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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) |
1,059,098 Units $10 principal amount per unit CUSIP No. 09710N390 ![]() |
Pricing Date Settlement Date Maturity Date |
February 29, 2024 March 7, 2024
April 25, 2025
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BofA Finance LLC
Accelerated Return Notes® Linked to the TOPIX® Index
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 Index, subject to a capped return of 38.10%
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1-to-1 downside exposure to decreases in the Index, 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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$10,590,980.00
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Underwriting discount
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$ 0.175
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$ 185,342.15
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Proceeds, before expenses, to BofA Finance
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$ 9.825
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$10,405,637.85
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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 TOPIX® Index, due April 25, 2025 |
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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 TOPIX® Index (Bloomberg symbol: “TPX”), a price return index
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Starting Value:
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2,675.73
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Ending Value:
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The average of the closing levels of the Market Measure 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 and “Other Terms of the Notes” on page TS-7 of this term sheet.
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Participation Rate:
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300%
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Capped Value:
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$13.81 per unit, which represents a return of 38.10% over the principal amount.
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Maturity Valuation Period:
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April 16, 2025, April 17, 2025, April 18, 2025, April 21, 2025 and April 22, 2025
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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 TOPIX® Index, due April 25, 2025 |
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Product supplement EQUITY ARN-1 dated January 12, 2023:
https://www.sec.gov/Archives/edgar/data/1682472/000119312523007149/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 Index 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 Index 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 the stocks included in the Index.
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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 Index 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 the stocks included in the Index.
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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 TOPIX® Index, due April 25, 2025 |
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Accelerated Return Notes®
![]() |
This graph reflects the returns on the notes, based on the Participation Rate of 300% and the Capped Value of $13.81 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 stocks included in the Index, 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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110.00
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10.00%
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$13.00
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30.00%
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112.70
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12.70%
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$13.81(2)
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38.10%
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120.00
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20.00%
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$13.81
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38.10%
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130.00
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30.00%
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$13.81
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38.10%
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140.00
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40.00%
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$13.81
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38.10%
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150.00
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50.00%
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$13.81
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38.10%
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160.00
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60.00%
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$13.81
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38.10%
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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 2,675.73, which was the closing level 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 TOPIX® Index, due April 25, 2025 |
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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 $13.81 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 TOPIX® Index, due April 25, 2025 |
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Depending on the performance of the Index 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 securities included in the Index.
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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 level of the Index, 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. 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 Index, 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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BAC and its affiliates’ hedging and trading activities (including trades in shares of companies included in the Index) 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 Index sponsor may adjust the 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 securities represented by the Index, 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 Index, except to the extent that BAC’s common stock is included in the Index, we, BAC and our other affiliates do not control any company included in the Index, and have not verified any disclosure made by any other company.
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Accelerated Return Notes®
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TS-6
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Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
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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, specifically changes in the countries represented by the Index. In addition, you will not obtain the benefit of any increase in the value of the relevant currencies against the U.S. dollar, which you would have received if you had owned the securities represented by the Index during the term of your notes, although the levels of the Index may be adversely affected by general exchange rate movements in the market.
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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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(A)
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the Tokyo Stock Exchange (or any successor to the foregoing exchange) is open for trading; and
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(B)
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the Index or any successors thereto are calculated and published.
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Accelerated Return Notes®
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TS-7
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Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
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Index value =
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Base index value of 100 ×
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Current free-float-adjusted market value
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Base market value
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Accelerated Return Notes®
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TS-8
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Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
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●
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Of the constituents as of April 1, 2022, those that fall under both the following (a) and (b) will be designated as “phased weighting reduction constituents”:
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Any constituent applying for listing on the First Section through an initial listing (excluding technical listings) or section transfer after the “first set of revisions pertaining to cash equity market restructuring” were implemented on November 1, 2020 will not be subject to designation as a phased weighting reduction constituent based on tradable share market capitalization.
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The weighting of phased weighting reduction constituents will be reduced in 10 stages on the last business day of every quarter starting on the last business day of October 2022 (October 31, 2022), and these constituents will be removed from the index on the last business day of January 2025.
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Said adjustments to the weighting of phased weighting reduction constituents will be calculated by multiplying the free-float weight by the transition factor (which will decrease from 1.0 to 0 in increments of 0.1)
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In order to check whether there have been changes to the tradeable share market capitalization of each phased weighting reduction constituent, a re-evaluation will be conducted, using tradable share market capitalization as of the end of the reporting period following the reporting period used for the second decision in (i)(b). If the tradable share market capitalization of a constituent has reached JPY 10 billion or more but the annual traded value ratio of said constituent has not reached 0.2 at this point, the transition factor will no longer decrease as of the fifth stage (it will stay at 0.6, the same as the fourth stage). If the tradable share market capitalization and the annual traded value ratio of a constituent have reached JPY 10 billion or more and 0.2 or more respectively at this point, the transition factor shall be increased to 1 in increments of 0.1 from the fifth stage and said constituent will be removed from the list of phased weighting reduction constituents. The traded value ratio used for the re-evaluation in (ii) is calculated using the sum of monthly traded value ratios from September 2022 to August 2023. The monthly traded value ratio shall be calculated as follows: (Median of daily traded value in trading sessions at TSE multiplied by the number of business days in the month) divided by the free-float adjusted market capitalization as of the last business day of the month before the transition factor was applied.
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Transition Stage
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Index Revision Date
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Transition Factor
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1st
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Last business day of October 2022
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x0.9
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2nd
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Last business day of January 2023
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x0.8
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3rd
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Last business day of April 2023
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x0.7
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4th
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Last business day of July 2023
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x0.6
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Accelerated Return Notes®
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TS-9
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Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
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Re-evaluation
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5th
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Last business day of October 2023
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x0.5
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6th
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Last business day of January 2024
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x0.4
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7th
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Last business day of April 2024
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x0.3
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8th
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Last business day of July 2024
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x0.2
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9th
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Last business day of October 2024
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x0.1
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10th (removed from the Index)
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Last business day of January 2025
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x0
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Constituents which are delisted (excluding cases where the stock lists on another TSE market immediately), designated as securities to be delisted or designated as securities on alert shall be removed
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If a constituent is designated as a security on alert as of the day of transition to the new market structure (April 4, 2022), said constituent will be removed from the Index on the last business day of April 2022
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Stocks which carry out initial listings (excluding technical listings) on or transfer to the Prime Market will be included in the Index on the last business day of the month following the month containing the listing date or transfer date.
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In the event a constituent of the Index is delisted due to a stock transfer, stock swap, merger for creating a new company or demerger, and the newly created, surviving or succeeding company is listed without delay, JPXI will add the new company to the index.
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In the event a constituent of the Index is delisted due to a stock swap or absorption-type merger, in which the surviving company or the parent company holding all shares of the constituent company is not a constituent of the Index, then JPXI will add the surviving company or the parent company to the index.
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For issues that are removed from the index due to designation as securities on alert, but have had said designation cancelled as of the last business day of August 2023, if the company meets the same criteria as for the re-evaluation in “Adjustment to the weighting of phased weighting reduction constituents” above (i.e., tradeable share market capitalization of JPY 10 billion or more and annual traded value ratio of 0.2 or more), said company shall be added to the Index on the last business day of October 2023.
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Event
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Adjustment Date
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Stock Price Used for Adjustment
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Addition
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A company is to be newly listed on the Prime Market
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Last business day of the month after such listing
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Stock price at the end of trading on the business day before adjustment date
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Addition
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New listing of a newly formed company resulting from a corporate consolidation, stock transfer, stock swap, merger for creating a new company or demerger that results in an Index constituent being delisted and the new company being included in the Index.
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New listing date. If the initial listing date falls on a holiday, it will be the following business day
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Base price
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Addition
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Delisting of an Index constituent due to a stock swap or an absorption-type merger with a surviving stock that is not an Index constituent, and the surviving stock is included in the Index
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Delisting date
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Stock price at the end of trading on the business day before adjustment date
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Addition
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A company is to be transferred to the Prime Market
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Last business day of the month after such change
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Stock price at the end of trading on the business day before adjustment date
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Accelerated Return Notes®
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TS-10
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Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
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Deletion
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New listing of a newly formed company resulting from a corporate consolidation, stock transfer, stock swap, merger for creating a new company or demerger that results in an Index constituent being delisted and the new company being included in the Index.
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Listing date of the newly formed company (normally two business days following delisting date)
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Stock price at the end of trading on the business day before the delisting date. The stock price at the end of trading on the business day before the delisting date is used to calculate the Index for the period from the delisting date to the removal date.
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Deletion
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A constituent is to be delisted due to a reason other than as described in the preceding scenario
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Delisting date
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Stock price at the end of trading on the business day before adjustment date
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Deletion
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A constituent’s securities are designated to be delisted or designated as a security on alert
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Four business days after designation. If the designation date falls on a holiday, it will be the next business day.
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Stock price at the end of trading on the business day before adjustment date
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Event
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Adjustment Date
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Stock Price Used for Adjustment
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Change of free-float weight
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Date of change
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Stock price at the end of trading on the business day before adjustment date
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Public offering
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Additional listing date (day after payment date). If listing date falls on a holiday, it will be the next business day
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Stock price at the end of trading on the business day before adjustment date
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Allocation of new shares to a third party
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Five business days after additional listing date (two business days after payment date)
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Stock price at the end of trading on the business day before adjustment date
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Capital increase through allotment to shareholders
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Ex-rights date
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Payment price per share
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Exercise of subscription warrants
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Last business day of the month following exercise
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Stock price at the end of trading on the business day before adjustment date
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Conversion of preferred shares
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Last business day of the month following conversion
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Stock price at the end of trading on the business day before adjustment date
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Cancellation of treasury stock
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Last business day of the month following cancellation
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Stock price at the end of trading on the business day before adjustment date
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Merger or stock swaps between a non-surviving constituent and another constituent
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Delisting date of the non-surviving constituent
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Stock price at the end of trading on the business day before adjustment date
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Merger or stock swaps other than that described above
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Listing change date (effective date)
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Stock price at the end of trading on the business day before adjustment date
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Rights offering (limited to case where the allotted subscription warrant securities are listed; the case where the allotted subscription warrant securities are not listed is treated as “Exercise of subscription warrants”)
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Ex-rights date
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Payment price per share
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Offering for sale of shares held by the Japanese government (Nippon Telegraph, Telephone and Japan Tobacco and Japan Post Holdings only)
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Date determined by JPXI (generally the delivery date)
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Stock price at the end of trading on the business day before adjustment date
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Accelerated Return Notes®
|
TS-11
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Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
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Demerger (absorption-type)
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Listing change date (the effective date)
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Stock price at the end of trading on the business day before adjustment date
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Other adjustments
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Last business day of the month in which the information appears in “Sho-ho” (TSE Notice) or the last business day of the following month
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Stock price at the end of trading on the business day before adjustment date
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Accelerated Return Notes®
|
TS-12
|
Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
|
Accelerated Return Notes®
|
TS-13
|
Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
|
Accelerated Return Notes®
|
TS-14
|
Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
|
Accelerated Return Notes®
|
TS-15
|
Accelerated Return Notes®
Linked to the TOPIX® Index, due April 25, 2025 |
|
■
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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 Index.
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■
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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.
|
Accelerated Return Notes®
|
TS-16
|