Filed Pursuant to Rule 424 (b)(2) Registration Statement No. 333-202354 (To Prospectus dated May 1, 2015, Prospectus Supplement dated January 20, 2016 and Product Supplement STOCK ARN-1 dated March 9, 2016) |
1,834,740 Units $10 principal amount per unit CUSIP No. 06053Y686 ![]() | Pricing Date Settlement Date Maturity Date | March 23, 2016 March 31, 2016 April 7, 2017 | |||
Accelerated Return Notes® Linked to the Common Stock of Apple Inc. ■ Maturity of approximately 12 months ■ 3-to-1 upside exposure to increases in the Underlying Stock, subject to a capped return of 21.78% ■ 1-to-1 downside exposure to decreases in the Underlying Stock, with 100% of your investment at risk ■ All payments occur at maturity and are subject to the credit risk of Bank of America Corporation ■ No periodic interest payments ■ Limited secondary market liquidity, with no exchange listing | |||||
Per Unit | Total | |
Public offering price | $10.000 | $18,347,400.00 |
Underwriting discount | $0.175 | $ 321,079.50 |
Proceeds, before expenses, to BAC | $9.825 | $18,026,320.50 |
Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
Terms of the Notes | Redemption Amount Determination | |
Issuer: | Bank of America Corporation (BAC) | On the maturity date, you will receive a cash payment per unit determined as follows: ![]() |
Principal Amount: | $10.00 per unit | |
Term: | Approximately 12 months | |
Market Measure: | Common stock of Apple Inc. (the Underlying Company) (NASDAQ symbol: AAPL) | |
Starting Value: | 106.48, the Volume Weighted Average Price on the pricing date | |
Volume Weighted Average Price: | The volume weighted average price (rounded to two decimal places) shown on page AAPL on Bloomberg L.P. for trading in shares of the Underlying Stock taking place from approximately 9:30 a.m. to 4:05 p.m. on all U.S. exchanges. | |
Ending Value: | The Closing Market Price of the Underlying Stock on the calculation day, multiplied by the Price Multiplier. The calculation day is subject to postponement in the event of Market Disruption Events, as described beginning on page PS-18 of product supplement STOCK ARN-1. | |
Participation Rate: | 300% | |
Capped Value: | $12.178 per unit, which represents a return of 21.78% over the principal amount. | |
Calculation Day: | March 31, 2017 | |
Price Multiplier: | 1, subject to adjustment for certain corporate events relating to the Underlying Stock described beginning on page PS-19 of product supplement STOCK ARN-1. | |
Fees and Charges: | The underwriting discount of $0.175 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-9. | |
Calculation Agent: | Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), a subsidiary of BAC. |
Accelerated Return Notes® | TS-2 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
■ | Product supplement STOCK ARN-1 dated March 9, 2016: https://www.sec.gov/Archives/edgar/data/70858/000119312516498589/d26301d424b5.htm |
■ | Series L MTN prospectus supplement dated January 20, 2016 and prospectus dated May 1, 2015: http://www.sec.gov/Archives/edgar/data/70858/000119312516433708/d122981d424b3.htm |
You may wish to consider an investment in the notes if: | The notes may not be an appropriate investment for you if: |
■ You anticipate that the price of the Underlying Stock will increase moderately from the Starting Value to the Ending Value. ■ You are willing to risk a loss of principal and return if the Underlying Stock decreases from the Starting Value to the Ending Value. ■ You accept that the return on the notes will be capped. ■ You are willing to forgo the interest payments that are paid on conventional interest bearing debt securities. ■ You are willing to forgo dividends or other benefits of owning shares of the Underlying Stock. ■ 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 actual and perceived creditworthiness, our internal funding rate and fees and charges on the notes. ■ You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount. | ■ You believe that the price of the Underlying Stock 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. ■ You seek principal repayment or preservation of capital. ■ You seek an uncapped return on your investment. ■ You seek interest payments or other current income on your investment. ■ You want to receive dividends or other distributions paid on the Underlying Stock. ■ You seek an investment for which there will be a liquid secondary market. ■ You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes. |
Accelerated Return Notes® | TS-3 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
Accelerated Return Notes ![]() | This graph reflects the returns on the notes, based on the Participation Rate of 300% and the Capped Value of $12.178. The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the Underlying Stock, excluding dividends. This graph has been prepared for purposes of illustration only. |
Ending Value | Percentage Change from the Starting Value to the Ending Value | Redemption Amount per Unit | Total Rate of Return on the Notes |
0.00 | -100.00% | $0.000 | -100.00% |
50.00 | -50.00% | $5.000 | -50.00% |
80.00 | -20.00% | $8.000 | -20.00% |
90.00 | -10.00% | $9.000 | -10.00% |
94.00 | -6.00% | $9.400 | -6.00% |
97.00 | -3.00% | $9.700 | -3.00% |
100.00(1) | 0.00% | $10.000 | 0.00% |
102.00 | 2.00% | $10.600 | 6.00% |
104.00 | 4.00% | $11.200 | 12.00% |
105.00 | 5.00% | $11.500 | 15.00% |
110.00 | 10.00% | $12.178(2) | 21.78% |
120.00 | 20.00% | $12.178 | 21.78% |
130.00 | 30.00% | $12.178 | 21.78% |
140.00 | 40.00% | $12.178 | 21.78% |
150.00 | 50.00% | $12.178 | 21.78% |
160.00 | 60.00% | $12.178 | 21.78% |
(1) | The hypothetical Starting Value of 100 used in these examples has been chosen for illustrative purposes only. The actual Starting Value is 106.48, which was the Volume Weighted Average Price of the Market Measure on the pricing date. |
(2) | The Redemption Amount per unit cannot exceed the Capped Value. |
Accelerated Return Notes® | TS-4 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
Example 1 | |
The Ending Value is 80.00, or 80.00% of the Starting Value: | |
Starting Value: 100.00 | |
Ending Value: 80.00 | |
![]() | = $8.000 Redemption Amount per unit |
Example 2 | |
The Ending Value is 104.00, or 104.00% of the Starting Value: | |
Starting Value: 100.00 | |
Ending Value: 104.00 | |
![]() | = $11.200 Redemption Amount per unit |
Example 3 | |
The Ending Value is 130.00, or 130.00% of the Starting Value: | |
Starting Value: 100.00 | |
Ending Value: 130.00 | |
![]() | = $19.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $12.178 per unit |
Accelerated Return Notes® | TS-5 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
■ | Depending on the performance of the Underlying Stock as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal. |
■ | 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. |
■ | Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If we become insolvent or are unable to pay our obligations, you may lose your entire investment. |
■ | 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 Stock. |
■ | The initial estimated value of the notes is an estimate only, determined as of a particular point in time by reference to our and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit spreads, our 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. |
■ | The public offering price you pay 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 Stock, our 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-9. These factors, together with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways. |
■ | The initial estimated value does not represent a minimum or maximum price at which we, MLPF&S or any of our affiliates would be willing to purchase your notes in any secondary market (if any exists) at any time. The value of your notes at any time after issuance will vary based on many factors that cannot be predicted with accuracy, including the performance of the Underlying Stock, our creditworthiness and changes in market conditions. |
■ | A trading market is not expected to develop for the notes. Neither we nor MLPF&S 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. |
■ | Our business activities as a full service financial institution, including our commercial and investment banking activities, our hedging and trading activities (including trading in shares of the Underlying Stock) and any hedging and trading activities we engage in for our clients’ accounts, may affect the market value and the return of the notes and may create conflicts of interest with you. |
■ | The Underlying Company will have no obligations relating to the notes, and neither we nor MLPF&S will perform any due diligence procedures with respect to the Underlying Company in connection with this offering. |
■ | You will have no rights of a holder of the Underlying Stock, and you will not be entitled to receive shares of the Underlying Stock or dividends or other distributions by the Underlying Company. |
■ | While we or our affiliates may from time to time own securities of the Underlying Company, we do not control the Underlying Company, and have not verified any disclosure made by the Underlying Company. |
■ | The Redemption Amount will not be adjusted for all corporate events that could affect the Underlying Stock. See Description of ARNs—Anti-Dilution Adjustments beginning on page PS-19 of product supplement STOCK ARN-1. |
■ | 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. |
■ | 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-29 of product supplement STOCK ARN-1. |
Accelerated Return Notes® | TS-6 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
High ($) | Low ($) | |
2008 | ||
First Quarter | 27.85 | 17.02 |
Second Quarter | 27.14 | 21.02 |
Third Quarter | 25.67 | 15.04 |
Fourth Quarter | 15.86 | 11.50 |
2009 | ||
First Quarter | 15.70 | 11.17 |
Second Quarter | 20.67 | 15.53 |
Third Quarter | 26.59 | 19.34 |
Fourth Quarter | 30.23 | 25.82 |
2010 | ||
First Quarter | 33.69 | 27.43 |
Second Quarter | 39.17 | 33.69 |
Third Quarter | 41.78 | 34.31 |
Fourth Quarter | 46.50 | 39.81 |
2011 | ||
First Quarter | 51.88 | 46.67 |
Second Quarter | 50.44 | 45.05 |
Third Quarter | 59.06 | 49.03 |
Fourth Quarter | 60.32 | 51.93 |
2012 | ||
First Quarter | 88.23 | 58.75 |
Second Quarter | 90.89 | 75.73 |
Third Quarter | 100.30 | 82.13 |
Fourth Quarter | 95.96 | 72.71 |
2013 | ||
First Quarter | 78.43 | 60.01 |
Second Quarter | 66.26 | 55.79 |
Third Quarter | 72.53 | 58.46 |
Fourth Quarter | 81.44 | 68.71 |
2014 | ||
First Quarter | 79.62 | 71.35 |
Second Quarter | 94.25 | 73.99 |
Third Quarter | 103.30 | 93.08 |
Fourth Quarter | 119.00 | 96.26 |
2015 | ||
First Quarter | 133.00 | 105.99 |
Second Quarter | 132.65 | 124.25 |
Third Quarter | 132.07 | 103.12 |
Fourth Quarter | 122.57 | 105.26 |
2016 | ||
First Quarter (through the pricing date) | 106.72 | 93.42 |
Accelerated Return Notes® | TS-7 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
Accelerated Return Notes® | TS-8 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
Accelerated Return Notes® | TS-9 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
■ | There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes. |
■ | 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 Stock. |
■ | Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning on page 99 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. |
■ | No assurance can be given that the IRS or any court will agree with this characterization and tax treatment. |
Accelerated Return Notes® | TS-10 |
Accelerated Return Notes® Linked to the Common Stock of Apple Inc., due April 7, 2017 | ![]() |
Accelerated Return Notes® | TS-11 |
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