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Filed Pursuant to Rule 424(b)(2)
Registration Statement Nos. 333-268718 and 333-268718-01 (To Prospectus dated December 30, 2022, Prospectus Supplement dated December 30, 2022 and Product Supplement EQUITY ARN-1 dated January 12, 2023) |
624,264 Units $10 principal amount per unit CUSIP No. 06054E879 ![]() |
Pricing Date Settlement Date Maturity Date |
August 24, 2023 August 31, 2023 October 25, 2024 |
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BofA Finance LLC
Accelerated Return Notes® Linked to the iShares® U.S. Aerospace & Defense ETF
Fully and Unconditionally Guaranteed by Bank of America Corporation
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Maturity of approximately 14 months
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3-to-1 upside exposure to increases in the Underlying Fund, subject to a capped return of 15.90%
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1-to-1 downside exposure to decreases in the Underlying Fund, with 100% of your investment at risk
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All payments occur at maturity and are subject to the credit risk of BofA Finance LLC, as issuer of the notes, and the credit risk of Bank of America Corporation, as guarantor of the notes
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No periodic interest payments
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In addition to the underwriting discount set forth below, the notes include a hedging-related charge of $0.05 per unit. See Structuring the Notes
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Limited secondary market liquidity, with no exchange listing
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Per Unit
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Total
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Public offering price
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$10.000
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$6,242,640.00
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Underwriting discount
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$ 0.175
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$ 109,246.20
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Proceeds, before expenses, to BofA Finance
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$ 9.825
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$6,133,393.80
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Terms of the Notes
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Redemption Amount Determination
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Issuer:
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BofA Finance LLC (BofA Finance)
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On the maturity date, you will receive a cash payment per unit determined as follows:
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Guarantor:
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Bank of America Corporation (BAC)
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Principal Amount:
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$10.00 per unit
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Term:
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Approximately 14 months
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Market Measure:
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The iShares® U.S. Aerospace & Defense ETF (Bloomberg symbol: ITA)
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Starting Value:
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$113.44
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Ending Value:
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The average of the Closing Market Prices of the Market Measure times the Price Multiplier on each calculation day occurring during the maturity valuation period. The scheduled calculation days are subject to postponement in the event of Market Disruption Events, as described beginning on page PS-25 of the accompanying product supplement.
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Price Multiplier
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1, subject to adjustment for certain events relating to the Market Measure, as described beginning on page PS-28 of the accompanying product supplement
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Participation Rate:
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300%
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Capped Value:
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$11.59 per unit, which represents a return of 15.90% over the principal amount.
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Maturity Valuation Period:
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October 16, 2024, October 17, 2024, October 18, 2024, October 21, 2024 and October 22, 2024.
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Fees and Charges:
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The underwriting discount of $0.175 per unit listed on the cover page and the hedging- related charge of $0.05 per unit described in Structuring the Notes on page TS-12.
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Calculation Agent:
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BofA Securities, Inc. (BofAS), an affiliate of BofA Finance.
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Accelerated Return Notes®
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TS-2
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Product supplement EQUITY ARN-1 dated January 12, 2023:
https://www.sec.gov/Archives/edgar/data/70858/000119312523007149/d431484d424b2.htm |
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Series A MTN prospectus supplement dated December 30, 2022 and prospectus dated December 30, 2022:
https://www.sec.gov/Archives/edgar/data/1682472/000119312522315195/d409418d424b3.htm |
You may wish to consider an investment in the notes if:
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The notes may not be an appropriate investment for you if:
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You anticipate that the Underlying Fund will increase moderately from the Starting Value to the Ending Value.
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You are willing to risk a loss of principal and return if the Underlying Fund decreases from the Starting Value to the Ending Value.
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You accept that the return on the notes will be capped.
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You are willing to forgo the interest payments that are paid on conventional interest-bearing debt securities.
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You are willing to forgo dividends or other benefits of owning shares of the Underlying Fund or the securities held by the Underlying Fund.
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You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various factors, including our and BAC’s actual and perceived creditworthiness, BAC’s internal funding rate and fees and charges on the notes.
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You are willing to assume our credit risk, as issuer of the notes, and BAC’s credit risk, as guarantor of the notes, for all payments under the notes, including the Redemption Amount.
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You believe that the Underlying Fund will decrease from the Starting Value to the Ending Value or that it will not increase sufficiently over the term of the notes to provide you with your desired return.
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You seek principal repayment or preservation of capital.
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You seek an uncapped return on your investment.
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You seek interest payments or other current income on your investment.
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You want to receive dividends or other distributions paid on shares of the Underlying Fund or the securities held by the Underlying Fund.
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You seek an investment for which there will be a liquid secondary market.
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You are unwilling or are unable to take market risk on the notes, to take our credit risk, as issuer of the notes, or to take BAC’s credit risk, as guarantor of the notes.
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Accelerated Return Notes®
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TS-3
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Accelerated Return Notes®
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This graph reflects the returns on the notes, based on the Participation Rate of 300% and the Capped Value of $11.59 per unit. The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the Underlying Fund, excluding dividends.
This graph has been prepared for purposes of illustration only.
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Ending Value
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Percentage Change from the Starting Value to the Ending Value
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Redemption Amount per Unit
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Total Rate of Return on the Notes
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0.00
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-100.00%
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$0.00
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-100.00%
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50.00
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-50.00%
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$5.00
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-50.00%
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80.00
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-20.00%
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$8.00
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-20.00%
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90.00
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-10.00%
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$9.00
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-10.00%
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94.00
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-6.00%
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$9.40
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-6.00%
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97.00
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-3.00%
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$9.70
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-3.00%
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100.00(1)
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0.00%
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$10.00
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0.00%
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102.00
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2.00%
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$10.60
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6.00%
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105.30
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5.30%
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$11.59(2)
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15.90%
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110.00
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10.00%
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$11.59
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15.90%
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120.00
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20.00%
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$11.59
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15.90%
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130.00
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30.00%
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$11.59
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15.90%
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140.00
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40.00%
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$11.59
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15.90%
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150.00
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50.00%
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$11.59
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15.90%
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160.00
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60.00%
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$11.59
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15.90%
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(1)
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The hypothetical Starting Value of 100 used in these examples has been chosen for illustrative purposes only. The actual Starting Value is $113.44, which was the Closing Market Price of the Market Measure on the pricing date.
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(2)
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The Redemption Amount per unit cannot exceed the Capped Value.
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Accelerated Return Notes®
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TS-4
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Example 1
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The Ending Value is 80.00, or 80.00% of the Starting Value:
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Starting Value: 100.00
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Ending Value: 80.00
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= $8.00 Redemption Amount per unit
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Example 2
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The Ending Value is 102.00, or 102.00% of the Starting Value:
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Starting Value: 100.00
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Ending Value: 102.00
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= $10.60 Redemption Amount per unit
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Example 3
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The Ending Value is 130.00, or 130.00% of the Starting Value:
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Starting Value: 100.00
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Ending Value: 130.00
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= $19.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $11.59 per unit
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Accelerated Return Notes®
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TS-5
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Depending on the performance of the Underlying Fund as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal.
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Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
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Payments on the notes are subject to our credit risk, and the credit risk of BAC, and any actual or perceived changes in our or BAC’s creditworthiness are expected to affect the value of the notes. If we and BAC become insolvent or are unable to pay our respective obligations, you may lose your entire investment.
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Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the Underlying Fund or the securities held by the Underlying Fund.
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We are a finance subsidiary and, as such, have no independent assets, operations or revenues.
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BAC’s obligations under its guarantee of the notes will be structurally subordinated to liabilities of its subsidiaries.
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The notes issued by us will not have the benefit of any cross-default or cross-acceleration with other indebtedness of BofA Finance or BAC; events of bankruptcy or insolvency or resolution proceedings relating to BAC and covenant breach by BAC will not constitute an event of default with respect to the notes.
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The initial estimated value of the notes considers certain assumptions and variables and relies in part on certain forecasts about future events, which may prove to be incorrect. The initial estimated value of the notes is an estimate only, determined as of the pricing date by reference to our and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit spreads and those of BAC, BAC’s internal funding rate on the pricing date, mid-market terms on hedging transactions, expectations on interest rates 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.
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The public offering price you are paying for the notes exceeds the initial estimated value. 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 the initial estimated value. This is due to, among other things, changes in the price of the Underlying Fund, changes in BAC’s internal funding rate, and the inclusion in the public offering price of the underwriting discount and the hedging-related charge, all as further described in Structuring the Notes on page TS-12, as well as fees paid for certain electronic platform services with respect to this offering. 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.
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The initial estimated value does not represent a minimum or maximum price at which we, BAC, MLPF&S, 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 Fund, our and BAC’s creditworthiness and changes in market conditions.
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A trading market is not expected to develop for the notes. None of us, BAC, MLPF&S or BofAS is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing to purchase your notes at any price in any secondary market.
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Your return on the notes and the value of the notes may be affected by exchange rate movements and factors affecting the international securities markets.
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BAC and its affiliates’ hedging and trading activities (including trades in the Underlying Fund or in shares of companies included in the Underlying Fund) and any hedging and trading activities BAC or its affiliates engage in that are not for your account or on your behalf, may affect the market value and return of the notes and may create conflicts of interest with you.
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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.
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The sponsor and investment advisor of the Underlying Fund may adjust the Underlying Fund in a way that could adversely affect the value of the notes and the amount payable on the notes, and these entities have no obligation to consider your interests.
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Accelerated Return Notes®
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TS-6
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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The sponsor of the Dow Jones U.S. Select Aerospace & Defense Index, which is the Underlying Fund’s underlying index (the Underlying Index), may adjust the Underlying Index in a way that affects its level, and has no obligation to consider your interests.
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You will have no rights of a holder of the Underlying Fund or the securities held by the Underlying Fund, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
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While BAC and our other affiliates may from time to time own securities of companies included in the Underlying Fund, we, BAC and our other affiliates do not control any company included in the Underlying Fund, and have not verified any disclosure made by any other company.
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There are liquidity and management risks associated with the Underlying Fund.
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The performance of the Underlying Fund may not correlate with the performance of its Underlying Index as well as the net asset value per share of the Underlying Fund, especially during periods of market volatility when the liquidity and the market price of shares of the Underlying Fund and/or securities held by the Underlying Fund may be adversely affected, sometimes materially.
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Risks associated with the Underlying Fund or the underlying assets of the Underlying Fund will affect the share price of the Underlying Fund and hence, the value of the notes.
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The payments on the notes will not be adjusted for all corporate events that could affect the Underlying Fund. See Description of the ARNs—Anti-Dilution and Discontinuance Adjustments Relating to Underlying Funds beginning on page PS-28 of product supplement EQUITY ARN-1.
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The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See Summary Tax Consequences below and U.S. Federal Income Tax Summary beginning on page PS-37 of the accompanying product supplement.
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Accelerated Return Notes®
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TS-7
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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●
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The weight of any individual company is capped at 22.50%.
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Accelerated Return Notes®
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TS-8
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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If any company’s weight exceeds 22.5%, that company’s weight is capped at 22.5% and all excess weight is proportionally redistributed to all uncapped companies within the Dow Jones U.S. Select Aerospace & Defense Index. If after this redistribution, any company breaches the 22.5% weight cap, the process is repeated iteratively until no company breaches the 22.5% weight cap.
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Then, the aggregate weight of the companies in the Dow Jones U.S. Select Aerospace & Defense Index with a weight greater than 4.5% is capped at 45%.
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Type of
Corporate Action |
Comments
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Divisor
Adjustment |
Company Addition/Deletion
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Addition: Companies are added at the float market capitalization weight.
Deletion: The weights of all stocks in the Dow Jones U.S. Select Aerospace & Defense Index will proportionally change. Relative weights will stay the same.
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Yes
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Change in Shares Outstanding
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Increasing (decreasing) the shares outstanding increases (decreases) the market capitalization of the Dow Jones U.S. Select Aerospace & Defense Index.
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Yes
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Split/Reverse Split
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Shares outstanding are adjusted by split ratio. Stock price is adjusted by split ratio.
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No
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Spin-off
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The spun-off company is added to the Dow Jones U.S. Select Aerospace & Defense Index at a zero price after the market close of the day before the ex-date (with no divisor adjustment). It will remain in the index until the next index rebalancing, at which time it will be evaluated for continued membership.
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Maybe
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Change in Investable Weight Factor (IWF)
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Increasing (decreasing) the IWF increases (decreases) the market capitalization of the Dow Jones U.S. Select Aerospace & Defense Index.
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Yes
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Special Dividends
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The stock price is adjusted by the amount of the dividend.
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Yes
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Rights Offering
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All rights offerings that are in the money on the ex-date are applied under the assumption the rights are fully subscribed. The stock price is adjusted by the value of the rights and the shares outstanding are increased by the rights ratio.
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Yes
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Accelerated Return Notes®
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TS-9
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Accelerated Return Notes®
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TS-10
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Accelerated Return Notes®
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TS-11
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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Accelerated Return Notes®
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TS-12
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Accelerated Return Notes®
Linked to the iShares® U.S. Aerospace & Defense ETF, due October 25, 2024 |
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There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
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You agree with us (in the absence of an administrative determination, or judicial ruling to the contrary) to characterize and treat the notes for all tax purposes as a single financial contract with respect to the Underlying Fund.
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Under this characterization and tax treatment of the notes, a U.S. Holder (as defined on page 71 of the prospectus) generally will recognize capital gain or loss upon maturity or upon a sale or exchange of the notes prior to maturity. This capital gain or loss generally will be long-term capital gain or loss if you held the notes for more than one year.
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No assurance can be given that the Internal Revenue Service (IRS) or any court will agree with this characterization and tax treatment.
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Under current IRS guidance, withholding on dividend equivalent payments (as discussed in the product supplement), if any, will not apply to notes that are issued as of the date of this term sheet unless such notes are delta-one instruments.
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Accelerated Return Notes®
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TS-13
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