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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 LIRN-1 dated February 1, 2023) |
923,700 Units
$10 principal amount per unit
CUSIP No. 06054E614 ![]() |
Pricing Date
Settlement Date Maturity Date |
May 25, 2023
June 2, 2023
May 30, 2025
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BofA Finance LLC
Capped Leveraged Index Return Notes® Linked to the Russell 2000® Index
Fully and Unconditionally Guaranteed by Bank of America Corporation
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Maturity of approximately two years
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2-to-1 upside exposure to increases in the Index, subject to a capped return of 25.31%
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1-to-1 downside exposure to decreases in the Index beyond a 10% decline, with up to 90% of your principal 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 $0.075 per unit. See Structuring the Notes
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Limited secondary market liquidity, with no exchange listing
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Per Unit
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Total
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Public offering price
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$ 10.000
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$9,237,000.000
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Underwriting discount
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$ 0.200
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$184,740.000
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Proceeds, before expenses, to BofA Finance
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$ 9.800
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$9,052,260.000
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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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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 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 two years
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Market Measure:
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The Russell 2000® Index (Bloomberg symbol: RTY), a price return index
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Starting Value:
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1,754.605
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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-26 of the accompanying product supplement.
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Threshold Value:
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1,579.145 (90.00% of the Starting Value, rounded to three decimal places).
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Participation Rate:
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200%
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Capped Value:
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$12.531 per unit, which represents a return of 25.31% over the principal amount.
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Maturity Valuation Period:
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May 20, 2025, May 21, 2025, May 22, 2025, May 23, 2025 and May 27, 2025.
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Fees and Charges:
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The underwriting discount of $0.20 per unit listed on the cover page and the hedging- related charge of $0.075 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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Capped Leveraged Index Return Notes®
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TS-2
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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●
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Product supplement EQUITY LIRN-1 dated February 1, 2023:
https://www.sec.gov/Archives/edgar/data/70858/000119312523021788/d369622d424b2.htm |
●
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Series A MTN prospectus supplement dated December 30, 2022 and prospectus dated December 30, 2022:
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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 an Ending Value that is below the Threshold 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 100% 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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Capped Leveraged Index Return Notes®
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TS-3
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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Capped Leveraged Index Return Notes®
![]() |
This graph reflects the returns on the notes, based on the Participation Rate of 200%, the Threshold Value of 90% of the Starting Value and the Capped Value of $12.531 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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0.000
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-100.000%
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$1.00
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-90.00%
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50.000
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-50.000%
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$6.00
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-40.00%
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80.000
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-20.000%
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$9.00
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-10.00%
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90.000(1)
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-10.000%
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$10.00
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0.00%
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94.000
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-6.000%
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$10.00
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0.00%
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95.000
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-5.000%
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$10.00
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0.00%
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97.000
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-3.000%
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$10.00
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0.00%
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100.000(2)
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0.000%
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$10.00
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0.00%
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102.000
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2.000%
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$10.40
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4.00%
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103.000
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3.000%
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$10.60
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6.00%
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104.000
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4.000%
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$10.80
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8.00%
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110.000
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10.000%
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$12.00
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20.00%
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112.655
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12.655%
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$12.531(3)
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25.31%
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120.000
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20.000%
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$12.531
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25.31%
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130.000
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30.000%
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$12.531
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25.31%
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140.000
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40.000%
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$12.531
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25.31%
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150.000
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50.000%
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$12.531
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25.31%
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160.000
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60.000%
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$12.531
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25.31%
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(1)
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This is the hypothetical Threshold Value.
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(2)
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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 1,754.605, which was the closing level of the Market Measure on the pricing date.
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(3)
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The Redemption Amount per unit cannot exceed the Capped Value.
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Capped Leveraged Index Return Notes®
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TS-4
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 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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Threshold Value: 90.00
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Ending Value: 80.00
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Redemption Amount per unit
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Example 2
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The Ending Value is 97.00, or 97.00% of the Starting Value:
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Starting Value: 100.00
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Threshold Value: 90.00
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Ending Value: 97.00
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Redemption Amount (per unit) = $10.00, the principal amount, since the Ending Value is less than the Starting Value but equal to or greater than the Threshold Value.
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Example 3
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The Ending Value is 103.00, or 103.00% of the Starting Value:
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Starting Value: 100.00
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Ending Value: 103.00
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= $10.60 Redemption Amount per unit
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Example 4
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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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![]() |
= $16.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $12.531 per unit
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Capped Leveraged Index Return Notes®
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TS-5
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 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 amount represented by the Capped Value and may be less than a comparable investment directly in the stocks 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; and 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 your 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 the 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, 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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Capped Leveraged Index Return Notes®
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TS-6
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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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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Capped Leveraged Index Return Notes®
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TS-7
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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Capped Leveraged Index Return Notes®
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TS-8
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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Capped Leveraged Index Return Notes®
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TS-9
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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Capped Leveraged Index Return Notes®
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TS-10
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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Capped Leveraged Index Return Notes®
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TS-11
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 2025 |
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Capped Leveraged Index Return Notes®
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TS-12
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Capped Leveraged Index Return Notes®
Linked to the Russell 2000® Index, due May 30, 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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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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Capped Leveraged Index Return Notes®
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TS-13
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