Subject to Completion

Preliminary Term Sheet dated
May 22, 2024

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 COMM LIRN-1 dated May 22, 2024)

   Units
$10 principal amount per unit
CUSIP No.    

Pricing Date*
Settlement Date*
Maturity Date*

May  , 2024

May  , 2024

November  , 2025

*Subject to change based on the actual date the notes are priced for initial sale to the public (the “pricing date”)

 

BofA Finance LLC

Notes with Absolute Return Buffer Linked to the WTI Crude Oil Futures Contract 

Fully and Unconditionally Guaranteed by Bank of America Corporation

 

Per Unit

Total

Public offering price⁽¹⁾

$10.00

$  

Underwriting discount⁽¹⁾

$ 0.175

$  

Proceeds, before expenses, to BofA Finance

$ 9.825

$  

(1)   

For any purchase of 300,000 units or more in a single transaction by an individual investor or in combined transactions with the investor’s household in this offering, the public offering price and the underwriting discount will be $9.95 per unit and $0.125 per unit, respectively. See “Supplement to the Plan of Distribution, Conflicts of Interest” below.

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Terms of the Notes

Redemption Amount Determination

Issuer:

BofA Finance LLC (“BofA Finance”)

On the maturity date, you will receive a cash payment per unit determined as follows:

Guarantor:

Bank of America Corporation (“BAC”)

Principal Amount:

$10.00 per unit

Term:

Approximately 18 months

Market Measure:

The WTI Crude Oil Futures Contract (Bloomberg symbol: “CL1”). 

Starting Value:

The closing price of the Market Measure on the pricing date.

Ending Value:

The closing price of the Market Measure on the scheduled calculation day. The calculation day is subject to postponement in the event of Market Disruption Events, as described beginning on page PS-24 of the accompanying product supplement.

Threshold Value:

[82.00% to 76.00%] of the Starting Value, rounded to two decimal places. The actual Threshold Value will be determined on the pricing date.

Participation Rate:

100%

Calculation Day:

Approximately the fifth scheduled Market Measure Business Day immediately preceding the maturity date. 

Fees and Charges:

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.

Calculation Agent:

BofA Securities Inc. (“BofAS”), an affiliate of BofA Finance.

Notes with Absolute Return Buffer

TS-2

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

●   

Product supplement COMM LIRN-1 dated May 22, 2024: 

●   

Series A MTN prospectus supplement dated December 30, 2022 and prospectus dated December 30, 2022:

You may wish to consider an investment in the notes if:

The notes may not be an appropriate investment for you if:

Notes with Absolute Return Buffer

TS-3

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Notes with Absolute Return Buffer

This graph reflects the returns on the notes, based on the Participation Rate of 100.00% and a Threshold Value of 79.00% of the Starting Value (the midpoint of the Threshold Value range of [82.00% to 76.00%]). The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the WTI Crude Oil Futures Contract. 

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%

$2.10

-79.00%

50.00

-50.00%

$7.10

-29.00%

75.00

-25.00%

$9.60

-4.00%

   79.00⁽¹⁾

-21.00%

$12.10

21.00%

80.00

-20.00%

$12.00

20.00%

90.00

-10.00%

$11.00

10.00%

95.00

-5.00%

$10.50

5.00%

97.00

-3.00%

$10.30

3.00%

   100.00⁽²⁾

0.00%

$10.00

0.00%

105.00

5.00%

$10.50

5.00%

110.00

10.00%

$11.00

10.00%

120.00

20.00%

$12.00

20.00%

125.00

25.00%

$12.50

25.00%

160.00

60.00%

$16.00

60.00%

180.00

80.00%

$18.00

80.00%

200.00

100.00%

$20.00

100.00%

(1)   

This is the hypothetical Threshold Value.

(2)   

The hypothetical Starting Value of 100.00 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.

Notes with Absolute Return Buffer

TS-4

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Example 1

The Ending Value is 75.00, or 75.00% of the Starting Value:

Starting Value:      100.00

Threshold Value:    79.00

Ending Value:         75.00

 Redemption Amount per unit

Example 2

The Ending Value is 97.00, or 97.00% of the Starting Value:

Starting Value:     100.00

Threshold Value:   79.00

Ending Value:        97.00

Redemption Amount per unit. Since the Ending Value is less than the Starting Value but equal to or greater than the Threshold Value, the Redemption Amount for the notes will be the principal amount plus a positive return equal to the absolute value of the negative return of the Market Measure.

Example 3

The Ending Value is 160.00, or 160.00% of the Starting Value:

Starting Value:  100.00

Ending Value:   160.00

= $16.00 Redemption Amount per unit.

Notes with Absolute Return Buffer

TS-5

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

■   

Depending on the performance of the Market Measure as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal.

■   

Your potential for a positive return based on the depreciation of the Market Measure is limited. The absolute value return feature applies only if the Ending Value is less than the Starting Value but greater than or equal to the Threshold Value. Because the Threshold Value will be [82.00% to 76.00%] of the Starting Value, any positive return due to the depreciation of the Market Measure is limited to [18.00% to 24.00%]. Any decline in the Ending Value from the Starting Value by more than [18.00% to 24.00%] will result in a loss, rather than a positive return, on the notes.

■   

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 the credit risk of BAC, and 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.

■   

Your investment return may be less than a comparable investment directly in the Market Measure or the related commodity. 

■   

We are a finance subsidiary and, as such, have no independent assets, operations or revenues.

■   

BAC’s obligations under its guarantee of the notes will be structurally subordinated to liabilities of its subsidiaries.

■   

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. 

■   

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 a particular point in time by reference to our and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit spreads, and those of 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.

■   

The public offering price you pay for the notes will exceed 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 Market Measure, 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.

■   

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 Market Measure, our and BAC’s creditworthiness and changes in market conditions.

■   

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 the notes at any price in any secondary market.

■   

BAC and its affilates’ hedging and trading activities (including trades related to the WTI Crude Oil Futures Contract), and any hedging and trading activities BAC or its affiliates engage in for our clients’ accounts, may affect the market value and return of the notes and may create conflicts of interest with you.

■   

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. 

Notes with Absolute Return Buffer

TS-6

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

■   

Ownership of the notes will not entitle you to any rights with respect to the WTI Crude Oil Futures Contract or the related commodity. 

■   

An investment linked to commodity futures contracts is not equivalent to an investment linked to the spot prices of physical commodities. 

■   

Suspensions or disruptions of trading in the WTI Crude Oil Futures Contract or the related commodity may adversely affect the value of the notes.

■   

Changes in the exchange methodology related to the WTI Crude Oil Futures Contract may adversely affect the value of the notes prior to maturity. 

■   

The notes will not be regulated by the U.S. Commodity Futures Trading Commission.

■   

Legal and regulatory changes could adversely affect the return on and value of your notes.

■   

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-31 of the accompanying product supplement.

Notes with Absolute Return Buffer

TS-7

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Notes with Absolute Return Buffer

TS-8

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Notes with Absolute Return Buffer

TS-9

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Notes with Absolute Return Buffer

TS-10

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

●   

the investor’s spouse (including a domestic partner), siblings, parents, grandparents, spouse’s parents, children and grandchildren, but excluding accounts held by aunts, uncles, cousins, nieces, nephews or any other family relationship not directly above or below the individual investor;

●   

a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor or members of the investor’s household as described above; and

●   

a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investor’s household as described above; provided that, purchases of the notes by a trust generally cannot be aggregated together with any purchases made by a trustee’s personal account.        

Notes with Absolute Return Buffer

TS-11

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

Notes with Absolute Return Buffer

TS-12

^{Notes With Absolute Return Buffer} 

Linked to the WTI Crude Oil Futures Contract, due November  , 2025 

■   

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 WTI Crude Oil Futures Contract.

■   

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.

■   

No assurance can be given that the Internal Revenue Service (“IRS”) or any court will agree with this characterization and tax treatment.

Notes with Absolute Return Buffer

TS-13