is greater than two business days following the pricing date. Under Rule 15c6-1 of the Securities
Exchange Act of 1934, trades in the secondary market generally are required to settle in two business days, unless the parties to any
such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes more than two business days prior to the original
issue date will be required to specify alternative settlement arrangements to prevent a failed settlement.
Under our distribution agreement with BofAS, BofAS
will purchase the notes from us as principal at the public offering price indicated on the cover of this pricing supplement, less the
indicated underwriting discount, if any. BofAS will sell the notes to other broker-dealers that will participate in the offering and that
are not affiliated with us, at an agreed discount to the principal amount. Each of those broker-dealers may sell the notes to one or more
additional broker-dealers. BofAS has informed us that these discounts may vary from dealer to dealer and that not all dealers will purchase
or repurchase the notes at the same discount. If all of the offered notes are not sold on the pricing date at the public offering price,
then the selling agent and/or dealers may offer the notes for sale in one or more transactions at an offering price that may be at a premium
to the public offering price. These sales may occur at market prices prevailing at the time of sale, at prices related to market prices
or at negotiated prices.
At BofAS’s discretion, for a short, undetermined
initial period after the issuance of the notes, BofAS may offer to buy the notes in the secondary market at a price that may exceed the
initial estimated value of the notes. Any price offered by BofAS for the notes will be based on then-prevailing market conditions and
other considerations, including the performance of the Underlying Stock and the remaining term of the notes. However, none of us, the
Guarantor, BofAS or any of our other affiliates is obligated to purchase your notes at any price or at any time, and we cannot assure
you that any party will purchase your notes at a price that equals or exceeds the initial estimated value of the notes.
Any price that BofAS may pay to repurchase the
notes will depend upon then prevailing market conditions, the creditworthiness of us and the Guarantor, and transaction costs. At certain
times, this price may be higher than or lower than the initial estimated value of the notes.
European Economic Area and United Kingdom
None of this pricing supplement, the accompanying
product supplement, the accompanying prospectus or the accompanying prospectus supplement is a prospectus for the purposes of the Prospectus
Regulation (as defined below). This pricing supplement, the accompanying product supplement, the accompanying prospectus and the accompanying
prospectus supplement have been prepared on the basis that any offer of Notes in any Member State of the European Economic Area (the “EEA”)
or in the United Kingdom (each, a “Relevant State”) will only be made to a legal entity which is a qualified investor under
the Prospectus Regulation (“Qualified Investors”). Accordingly any person making or intending to make an offer in that Relevant
State of Notes which are the subject of the offering contemplated in this pricing supplement, the accompanying product supplement, the
accompanying prospectus and the accompanying prospectus supplement may only do so with respect to Qualified Investors. Neither BofA Finance
nor BAC has authorized, nor does it authorize, the making of any offer of Notes other than to Qualified Investors. The expression “Prospectus
Regulation” means Regulation (EU) 2017/1129.
PROHIBITION OF SALES TO EEA AND UNITED KINGDOM RETAIL INVESTORS
– The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the EEA or in the United Kingdom. For these purposes: (a) a retail investor means a person who
is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”);
or (ii) a customer within the meaning of Directive (EU) 2016/97 (the Insurance Distribution Directive) where that customer would not qualify
as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus
Regulation; and (b) the expression “offer” includes the communication in any form and by any means of sufficient information
on the terms of the offer and the Notes to be offered so as to enable an
investor to decide to purchase or subscribe for the Notes. Consequently
no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”) for offering or
selling the Notes or otherwise making them available to retail investors in the EEA or in the United Kingdom has been prepared and therefore
offering or selling the Notes or otherwise making them available to any retail investor in the EEA or in the United Kingdom may be unlawful
under the PRIIPs Regulation.
United Kingdom
The communication of this pricing supplement, the
accompanying product supplement, the accompanying prospectus supplement, the accompanying prospectus and any other document or materials
relating to the issue of the Notes offered hereby is not being made, and such documents and/or materials have not been approved, by an
authorized person for the purposes of section 21 of the United Kingdom’s Financial Services and Markets Act 2000, as amended (the
“FSMA”). Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general
public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those
persons in the United Kingdom who have professional experience in matters relating to investments and who fall within the definition of
investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005,
as amended (the “Financial Promotion Order”)), or who fall within Article 49(2)(a) to (d) of the Financial Promotion Order,
or who are any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order (all such persons together
being referred to as “relevant persons”). In the United Kingdom, the Notes offered hereby are only available to, and any investment
or investment activity to which this pricing supplement, the accompanying product supplement, the accompanying prospectus supplement and
the accompanying prospectus relates will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant
person should not act or rely on this pricing supplement, the accompanying product supplement, the accompanying prospectus supplement
or the accompanying prospectus or any of their contents.
Any invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the Notes may only be communicated or
caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to BofA Finance, as issuer, or BAC, as guarantor.
All applicable provisions of the FSMA must be complied
with in respect to anything done by any person in relation to the Notes in, from or otherwise involving the United Kingdom.
STRUCTURING THE NOTES
The notes are our debt securities, the return
on which is linked to the performance of the Underlying Stock. The related guarantees are BAC’s obligations. As is the case for
all of our and BAC’s respective debt securities, including our market-linked notes, the economic terms of the notes reflect our
and BAC’s actual or perceived creditworthiness at the time of pricing. In addition, because market-linked notes result in increased
operational, funding and liability management costs to us and BAC, BAC typically borrows the funds under these types of notes at a rate,
which we refer to in this pricing supplement as BAC’s internal funding rate, that is more favorable to BAC than the rate that it
might pay for a conventional fixed or floating rate debt security. This generally relatively lower internal funding rate, which is reflected
in the economic terms of the notes, along with the fees and charges associated with market-linked notes, typically results in the initial
estimated value of the notes on the pricing date being less than their public offering price.
In order to meet our payment obligations on
the notes, at the time we issue the notes, we may choose to enter into certain hedging arrangements (which may include call options, put
options or other derivatives) with BofAS or one of our other affiliates. The terms of these hedging arrangements are determined based
upon terms provided by BofAS and its affiliates, and take into account a number of factors, including our and BAC’s creditworthiness,
interest rate movements, the volatility of the Underlying Stock, the tenor of the notes and the hedging arrangements. The economic terms
of the notes and their initial estimated value depend in part on the terms of these hedging arrangements.
BofAS has advised us that the hedging arrangements
will include hedging related charges, reflecting the costs associated with, and our affiliates’ profit earned from, these hedging
arrangements. Since hedging entails risk and may be influenced by unpredictable market forces, actual profits or losses from these hedging
transactions may be more or less than any expected amounts.
For further information, see “Risk Factors”
beginning on page PS-7 above and "Supplemental Use of Proceeds" on page PS-18 of the accompanying product supplement.
U.S.
FEDERAL INCOME TAX SUMMARY
The following summary of the material U.S. federal
income tax considerations of the acquisition, ownership, and disposition of the notes supplements, and to the extent inconsistent supersedes,
the discussion under “U.S. Federal Income Tax Considerations” in the accompanying prospectus and is not exhaustive of all
possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations
promulgated under the Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary regulations), rulings,
current administrative interpretations and official pronouncements of the Internal Revenue Service (“IRS”), and judicial decisions,
all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No
assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences
described below. This summary does not include any description of the tax laws of any state or local governments, or of any foreign government,
that may be applicable to a particular holder.
Although the notes are issued by us, they will be
treated as if they were issued by Bank of America Corporation for U.S. federal income tax purposes. Accordingly throughout this tax discussion,
references to “we,” “our” or “us” are generally to Bank of America Corporation unless the context
requires otherwise.
This summary is directed solely to U.S. Holders and
Non-U.S. Holders that, except as otherwise specifically noted, will purchase the notes upon original issuance and will hold the notes
as capital assets within the meaning of Section 1221 of the Code, which generally means property held for investment, and that are not
excluded from the discussion under “U.S. Federal Income Tax Considerations” in the accompanying prospectus. This discussion
does not address the tax consequences applicable to holders subject to Section 451(b) of the Code. This summary assumes that the issue
price of the notes, as determined for U.S. federal income tax purposes, equals the principal amount thereof.
You should consult your own tax advisor concerning
the U.S. federal income tax consequences to you of acquiring, owning, and disposing of the notes, as well as any tax consequences arising
under the laws of any state, local, foreign, or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax
laws.
General
No statutory, judicial, or administrative authority
directly addresses the characterization of the notes or securities similar to the notes for U.S. federal income tax purposes. As a result,
certain aspects of the U.S. federal income tax consequences of an investment in the notes are not certain. We intend to treat the notes
as “contingent payment debt instruments” for U.S. federal income tax purposes, subject to taxation under the “noncontingent
bond method.” The balance of this discussion assumes that this characterization is proper and will be respected.
U.S. Holders
If the notes are properly characterized as contingent
payment debt instruments for U.S. federal income tax purposes, such notes generally will be subject to Treasury regulations governing
contingent payment debt instruments. Under those regulations, and as further described under “U.S. Federal Income Tax Considerations—General—Consequences
to U.S. Holders—Debt Securities Subject to Contingencies” in the accompanying prospectus, a U.S. Holder will be required to
report original issue discount (“OID”) or interest income based on a “comparable yield” and a “projected
payment schedule,” established by us for determining interest accruals and adjustments with respect to the notes. A U.S. Holder
of the notes generally will be required to include in income OID in excess of actual cash payments received for certain taxable years.
The following table is based upon a hypothetical projected
payment schedule (including a hypothetical Redemption Amount) and a hypothetical comparable yield equal to 5.03% per annum (compounded
semi-annually). The hypothetical comparable yield is our current estimate of the comparable yield based upon market conditions as of the
date of this preliminary pricing supplement. It has been determined by us for purposes of illustrating the application of the Code and
the Treasury regulations to the notes as if the notes had been issued on July 5, 2023 and were scheduled to mature on July 2, 2026. This
tax accrual table is based upon a hypothetical projected payment schedule per
$1,150.00 principal amount of the notes, which would consist of a single
payment of $1,325.3505 at maturity. The following table is
for tax purposes only, and we make no representations or predictions as to what the actual Redemption Amount will be. The actual “projected
payment schedule” will be completed on the pricing date, and included in the final pricing supplement.
| Accrual Period |
Interest Deemed to
Accrue During Accrual
Period
(per $1,150 principal
amount of the Notes) |
Total Interest Deemed
to Have Accrued from
Original Issue Date
(per $1,150 principal
amount of the Notes) |
| July 5, 2023, through December 31, 2023 |
$28.1191 |
$28.1191 |
| January 1, 2024 through December 31, 2024 |
$58.2872 |
$86.4063 |
| January 1, 2025 through December 31, 2025 |
$58.9130 |
$145.3193 |
| January 1, 2026 through July 2, 2026 |
$30.0312 |
$175.3505 |
Hypothetical Projected Redemption Amount = $1,325.3505 per note.
Upon a sale, exchange, retirement, or other disposition
of the notes, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between the amount realized and that
holder’s tax basis in the notes. A U.S. Holder’s tax basis in the notes generally will equal the cost of the notes, increased
by the amount of OID previously accrued by the holder for the notes. A U.S. Holder generally will treat any gain as interest income, and
will treat any loss as ordinary loss to the extent of the previous interest inclusions in respect of the notes, and the balance as long-term
or short-term capital loss depending upon the U.S. Holder’s holding period for the note. The deductibility of capital losses by
a U.S. Holder is subject to limitations.
Non-U.S. Holders
Please see the discussion under “U.S. Federal
Income Tax Considerations—General—Consequences to Non-U.S. Holders” in the accompanying prospectus for the material
U.S. federal income tax consequences that will apply to Non-U.S. Holders of the notes, except that the following disclosure supplements
the discussion in the prospectus.
A “dividend equivalent” payment is treated
as a dividend from sources within the United States and such payments generally would be subject to a 30% U.S. withholding tax if paid
to a Non-U.S. Holder. Under Treasury regulations, payments (including deemed payments) with respect to equity-linked instruments (“ELIs”)
that are “specified ELIs” may be treated as dividend equivalents if such specified ELIs reference an interest in an “underlying
security,” which is generally any interest in an entity taxable as a corporation for U.S. federal income tax purposes, if a payment
with respect to such interest could give rise to a U.S. source dividend. However, IRS guidance provides that withholding on dividend equivalent
payments will not apply to specified ELIs that are not delta-one instruments and that are issued before January 1, 2025. Based on our
determination that the notes are not delta-one instruments, Non-U.S. Holders should not be subject to withholding on dividend equivalent
payments, if any, under the notes. However, it is possible that the notes could be treated as deemed reissued for U.S. federal income
tax purposes upon the occurrence of certain events affecting the Underlying Stock or the notes, and following such occurrence the notes
could be treated as subject to withholding on dividend equivalent payments. Non-U.S. Holders that enter, or have entered, into other transactions
in respect of the Underlying Stock or the notes should consult their tax advisors as to the application of the dividend equivalent withholding
tax in the context of the notes and their other transactions. If any payments are treated as dividend equivalents subject to withholding,
we (or the applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect
to amounts so withheld.
Backup Withholding and Information Reporting
Please see the discussion under “U.S.
Federal Income Tax Considerations — General — Backup Withholding and Information Reporting” in the accompanying prospectus
for a description of the applicability of the backup withholding and information reporting rules to payments made on the notes.