This pricing supplement, which is not complete and may be changed, relates to an effective Registration Statement under the Securities Act of 1933. This pricing supplement and the accompanying product supplement, prospectus supplement and prospectus are not an offer to sell these notes in any country or jurisdiction where such an offer would not be permitted.
Linked to the Least Performing of the Dow Jones Industrial
Average®, the Russell 2000® Index and the EURO STOXX 50®
Index
|
●
|
Approximate 15 month term
if not called prior to maturity.
|
|
●
|
Payments on the Notes will depend on the individual
performance of the Dow Jones Industrial Average®, the Russell 2000®
Index and the EURO STOXX 50® Index (each an “Underlying”).
|
|
●
|
Contingent coupon rate of 6.80% per annum (1.70%
per quarter) payable quarterly if
the closing level of each Underlying on the applicable Observation
Date is greater than or equal to 65% of its Starting Value.
|
|
●
|
Beginning on March 4, 2021, callable quarterly
at our option for an amount equal to the principal amount plus the relevant contingent
coupon, if otherwise payable.
|
|
●
|
Assuming the Notes are not called prior to maturity,
if any Underlying declines by more than 35% from
its Starting Value, at maturity your investment will be subject to a 1:1 downside, with up to 100%
of the principal at risk; otherwise, at maturity investors will receive the principal amount. At maturity the investor will also
receive the final contingent coupon if the closing level of each
Underlying on the final Observation Date is greater than or equal to 65%
of its Starting Value.
|
|
●
|
All payments on the Notes are subject to the credit
risk of BofA Finance LLC (“BofA Finance”) and Bank of America Corporation (“BAC” or the “Guarantor”).
|
|
●
|
The Notes are expected to price on December
1, 2020, expected to issue on December 4, 2020 and
expected to mature on March 4, 2022.
|
|
●
|
The Notes will not be listed on any securities exchange.
|
The initial estimated value of the Notes as
of the pricing date is expected to be between $960.00 and $990.00 per $1,000.00 in principal amount of Notes, which is less than
the public offering price listed below. The actual value of your Notes at any time will reflect many factors and cannot be
predicted with accuracy. See “Risk Factors” beginning on page PS-8 of this pricing supplement and “Structuring
the Notes” on page PS-22 of this pricing supplement for additional information.
Potential purchasers of the Notes should
consider the information in “Risk Factors” beginning on page PS-8 of this pricing supplement, page PS-5 of the accompanying
product supplement, page S-5 of the accompanying prospectus supplement, and page 7 of the accompanying prospectus.
None of the Securities and Exchange Commission
(the “SEC”), any state securities commission, or any other regulatory body has approved or disapproved of these securities
or determined if this Note Prospectus (as defined on page PS-26) is truthful or complete. Any representation to the contrary is
a criminal offense.
|
Public offering price(1)
|
Underwriting discount(1)
|
Proceeds, before expenses, to BofA Finance
|
Per Note
|
$1,000.00
|
$10.00
|
$990.00
|
Total
|
|
|
|
|
(1)
|
Certain dealers who purchase the Notes for sale to certain fee-based advisory accounts may forgo
some or all of their selling concessions, fees or commissions. The public offering price for investors purchasing the Notes in
these fee-based advisory accounts may be as low as $990.00 per $1,000 in principal amount of Notes.
|
The Notes and the related
guarantee:
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Selling Agent
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Terms of the Notes
The Contingent Income Issuer Callable Yield Notes
Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000®
Index and the EURO STOXX 50® Index (the “Notes”) provide a quarterly Contingent Coupon Payment of $17.00
on the applicable Contingent Payment Date if, on any quarterly Observation Date, the Observation Value of each Underlying
is greater than or equal to its Coupon Barrier.
Prior to the maturity date, beginning on March
4, 2021 and on each quarterly Call Date thereafter, we have the right to redeem all, but not less than all, of the Notes at 100%
of the principal amount, together with the relevant Contingent Coupon Payment, if otherwise payable. No further amounts will be
payable following an Optional Early Redemption. If the Notes are not called prior to maturity and the Least Performing Underlying
declines by more than 35% from its Starting Value, there is full exposure to declines in the Least Performing Underlying and you
will lose a significant portion or all of your investment in the Notes. Otherwise, at maturity you will receive the principal amount.
At maturity you will also receive the final Contingent Coupon Payment if the Observation Value of each Underlying on the
final Observation Date is greater than or equal to its Coupon Barrier. The Notes are not traditional debt securities and it is
possible that the Notes will not pay any Contingent Coupon Payments, and you may lose a significant portion or all of your principal
amount at maturity. Any payments on the Notes will be calculated based on $1,000 in principal amount of Notes and will depend on
the performance of the Underlyings, subject to our and BAC’s credit risk.
Issuer:
|
BofA Finance
|
Guarantor:
|
BAC
|
Denominations:
|
The Notes will be issued in minimum denominations of $1,000 and whole multiples of $1,000 in excess thereof.
|
Term:
|
Approximately 15 months, unless previously called.
|
Underlyings:
|
The Dow Jones Industrial Average® (the “INDU”) (Bloomberg symbol: “INDU”), the Russell 2000® Index (the “RTY”) (Bloomberg symbol: “RTY”) and the EURO STOXX 50® Index (the “SX5E”) (Bloomberg symbol: “SX5E”), each a price return index.
|
Pricing Date*:
|
December 1, 2020
|
Issue Date*:
|
December 4, 2020
|
Valuation Date*:
|
March 1, 2022, subject to postponement as described under “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” in the accompanying product supplement.
|
Maturity Date*:
|
March 4, 2022
|
Starting Value:
|
With respect to each Underlying, its closing level on the pricing date.
|
Observation Value:
|
With respect to each Underlying, its closing level on the applicable Observation Date, as determined by the calculation agent.
|
Ending Value:
|
With respect to each Underlying, its closing level on the Valuation Date, as determined by the calculation agent.
|
Coupon Barrier:
|
With respect to each Underlying, 65% of its Starting Value.
|
Threshold Value:
|
With respect to each Underlying, 65% of its Starting Value.
|
Contingent
Coupon
Payment:
|
If, on any quarterly Observation Date, the Observation Value of each Underlying is greater than or equal to its Coupon Barrier, we will pay a Contingent Coupon Payment of $17.00 per $1,000 in principal amount of Notes (equal to a rate of 1.70% per quarter or 6.80% per annum) on the applicable Contingent Payment Date (including the Maturity Date).
|
Optional
Early
Redemption:
|
On any Call Date, we have the right to redeem all (but not less than all) of the Notes at the Early Redemption Amount. No further amounts will be payable following an Optional Early Redemption. We will give notice to the trustee at least five business days but not more than 60 calendar days before the applicable Call Date.
|
Early
Redemption
Amount:
|
For each $1,000 in principal amount of Notes, $1,000. The Early Redemption Amount will also include the applicable Contingent Coupon Payment if the Observation Value of each Underlying on the corresponding Observation Date is greater than or equal to its Coupon Barrier.
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-2
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Redemption Amount:
|
If the Notes have not been called prior
to maturity, the Redemption Amount per $1,000 in principal amount of Notes will be:
a) If the Ending Value of the Least Performing
Underlying is greater than or equal to its Threshold Value:
$1,000; or
b) If the Ending Value of the Least Performing
Underlying is less than its Threshold Value:
In this case, the Redemption Amount
will be less than 65% of the principal amount and could be zero.
The Redemption Amount will also include
the final Contingent Coupon Payment if the Ending Value of the Least Performing Underlying is greater than or equal to its Coupon
Barrier.
|
Observation Dates*:
|
As set forth on page PS-4.
|
Contingent
Payment
Dates*:
|
As set forth on page PS-4.
|
Call Dates*:
|
The quarterly Contingent Payment Dates beginning on March 4, 2021 and ending on December 6, 2021.
|
Calculation Agent:
|
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance.
|
Selling Agent:
|
BofAS
|
CUSIP:
|
09709T3A7
|
Underlying Return:
|
With respect to each Underlying,
|
Least
Performing
Underlying:
|
The Underlying with the lowest Underlying Return.
|
Events of Default and Acceleration:
|
If an Event of Default, as defined in the senior indenture and in the section entitled “Description of Debt Securities—Events of Default and Rights of Acceleration” beginning on page 22 of the accompanying prospectus, with respect to the Notes occurs and is continuing, the amount payable to a holder of the Notes upon any acceleration permitted under the senior indenture will be equal to the amount described under the caption “Redemption Amount” above, calculated as though the date of acceleration were the Maturity Date of the Notes and as though the Valuation Date were the third trading day prior to the date of acceleration. We will also determine whether the final Contingent Coupon Payment is payable based upon the levels of the Underlyings on the deemed Valuation Date; any such final Contingent Coupon Payment will be prorated by the calculation agent to reflect the length of the final contingent payment period. In case of a default in the payment of the Notes, whether at their maturity or upon acceleration, the Notes will not bear a default interest rate.
|
*Subject
to change.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-3
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Observation Dates and Contingent Payment Dates
|
Observation Dates*
|
|
Contingent Payment Dates
|
|
|
March 1, 2021
|
|
March 4, 2021
|
|
|
June 1, 2021
|
|
June 4, 2021
|
|
|
September 1, 2021
|
|
September 7, 2021
|
|
|
December 1, 2021
|
|
December 6, 2021
|
|
|
March 1, 2022 (the “Valuation Date”)
|
|
March 4, 2022 (the “Maturity Date”)
|
|
* The Observation Dates are subject to postponement as set forth
in “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” beginning
on page PS-22 of the accompanying product supplement.
Any payments on the Notes depend on the credit
risk of BofA Finance, as Issuer, and BAC, as Guarantor, and on the performance of the Underlyings. The economic terms of the Notes
are based on BAC’s internal funding rate, which is the rate it would pay to borrow funds through the issuance of market-linked
notes, and the economic terms of certain related hedging arrangements BAC’s affiliates enter into. BAC’s internal funding
rate is typically lower than the rate it would pay when it issues conventional fixed or floating rate debt securities. This difference
in funding rate, as well as the underwriting discount and the hedging related charges described below (see “Risk Factors”
beginning on page PS-8), will reduce the economic terms of the Notes to you and the initial estimated value of the Notes. Due to
these factors, the public offering price you pay to purchase the Notes will be greater than the initial estimated value of the
Notes as of the pricing date.
The initial estimated value range of the Notes
as of the date of this pricing supplement is set forth on the cover page of this pricing supplement. The final pricing supplement
will set forth the initial estimated value of the Notes as of the pricing date. For more information about the initial estimated
value and the structuring of the Notes, see “Risk Factors” beginning on page PS-8 and “Structuring the Notes”
on page PS-22.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-4
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Contingent Coupon Payment and Redemption Amount Determination
On
each Contingent Payment Date, you may receive a
Contingent
Coupon Payment per $1,000 in principal amount of Notes determined as follows:
Assuming
the Notes have not been previously called,
on
the Maturity Date, you will receive a cash payment per $1,000 in principal amount of Notes determined as follows:
All payments described above are subject to Issuer and
Guarantor credit risk.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-5
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Total Contingent Coupon Payment Examples
The table below illustrates the hypothetical
total Contingent Coupon Payments per $1,000 in principal amount of Notes over the term of the Notes, based on the Contingent Coupon
Payment of $17.00, depending on how many Contingent Coupon Payments are payable prior to an Optional Early Redemption or maturity.
Depending on the performance of the Underlyings, you may not receive any Contingent Coupon Payments during the term of the Notes.
|
Number of Contingent Coupon Payments
|
|
Total Contingent Coupon Payments
|
|
|
0
|
|
$0.00
|
|
|
1
|
|
$17.00
|
|
|
2
|
|
$34.00
|
|
|
3
|
|
$51.00
|
|
|
4
|
|
$68.00
|
|
|
5
|
|
$85.00
|
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-6
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Hypothetical Payout Profile and Examples of Payments at
Maturity
Contingent
Income Issuer Callable Yield Notes Table
The following table is for purposes of illustration
only. It assumes the Notes have not been called prior to maturity and is based on hypothetical values and shows hypothetical
returns on the Notes. The table illustrates the calculation of the Redemption Amount and the return on the Notes based on a hypothetical
Starting Value of 100 for the Least Performing Underlying, a hypothetical Coupon Barrier of 70 for the Least Performing Underlying,
a hypothetical Threshold Value of 70 for the Least Performing Underlying, the Contingent Coupon Payment of $17.00 per $1,000 in
principal amount of Notes and a range of hypothetical Ending Values of the Least Performing Underlying. The actual amount you
receive and the resulting return will depend on the actual Starting Values, Coupon Barriers, Threshold Values, Observation Values
and Ending Values of the Underlyings, whether the Notes are called prior to maturity, and whether you hold the Notes to maturity.
The following examples do not take into account any tax consequences from investing in the Notes.
For recent actual levels of the Underlyings,
see “The Underlyings” section below. Each Underlying is a price return index and as such its Ending Value will not
include any income generated by dividends paid on the stocks included in that Underlying, which you would otherwise be entitled
to receive if you invested in those stocks directly. In addition, all payments on the Notes are subject to Issuer and Guarantor
credit risk.
Ending
Value of the Least Performing Underlying
|
Underlying
Return of the Least Performing Underlying
|
Redemption
Amount per Note (including any final Contingent Coupon Payment)
|
Return
on the Notes(1)
|
160.00
|
60.00%
|
$1,017.00(2)
|
1.70%
|
150.00
|
50.00%
|
$1,017.00
|
1.70%
|
140.00
|
40.00%
|
$1,017.00
|
1.70%
|
130.00
|
30.00%
|
$1,017.00
|
1.70%
|
120.00
|
20.00%
|
$1,017.00
|
1.70%
|
110.00
|
10.00%
|
$1,017.00
|
1.70%
|
105.00
|
5.00%
|
$1,017.00
|
1.70%
|
102.00
|
2.00%
|
$1,017.00
|
1.70%
|
100.00(3)
|
0.00%
|
$1,017.00
|
1.70%
|
90.00
|
-10.00%
|
$1,017.00
|
1.70%
|
80.00
|
-20.00%
|
$1,017.00
|
1.70%
|
65.00(4)
|
-35.00%
|
$1,017.00
|
1.70%
|
64.99
|
-35.01%
|
$649.90
|
-35.01%
|
30.00
|
-70.00%
|
$300.00
|
-70.00%
|
20.00
|
-80.00%
|
$200.00
|
-80.00%
|
0.00
|
-100.00%
|
$0.00
|
-100.00%
|
(1)
|
The “Return on the Notes” is calculated based on the Redemption Amount and potential final Contingent Coupon Payment, not including any Contingent Coupon Payments paid prior to maturity.
|
(2)
|
This amount represents the sum of the principal amount and the final Contingent Coupon Payment.
|
(3)
|
The hypothetical Starting Value of 100 used in the table above has been chosen for illustrative purposes only and does not represent a likely Starting Value for any Underlying.
|
(4)
|
This is the hypothetical Coupon Barrier and Threshold Value of the Least Performing Underlying.
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-7
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Risk Factors
Your investment in the Notes entails significant
risks, many of which differ from those of a conventional debt security. Your decision to purchase the Notes should be made only
after carefully considering the risks of an investment in the Notes, including those discussed below, with your advisors in light
of your particular circumstances. The Notes are not an appropriate investment for you if you are not knowledgeable about significant
elements of the Notes or financial matters in general. You should carefully review the more detailed explanation of risks relating
to the Notes in the “Risk Factors” sections beginning on page PS-5 of the accompanying product supplement, page S-5
of the accompanying prospectus supplement and page 7 of the accompanying prospectus, each as identified on page PS-26 below.
Structure-related
Risks
|
●
|
Your investment may result in a loss; there is no guaranteed return of principal. There is no fixed principal repayment
amount on the Notes at maturity. If the Notes are not called prior to maturity and the Ending Value of any Underlying is
less than its Threshold Value, at maturity you will lose 1% of the principal amount for each 1% that the Ending Value of the Least
Performing Underlying is less than its Starting Value. In that case, you will lose a significant portion or all of your principal
amount in the Notes.
|
|
●
|
Your return on the Notes is limited to the return represented by the Contingent Coupon Payments, if any, over the term of
the Notes. Your return on the Notes is limited to the Contingent Coupon Payments paid over the term of the Notes, regardless
of the extent to which the Observation Value or Ending Value of any Underlying exceeds its Coupon Barrier or Starting Value, as
applicable. Similarly, the amount payable at maturity or upon an Optional Early Redemption will never exceed the sum of the principal
amount and the applicable Contingent Coupon Payment, regardless of the extent to which the Observation Value of any Underlying
exceeds its Starting Value. In contrast, a direct investment in the securities included in one or more of the Underlyings would
allow you to receive the benefit of any appreciation in their values. Thus, any return on the Notes will not reflect the return
you would realize if you actually owned those securities and received the dividends paid or distributions made on them.
|
|
●
|
The Contingent Coupon Payment, Early Redemption Amount or Redemption Amount, as applicable, will not reflect the levels
of the Underlyings other than on the Observation Dates. The levels of the Underlyings during the term of the Notes other than
on the Observation Dates will not affect payments on the Notes. Notwithstanding the foregoing, investors should generally be aware
of the performance of the Underlyings while holding the Notes, as the performance of the Underlyings may influence the market value
of the Notes. The calculation agent will determine whether each Contingent Coupon Payment is payable and will calculate the Early
Redemption Amount or the Redemption Amount, as applicable, by comparing only the Starting Value, the Coupon Barrier or the Threshold
Value, as applicable, to the Observation Value or the Ending Value for each Underlying. No other levels of the Underlyings will
be taken into account. As a result, if the Notes are not called prior to maturity, and the Ending Value of the Least Performing
Underlying is less than the Threshold Value, you will receive less than the principal amount at maturity even if the level of each
Underlying was always above its Threshold Value prior to the Valuation Date.
|
|
●
|
The Notes are subject to Optional Early Redemption, which would limit your ability to receive the Contingent Coupon Payments
over the full term of the Notes. On each Call Date, at our option, we may redeem your Notes in whole, but not in part. If the
Notes are redeemed prior to the Maturity Date, you will be entitled to receive the Early Redemption Amount. In this case, you will
lose the opportunity to continue to receive Contingent Coupon Payments after the date of the Optional Early Redemption. If the
Notes are redeemed prior to the Maturity Date, you may be unable to invest in other securities with a similar level of risk that
could provide a return that is similar to the Notes. Even if we do not exercise our option to redeem your Notes, our ability to
do so may adversely affect the market value of your Notes. It is our sole option whether to redeem your Notes prior to maturity
on any such Call Date and we may or may not exercise this option for any reason. Because of this Optional Early Redemption potential,
the term of your Notes could be anywhere between three months and fifteen months.
|
|
●
|
You may not receive any Contingent Coupon Payments. The Notes do not provide for any regular fixed coupon payments.
Investors in the Notes will not necessarily receive any Contingent Coupon Payments on the Notes. If the Observation Value of any
Underlying is less than its Coupon Barrier on an Observation Date, you will not receive the Contingent Coupon Payment applicable
to that Observation Date. If the Observation Value of any Underlying is less than its Coupon Barrier on all the Observation Dates
during the term of the Notes, you will not receive any Contingent Coupon Payments during the term of the Notes, and will not receive
a positive return on the Notes.
|
|
●
|
Because the Notes are linked to the least performing (and not the average performance) of the Underlyings, you may not receive
any return on the Notes and may lose a significant portion or all of your principal amount even if the Observation Value or Ending
Value of one Underlying is always greater than or equal to its Coupon Barrier or Threshold Value, as applicable. Your Notes
are linked to the least performing of the Underlyings, and a change in the level of one Underlying may not correlate with changes
in the level of the other Underlying(s). The Notes are not linked to a basket composed of the Underlyings, where the depreciation
in the level of one Underlying could be offset to some extent by the appreciation in the level of the other Underlying(s). In the
case of the Notes, the individual performance of each Underlying would not be combined, and the depreciation in the level of one
Underlying would not be offset by any appreciation in the level of the other Underlying(s). Even if the Observation Value of an
Underlying is at or above its Coupon Barrier on an Observation Date, you will not receive the Contingent Coupon Payment with respect
to that Observation Date if the Observation Value of another Underlying is below its Coupon Barrier on that day. In addition, even
if the Ending Value of an Underlying is at or above its Threshold Value, you will lose a portion of your principal if the Ending
Value of the Least Performing Underlying is below its Threshold Value.
|
|
●
|
Your return on the Notes may be less than the yield on a conventional debt security of comparable maturity. Any return
that you receive on the Notes may be less than the return you would earn if you purchased a conventional debt security with the
same Maturity Date. As a result,
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-8
|
Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
|
|
your investment in the Notes may not reflect
the full opportunity cost to you when you consider factors, such as inflation, that affect the time value of money. In addition,
if interest rates increase during the term of the Notes, the Contingent Coupon Payment (if any) may be less than the yield on a
conventional debt security of comparable maturity.
|
|
●
|
Any payment on the Notes is subject to the credit risk of BofA Finance and the Guarantor, and actual or perceived changes
in BofA Finance or the Guarantor’s creditworthiness are expected to affect the value of the Notes. The Notes are our
senior unsecured debt securities. Any payment on the Notes will be fully and unconditionally guaranteed by the Guarantor. The Notes
are not guaranteed by any entity other than the Guarantor. As a result, your receipt of the Early Redemption Amount or the Redemption
Amount at maturity, as applicable, will be dependent upon our ability and the ability of the Guarantor to repay our respective
obligations under the Notes on the applicable Contingent Payment Date, Call Date or the Maturity Date, regardless of the Ending
Value of the Least Performing Underlying as compared to its Starting Value.
|
|
|
In addition, our credit ratings and the credit ratings of the Guarantor are assessments by ratings agencies of our respective
abilities to pay our obligations. Consequently, our or the Guarantor’s perceived creditworthiness and actual or anticipated
decreases in our or the Guarantor’s credit ratings or increases in the spread between the yield on our respective securities
and the yield on U.S. Treasury securities (the “credit spread”) prior to the Maturity Date of your Notes may adversely
affect the market value of the Notes. However, because your return on the Notes depends upon factors in addition to our ability
and the ability of the Guarantor to pay our respective obligations, such as the values of the Underlyings, an improvement in our
or the Guarantor’s credit ratings will not reduce the other investment risks related to the Notes.
|
|
●
|
We are a finance subsidiary and, as such, have no independent assets, operations or revenues. We are a finance subsidiary
of BAC, have no operations other than those related to the issuance, administration and repayment of our debt securities that are
guaranteed by the Guarantor, and are dependent upon the Guarantor and/or its other subsidiaries to meet our obligations under the
Notes in the ordinary course. Therefore, our ability to make payments on the Notes may be limited.
|
Valuation-
and Market-related Risks
|
●
|
The public offering price you pay for the Notes will exceed their initial estimated value. The range of initial estimated
values of the Notes that is provided on the cover page of this preliminary pricing supplement, and the initial estimated value
as of the pricing date that will be provided in the final pricing supplement, are each estimates 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 the Guarantor, the Guarantor’s internal funding rate, mid-market terms
on hedging transactions, expectations on interest rates, dividends 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.
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 their initial estimated value. This is due to, among other things, changes in the levels of the Underlyings, changes in the
Guarantor’s internal funding rate, and the inclusion in the public offering price of the underwriting discount and the hedging
related charges, all as further described in “Structuring the Notes” below. 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, 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 Underlyings,
our and BAC’s creditworthiness and changes in market conditions.
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We cannot assure you that a trading market for your Notes will ever develop or be maintained. We will not list the Notes
on any securities exchange. We cannot predict how the Notes will trade in any secondary market or whether that market will be liquid
or illiquid.
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Conflict-related
Risks
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Trading and hedging activities by us, the Guarantor and any of our other affiliates, including BofAS, may create conflicts
of interest with you and may affect your return on the Notes and their market value. We, the Guarantor or one or more of our
other affiliates, including BofAS, may buy or sell the securities held by or included in the Underlyings, or futures or options
contracts on the Underlyings or those securities, or other listed or over-the-counter derivative instruments linked to the Underlyings
or those securities. While we, the Guarantor or one or more of our other affiliates, including BofAS, may from time to time own
securities represented by the Underlyings, except to the extent that BAC’s common stock may be included in the Underlyings,
we, the Guarantor and our other affiliates, including BofAS, do not control any company included in the Underlyings, and have not
verified any disclosure made by any other company. We, the Guarantor or one or more of our other affiliates, including BofAS, may
execute such purchases or sales for our own or their own accounts, for business reasons, or in connection with hedging our obligations
under the Notes. These transactions may present a conflict of interest between your interest in the Notes and the interests we,
the Guarantor and our other affiliates, including BofAS, may have in our or their proprietary accounts, in facilitating transactions,
including block trades, for our or their other customers, and in accounts under our or their management. These transactions may
adversely affect the value of the Underlyings in a manner that could be adverse to your investment in the Notes. On or before the
pricing date, any purchases or sales by us, the Guarantor or our other affiliates, including BofAS or others on its behalf (including
for the purpose of hedging some or all of our anticipated exposure in connection with the Notes), may affect the value of the Underlyings.
Consequently, the value of the Underlyings may change subsequent to the pricing date, which may adversely affect the market value
of the Notes.
We, the Guarantor or one or more of our other affiliates, including BofAS, also expect to engage in hedging activities that could
affect the value of
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-9
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
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the Underlyings on the pricing date. In addition,
these hedging activities, including the unwinding of a hedge, may decrease the market value of your Notes prior to maturity, and
may affect the amounts to be paid on the Notes. We, the Guarantor or one or more of our other affiliates, including BofAS, may
purchase or otherwise acquire a long or short position in the Notes and may hold or resell the Notes. For example, BofAS may enter
into these transactions in connection with any market making activities in which it engages. We cannot assure you that these activities
will not adversely affect the value of the Underlyings, the market value of your Notes prior to maturity or the amounts payable
on the Notes.
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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. One of our affiliates will be the calculation agent for the Notes and,
as such, will make a variety of determinations relating to the Notes, including the amounts that will be paid on the Notes. Under
some circumstances, these duties could result in a conflict of interest between its status as our affiliate and its responsibilities
as calculation agent.
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Underlying-related
Risks
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The Notes are subject to risks associated with small-size capitalization companies. The stocks composing the RTY are
issued by companies with small-sized market capitalization. The stock prices of small-size companies may be more volatile than
stock prices of large capitalization companies. Small-size capitalization companies may be less able to withstand adverse economic,
market, trade and competitive conditions relative to larger companies. Small-size capitalization companies may also be more susceptible
to adverse developments related to their products or services.
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The Notes are subject to risks associated with foreign securities markets. The SX5E includes certain foreign equity
securities. You should be aware that investments in securities linked to the value of foreign equity securities involve particular
risks. The foreign securities markets comprising the SX5E may have less liquidity and may be more volatile than U.S. or other securities
markets and market developments may affect foreign markets differently from U.S. or other securities markets. Direct or indirect
government intervention to stabilize these foreign securities markets, as well as cross-shareholdings in foreign companies, may
affect trading prices and volumes in these markets. Also, there is generally less publicly available information about foreign
companies than about those U.S. companies that are subject to the reporting requirements of the SEC, and foreign companies are
subject to accounting, auditing and financial reporting standards and requirements that differ from those applicable to U.S. reporting
companies. Prices of securities in foreign countries are subject to political, economic, financial and social factors that apply
in those geographical regions. These factors, which could negatively affect those securities markets, include the possibility of
recent or future changes in a foreign government’s economic and fiscal policies, the possible imposition of, or changes in,
currency exchange laws or other laws or restrictions applicable to foreign companies or investments in foreign equity securities
and the possibility of fluctuations in the rate of exchange between currencies, the possibility of outbreaks of hostility and political
instability and the possibility of natural disaster or adverse public health developments in the region. Moreover, foreign economies
may differ favorably or unfavorably from the U.S. economy in important respects such as growth of gross national product, rate
of inflation, capital reinvestment, resources and self-sufficiency.
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The publisher of an Underlying may adjust that Underlying in a way that affects its levels, and the publisher has no obligation
to consider your interests. The publisher of an Underlying can add, delete, or substitute the components included in that Underlying
or make other methodological changes that could change its level. Any of these actions could adversely affect the value of your
Notes.
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Tax-related
Risks
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The U.S. federal income tax consequences of an investment in the Notes are uncertain, and may be adverse to a holder of
the Notes. No statutory, judicial, or administrative authority directly addresses the characterization of the Notes or securities
similar to the Notes for U.S. federal income tax purposes. As a result, significant aspects of the U.S. federal income tax consequences
of an investment in the Notes are not certain. Under the terms of the Notes, you will have agreed with us to treat the Notes as
contingent income-bearing single financial contracts, as described below under “U.S. Federal Income Tax Summary—General.”
If the Internal Revenue Service (the “IRS”) were successful in asserting an alternative characterization for the Notes,
the timing and character of income, gain or loss with respect to the Notes may differ. No ruling will be requested from the IRS
with respect to the Notes and no assurance can be given that the IRS will agree with the statements made in the section entitled
“U.S. Federal Income Tax Summary.” You are urged to consult with your own tax advisor regarding all aspects of the
U.S. federal income tax consequences of investing in the Notes.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-10
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
The Underlyings
All disclosures contained in this pricing supplement
regarding the Underlyings, including, without limitation, their make-up, method of calculation, and changes in their components,
have been derived from publicly available sources. The information reflects the policies of, and is subject to change by, each
of S&P Dow Jones Indices LLC (“SPDJI”), the sponsor of the INDU, FTSE Russell, the sponsor of the RTY and STOXX
Limited (“STOXX”), the sponsor of the SX5E. We refer to SPDJI, FTSE Russell and STOXX as the “Underlying Sponsors.”
The Underlying Sponsors, which license the copyright and all other rights to the Underlyings, have no obligation to continue to
publish, and may discontinue publication of, the Underlyings. The consequences of any Underlying Sponsor discontinuing publication
of the applicable Underlying are discussed in “Description of the Notes — Discontinuance of an Index” in the
accompanying product supplement. None of us, the Guarantor, the calculation agent, or BofAS accepts any responsibility for the
calculation, maintenance or publication of any Underlying or any successor index. None of us, the Guarantor, BofAS or any of our
other affiliates makes any representation to you as to the future performance of the Underlyings. You should make your own investigation
into the Underlyings.
The Dow
Jones Industrial Average®
Unless otherwise stated, all information on the
INDU provided in this pricing supplement is derived from Dow Jones Indexes, the marketing name and a licensed trademark of CME
Group Index Services, LLC. The INDU is a price-weighted index, which means an underlying stock’s weight in the INDU is based
on its price per share rather than the total market capitalization of the issuer. The INDU is designed to provide an indication
of the composite performance of 30 common stocks of corporations representing a broad cross-section of U.S. industry. The corporations
represented in the INDU tend to be market leaders in their respective industries and their stocks are typically widely held by
individuals and institutional investors.
The INDU is maintained by an Averages Committee
comprised of the Managing Editor of The Wall Street Journal (“WSJ”), the head of Dow Jones Indexes research and the
head of CME Group Inc. research. The Averages Committee was created in March 2010, when Dow Jones Indexes became part of CME Group
Index Services, LLC, a joint venture company owned 90% by CME Group Inc. and 10% by Dow Jones & Company. Generally, composition
changes occur only after mergers, corporate acquisitions or other dramatic shifts in a component's core business. When such an
event necessitates that one component be replaced, the entire INDU is reviewed. As a result, when changes are made they typically
involve more than one component. While there are no rules for component selection, a stock typically is added only if it has an
excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the
sector(s) covered by the average.
Changes in the composition of the INDU are made
entirely by the Averages Committee without consultation with the corporations represented in the INDU, any stock exchange, any
official agency or us. Unlike most other indices, which are reconstituted according to a fixed review schedule, constituents of
the INDU are reviewed on an as-needed basis. Changes to the common stocks included in the INDU tend to be made infrequently, and
the underlying stocks of the INDU may be changed at any time for any reason. The companies currently represented in the INDU are
incorporated in the United States and its territories and their stocks are listed on the New York Stock Exchange and NASDAQ.
The INDU initially consisted of 12 common stocks
and was first published in the WSJ in 1896. The INDU was increased to include 20 common stocks in 1916 and to include 30 common
stocks in 1928. The number of common stocks in the INDU has remained at 30 since 1928, and, in an effort to maintain continuity,
the constituent corporations represented in the INDU have been changed on a relatively infrequent basis. The INDU includes companies
from nine main groups: Basic Materials; Consumer Goods; Consumer Services; Financials; Healthcare; Industrials; Oil & Gas;
Technology; and Telecommunications.
Computation of the INDU
The level of the INDU is the sum of the primary
exchange prices of each of the 30 component stocks included in the INDU, divided by a divisor that is designed to provide a meaningful
continuity in the level of the INDU. Because the INDU is price-weighted, stock splits or changes in the component stocks could
result in distortions in the INDU level. In order to prevent these distortions related to extrinsic factors, the divisor is periodically
changed in accordance with a mathematical formula that reflects adjusted proportions within the INDU. The current divisor of the
INDU is published daily in the WSJ and other publications. In addition, other statistics based on the INDU may be found in a variety
of publicly available sources.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-11
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Historical Performance of the INDU
The following graph sets forth the daily historical
performance of the INDU in the period from January 1, 2008 through November 25, 2020. We obtained this historical data from Bloomberg
L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. The horizontal
orange line in the graph represents the INDU’s hypothetical Coupon Barrier and Threshold Value of 19,417.11 (rounded to two
decimal places), which is 65% of the INDU’s hypothetical Starting Value of 29,872.47, which was its closing level on November
25, 2020, The actual Starting Value, Coupon Barrier and Threshold Value will be determined on the pricing date.
This historical data on the INDU is not necessarily
indicative of the future performance of the INDU or what the value of the Notes may be. Any historical upward or downward trend
in the level of the INDU during any period set forth above is not an indication that the level of the INDU is more or less likely
to increase or decrease at any time over the term of the Notes.
Before investing in the Notes, you should consult
publicly available sources for the levels of the INDU.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-12
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
License Agreement
S&P® is a registered trademark
of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark
of Dow Jones Trademark Holdings LLC (“Dow Jones”). These trademarks have been licensed for use by SPDJI. “Standard
& Poor’s®,” “S&P 500®” and “S&P®”
are trademarks of S&P. These trademarks have been sublicensed for certain purposes by our affiliate, Merrill Lynch, Pierce,
Fenner & Smith Incorporated. The INDU is a product of SPDJI and/or its affiliates and has been licensed for use by Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
The Notes are not sponsored, endorsed, sold or
promoted by SPDJI, Dow Jones, S&P or any of their respective affiliates (collectively, “S&P Dow Jones Indices”).
S&P Dow Jones Indices make no representation or warranty, express or implied, to the holders of the Notes or any member of
the public regarding the advisability of investing in securities generally or in the Notes particularly or the ability of the INDU
to track general market performance. S&P Dow Jones Indices’ only relationship to Merrill Lynch, Pierce, Fenner &
Smith Incorporated with respect to the INDU is the licensing of the INDU and certain trademarks, service marks and/or trade names
of S&P Dow Jones Indices and/or its third party licensors. The INDU is determined, composed and calculated by S&P Dow Jones
Indices without regard to us, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or the Notes. S&P Dow Jones Indices have
no obligation to take our needs, BAC’s needs or the needs of Merrill Lynch, Pierce, Fenner & Smith Incorporated or holders
of the Notes into consideration in determining, composing or calculating the INDU. S&P Dow Jones Indices are not responsible
for and have not participated in the determination of the prices and amount of the Notes or the timing of the issuance or sale
of the Notes or in the determination or calculation of the equation by which the Notes are to be converted into cash. S&P Dow
Jones Indices have no obligation or liability in connection with the administration, marketing or trading of the Notes. There is
no assurance that investment products based on the INDU will accurately track index performance or provide positive investment
returns. SPDJI and its subsidiaries are not investment advisors. Inclusion of a security or futures contract within an index is
not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security or futures contract, nor is it considered
to be investment advice. Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor
financial products unrelated to the Notes currently being issued by us, but which may be similar to and competitive with the Notes.
In addition, CME Group Inc. and its affiliates may trade financial products which are linked to the performance of the INDU. It
is possible that this trading activity will affect the value of the Notes.
S&P DOW JONES INDICES DO NOT GUARANTEE THE
ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDU OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING
BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATIONS (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES
INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES
MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE OR AS TO RESULTS TO BE OBTAINED BY US, BAC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, HOLDERS OF THE NOTES,
OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDU OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY
BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-13
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
The Russell
2000® Index
The RTY was developed by Russell Investments
(“Russell”) before FTSE International Limited and Russell combined in 2015 to create FTSE Russell, which is wholly
owned by London Stock Exchange Group. Additional information on the RTY is available at the following website: http://www.ftserussell.com.
No information on that website is deemed to be included or incorporated by reference in this pricing supplement.
Russell began dissemination of the RTY (Bloomberg
L.P. index symbol “RTY”) on January 1, 1984. FTSE Russell calculates and publishes the RTY. The RTY was set to 135
as of the close of business on December 31, 1986. The RTY is designed to track the performance of the small capitalization segment
of the U.S. equity market. As a subset of the Russell 3000® Index, the
RTY consists of the smallest 2,000 companies included in the Russell 3000®
Index. The Russell 3000® Index measures the performance of the largest
3,000 U.S. companies, representing approximately 98% of the investable U.S. equity market. The RTY is determined, comprised, and
calculated by FTSE Russell without regard to the Notes.
Selection of Stocks Comprising the RTY
All companies eligible for inclusion in the RTY
must be classified as a U.S. company under FTSE Russell’s country-assignment methodology. If a company is incorporated, has
a stated headquarters location, and trades in the same country (American Depositary Receipts and American Depositary Shares are
not eligible), then the company is assigned to its country of incorporation. If any of the three factors are not the same, FTSE
Russell defines three Home Country Indicators (“HCIs”): country of incorporation, country of headquarters, and country
of the most liquid exchange (as defined by a two-year average daily dollar trading volume) (“ADDTV”) from all exchanges
within a country. Using the HCIs, FTSE Russell compares the primary location of the company’s assets with the three HCIs.
If the primary location of its assets matches any of the HCIs, then the company is assigned to the primary location of its assets.
If there is insufficient information to determine the country in which the company’s assets are primarily located, FTSE Russell
will use the country from which the company’s revenues are primarily derived for the comparison with the three HCIs in a
similar manner. FTSE Russell uses the average of two years of assets or revenues data to reduce potential turnover. If conclusive
country details cannot be derived from assets or revenues data, FTSE Russell will assign the company to the country of its headquarters,
which is defined as the address of the company’s principal executive offices, unless that country is a Benefit Driven Incorporation
“BDI” country, in which case the company will be assigned to the country of its most liquid stock exchange. BDI countries
include: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Channel
Islands, Cook Islands, Curacao, Faroe Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Marshall Islands, Panama, Saba,
Sint Eustatius, Sint Maarten, and Turks and Caicos Islands. For any companies incorporated or headquartered in a U.S. territory,
including Puerto Rico, Guam, and U.S. Virgin Islands, a U.S. HCI is assigned.
All securities eligible for inclusion in the
RTY must trade on a major U.S. exchange. Stocks must have a closing price at or above $1.00 on their primary exchange on the last
trading day in May to be eligible for inclusion during annual reconstitution. However, in order to reduce unnecessary turnover,
if an existing member’s closing price is less than $1.00 on the last day of May, it will be considered eligible if the average
of the daily closing prices (from its primary exchange) during the month of May is equal to or greater than $1.00. Initial public
offerings are added each quarter and must have a closing price at or above $1.00 on the last day of their eligibility period in
order to qualify for index inclusion. If an existing stock does not trade on the “rank day” (typically the last trading
day in May but a confirmed timetable is announced each spring) but does have a closing price at or above $1.00 on another eligible
U.S. exchange, that stock will be eligible for inclusion.
An important criterion used to determine the
list of securities eligible for the RTY is total market capitalization, which is defined as the market price as of the last trading
day in May for those securities being considered at annual reconstitution times the total number of shares outstanding. Where applicable,
common stock, non-restricted exchangeable shares and partnership units/membership interests are used to determine market capitalization.
Any other form of shares such as preferred stock, convertible preferred stock, redeemable shares, participating preferred stock,
warrants and rights, installment receipts or trust receipts, are excluded from the calculation. If multiple share classes of common
stock exist, they are combined. In cases where the common stock share classes act independently of each other (e.g., tracking stocks),
each class is considered for inclusion separately. If multiple share classes exist, the pricing vehicle will be designated as the
share class with the highest two-year trading volume as of the rank day in May.
Companies with a total market capitalization
of less than $30 million are not eligible for the RTY. Similarly, companies with only 5% or less of their shares available in the
marketplace are not eligible for the RTY. Royalty trusts, limited liability companies, closed-end investment companies (companies
that are required to report Acquired Fund Fees and Expenses, as defined by the SEC, including business development companies),
blank check companies, special purpose acquisition companies, and limited partnerships are also ineligible for inclusion. Bulletin
board, pink sheets, and over-the-counter (“OTC”) traded securities are not eligible for inclusion. Exchange traded
funds and mutual funds are also excluded.
Annual reconstitution is a process by which the
RTY is completely rebuilt. Based on closing levels of the company’s common stock on its primary exchange on the rank day
of May of each year, FTSE Russell reconstitutes the composition of the RTY using the then existing market capitalizations of eligible
companies. Reconstitution of the RTY occurs on the last Friday in June or, when the last Friday in June is the 29th or 30th, reconstitution
occurs on the prior Friday. In addition, FTSE Russell adds initial public offerings to the RTY on a quarterly basis based on total
market capitalization ranking within the market-adjusted capitalization breaks established during the most recent reconstitution.
After membership is determined, a security’s shares are adjusted to include only those shares available to the public. This
is often referred to as “free float.” The purpose of the adjustment is to exclude from market calculations the capitalization
that is not available for purchase and is not part of the investable opportunity set.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-14
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Historical Performance of the RTY
The following graph sets forth the daily historical
performance of the RTY in the period from January 1, 2008 through November 25, 2020. We obtained this historical data from Bloomberg
L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. The horizontal
orange line in the graph represents the RTY’s hypothetical Coupon Barrier and Threshold Value of 1,199.266 (rounded to three
decimal places), which is 65% of the RTY’s hypothetical Starting Value of 1,845.024, which was its closing level on November
25, 2020. The actual Starting Value, Coupon Barrier and Threshold Value will be determined on the pricing date.
This historical data on the RTY is not necessarily
indicative of the future performance of the RTY or what the value of the Notes may be. Any historical upward or downward trend
in the level of the RTY during any period set forth above is not an indication that the level of the RTY is more or less likely
to increase or decrease at any time over the term of the Notes.
Before investing in the Notes, you should consult
publicly available sources for the levels of the RTY.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-15
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
License Agreement
“Russell 2000®”
and “Russell 3000®” are trademarks of FTSE Russell and have
been licensed for use by our affiliate, Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Notes are not sponsored, endorsed,
sold, or promoted by FTSE Russell, and FTSE Russell makes no representation regarding the advisability of investing in the Notes.
FTSE Russell and Merrill Lynch, Pierce, Fenner
& Smith Incorporated have entered into a non-exclusive license agreement providing for the license to Merrill Lynch, Pierce,
Fenner & Smith Incorporated and its affiliates, including us, in exchange for a fee, of the right to use indices owned and
published by FTSE Russell in connection with some securities, including the Notes. The license agreement provides that the following
language must be stated in this pricing supplement:
The Notes are not sponsored, endorsed, sold,
or promoted by FTSE Russell. FTSE Russell makes no representation or warranty, express or implied, to the holders of the Notes
or any member of the public regarding the advisability of investing in securities generally or in the Notes particularly or the
ability of the RTY to track general stock market performance or a segment of the same. FTSE Russell’s publication of the
RTY in no way suggests or implies an opinion by FTSE Russell as to the advisability of investment in any or all of the securities
upon which the RTY is based. FTSE Russell’s only relationship to Merrill Lynch, Pierce, Fenner & Smith Incorporated and
to us is the licensing of certain trademarks and trade names of FTSE Russell and of the RTY, which is determined, composed, and
calculated by FTSE Russell without regard to Merrill Lynch, Pierce, Fenner & Smith Incorporated, us, or the Notes. FTSE Russell
is not responsible for and has not reviewed the Notes nor any associated literature or publications and FTSE Russell makes no representation
or warranty express or implied as to their accuracy or completeness, or otherwise. FTSE Russell reserves the right, at any time
and without notice, to alter, amend, terminate, or in any way change the RTY. FTSE Russell has no obligation or liability in connection
with the administration, marketing, or trading of the Notes.
FTSE RUSSELL DOES NOT GUARANTEE THE ACCURACY
AND/OR THE COMPLETENESS OF THE RTY OR ANY DATA INCLUDED THEREIN AND FTSE RUSSELL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS,
OR INTERRUPTIONS THEREIN. FTSE RUSSELL MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, US, HOLDERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE RTY OR ANY DATA INCLUDED
THEREIN. FTSE RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE RTY OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN
NO EVENT SHALL FTSE RUSSELL HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-16
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
The EURO
STOXX 50® Index
The SX5E was created by STOXX, which is owned
by Deutsche Börse AG. Publication of the SX5E began in February 1998, based on an initial index level of 1,000 at December
31, 1991.
Index Composition and Maintenance
The SX5E is composed of 50 stocks from 11 Eurozone
countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain) of the
STOXX Europe 600 Supersector indices. The STOXX 600 Supersector indices contain the 600 largest stocks traded on the major exchanges
of 18 European countries and are organized into the following 19 Supersectors: automobiles & parts; banks; basic resources;
chemicals; construction & materials; financial services; food & beverage; health care; industrial goods & services;
insurance; media; oil & gas; personal & household goods; real estate; retail; technology; telecommunications; travel &
leisure and utilities.
For each of the 19 EURO STOXX regional supersector
indices, the stocks are ranked in terms of free-float market capitalization. The largest stocks are added to the selection list
until the coverage is close to, but still less than, 60% of the free-float market capitalization of the corresponding supersector
index. If the next highest-ranked stock brings the coverage closer to 60% in absolute terms, then it is also added to the selection
list. All current stocks in the SX5E are then added to the selection list. All of the stocks on the selection list are then ranked
in terms of free-float market capitalization to produce the final index selection list. The largest 40 stocks on the selection
list are selected; the remaining 10 stocks are selected from the largest remaining current stocks ranked between 41 and 60; if
the number of stocks selected is still below 50, then the largest remaining stocks are selected until there are 50 stocks. In exceptional
cases, STOXX’s management board can add stocks to and remove them from the selection list.
The index components are subject to a capped
maximum index weight of 10%, which is applied on a quarterly basis.
The composition of the SX5E is reviewed annually,
based on the closing stock data on the last trading day in August. Changes in the composition of the SX5E are made to ensure that
the SX5E includes the 50 market sector leaders from within the EURO STOXX® Index.
The free float factors for each component stock
used to calculate the SX5E, as described below, are reviewed, calculated, and implemented on a quarterly basis and are fixed until
the next quarterly review.
The SX5E is subject to a “fast exit rule.”
The index components are monitored for any changes based on the monthly selection list ranking. A stock is deleted from the SX5E
if: (a) it ranks 75 or below on the monthly selection list and (b) it has been ranked 75 or below for a consecutive period of two
months in the monthly selection list. The highest-ranked stock that is not an index component will replace it. Changes will be
implemented on the close of the fifth trading day of the month, and are effective the next trading day.
The SX5E is also subject to a “fast entry
rule.” All stocks on the latest selection lists and initial public offering (IPO) stocks are reviewed for a fast-track addition
on a quarterly basis. A stock is added, if (a) it qualifies for the latest STOXX blue-chip selection list generated end of February,
May, August or November and (b) it ranks within the “lower buffer” on this selection list.
The SX5E is also reviewed on an ongoing monthly
basis. Corporate actions (including initial public offerings, mergers and takeovers, spin-offs, delistings, and bankruptcy) that
affect the index composition are announced immediately, implemented two trading days later and become effective on the next trading
day after implementation.
Index Calculation
The SX5E is calculated with the “Laspeyres
formula,” which measures the aggregate price changes in the component stocks against a fixed base quantity weight. The formula
for calculating the index value can be expressed as follows:
EURO STOXX 50® Index = Free
float market capitalization of the EURO STOXX 50® Index
Divisor
The “free float market capitalization of
the EURO STOXX 50® Index” is equal to the sum of the product of the price, the number of shares and the free
float factor and the weighting cap factor for each component stock as of the time the SX5E is being calculated.
The SX5E is also subject to a divisor, which
is adjusted to maintain the continuity of the index values across changes due to corporate actions, such as the deletion and addition
of stocks, the substitution of stocks, stock dividends, and stock splits.
Neither we nor any of our affiliates, including
BofAS, accepts any responsibility for the calculation, maintenance, or publication of, or for any error, omission, or disruption
in, the SX5E or any successor to the SX5E. STOXX does not guarantee the accuracy or the completeness of the SX5E or any data included
in the SX5E. STOXX assumes no liability for any errors, omissions, or disruption in the calculation and dissemination of the SX5E.
STOXX disclaims all responsibility for any errors or omissions in the calculation and dissemination of the SX5E or the manner in
which the SX5E is applied in determining the amount payable on the Notes at maturity.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-17
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Historical Performance of the SX5E
The following graph sets forth the daily historical
performance of the SX5E in the period from January 1, 2008 through November 25, 2020. We obtained this historical data from Bloomberg
L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. The horizontal
orange line in the graph represents the SX5E’s hypothetical Coupon Barrier and Threshold Value of 2,282.74 (rounded to two
decimal places), which is 65% of the SX5E’s hypothetical Starting Value of 3,511.90, which was its closing level on November
25, 2020. The actual Starting Value, Coupon Barrier and Threshold Value will be determined on the pricing date.
This historical data on the SX5E is not necessarily
indicative of the future performance of the SX5E or what the value of the Notes may be. Any historical upward or downward trend
in the level of the SX5E during any period set forth above is not an indication that the level of the SX5E is more or less likely
to increase or decrease at any time over the term of the Notes.
Before investing in the Notes, you should consult
publicly available sources for the levels of the SX5E.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-18
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
License Agreement
One of our affiliates has
entered into a non-exclusive license agreement with STOXX providing for the license to it and certain of its affiliated companies,
including us, of the right to use indices owned and published by STOXX (including the SX5E) in connection with certain securities,
including the Notes.
The license agreement requires
that the following language be stated in this pricing supplement:
“STOXX Limited, Deutsche
Börse Group and their licensors, research partners or data providers have no relationship to us other than the licensing of
the SX5E and the related trademarks for use in connection with the Notes.
STOXX, Deutsche Börse
Group and their licensors, research partners or data providers do not:
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sponsor, endorse, sell or promote the Notes.
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recommend that any person invest in the Notes or any other securities.
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have any responsibility or liability for or make any decisions about the timing, amount or pricing
of the Notes.
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have any responsibility or liability for the administration, management or marketing of the Notes.
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consider the needs of the Notes or the owners of the Notes in determining, composing or calculating
the SX5E or have any obligation to do so.
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STOXX, Deutsche Börse
Group and their licensors, research partners or data providers give no warranty, and exclude any liability (whether in negligence
or otherwise), in connection with the Notes or their performance.
STOXX does not assume any
contractual relationship with the purchasers of the Notes or any other third parties.
Specifically,
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STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not
give any warranty, express or implied, and exclude any liability about:
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The results to be obtained by the Notes, the owner of the Notes or any other person in connection
with the use of the SX5E and the data included in the SX5E;
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The accuracy, timeliness, and completeness of the SX5E and its data;
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The merchantability and the fitness for a particular purpose or use of the SX5E and its data;
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The performance of the Notes generally.
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STOXX, Deutsche Börse Group and their licensors, research partners or data providers give
no warranty and exclude any liability, for any errors, omissions or interruptions in the SX5E or its data;
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Under no circumstances will STOXX, Deutsche Börse Group or their licensors, research partners
or data providers be liable (whether in negligence or otherwise) for any lost profits or indirect, punitive, special or consequential
damages or losses, arising as a result of such errors, omissions or interruptions in the SX5E or its data or generally in relation
to the Notes, even in circumstances where STOXX, Deutsche Börse Group or their licensors, research partners or data providers
are aware that such loss or damage may occur.
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The licensing agreement
discussed above is solely for our benefit and that of STOXX, and not for the benefit of the owners of the Notes or any other third
parties.”
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-19
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Supplement to the Plan of Distribution; Role of BofAS
and Conflicts of Interest
BofAS, a broker-dealer affiliate of ours, is
a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling agent in the
distribution of the Notes. Accordingly, the offering of the Notes will conform to the requirements of FINRA Rule 5121. BofAS may
not make sales in this offering to any of its discretionary accounts without the prior written approval of the account holder.
We expect to deliver the Notes against payment
therefor in New York, New York on a date that is greater than two business days following the pricing date. Under Rule 15c6-1 of
the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in two business days, unless
the parties to any such trade expressly agree otherwise. Accordingly, if the initial settlement of the Notes occurs more than two
business days from the pricing date, purchasers who wish to trade the Notes more than two business days prior to the original issue
date will be required to specify alternative settlement arrangements to prevent a failed settlement.
Under our distribution agreement with BofAS,
BofAS will purchase the Notes from us as principal at the public offering price indicated on the cover of this pricing supplement,
less the indicated underwriting discount. BofAS will sell the Notes to other broker-dealers that will participate in the offering
and that are not affiliated with us, at an agreed discount to the principal amount. Each of those broker-dealers may sell the Notes
to one or more additional broker-dealers. BofAS has informed us that these discounts may vary from dealer to dealer and that not
all dealers will purchase or repurchase the Notes at the same discount. Certain dealers who purchase the Notes for sale to certain
fee-based advisory accounts may forgo some or all of their selling concessions, fees or commissions. The public offering price
for investors purchasing the Notes in these fee-based advisory accounts may be as low as $990.00 per $1,000 in principal amount
of Notes.
BofAS and any of our other broker-dealer affiliates
may use this pricing supplement and the accompanying product supplement, prospectus supplement and prospectus for offers and sales
in secondary market transactions and market-making transactions in the Notes. However, they are not obligated to engage in such
secondary market transactions and/or market-making transactions. The selling agent may act as principal or agent in these transactions,
and any such sales will be made at prices related to prevailing market conditions at the time of the sale.
At BofAS’s discretion, for a short, undetermined
initial period after the issuance of the Notes, BofAS may offer to buy the Notes in the secondary market at a price that may exceed
the initial estimated value of the Notes. Any price offered by BofAS for the Notes will be based on then-prevailing market conditions
and other considerations, including the performance of the Underlyings and the remaining term of the Notes. However, none of us,
the Guarantor, BofAS or any of our other affiliates is obligated to purchase your Notes at any price or at any time, and we cannot
assure you that any party will purchase your Notes at a price that equals or exceeds the initial estimated value of the Notes.
Any price that BofAS may pay to repurchase the
Notes will depend upon then prevailing market conditions, the creditworthiness of us and the Guarantor, and transaction costs.
At certain times, this price may be higher than or lower than the initial estimated value of the Notes.
European Economic Area and United Kingdom
None of this pricing supplement, the accompanying
product supplement, the accompanying prospectus or the accompanying prospectus supplement is a prospectus for the purposes of the
Prospectus Regulation (as defined below). This pricing supplement, the accompanying product supplement, the accompanying prospectus
and the accompanying prospectus supplement have been prepared on the basis that any offer of Notes in any Member State of the European
Economic Area (the “EEA”) or in the United Kingdom (each, a “Relevant State”) will only be made to a legal
entity which is a qualified investor under the Prospectus Regulation (“Qualified Investors”). Accordingly any person
making or intending to make an offer in that Relevant State of Notes which are the subject of the offering contemplated in this
pricing supplement, the accompanying product supplement, the accompanying prospectus and the accompanying prospectus supplement
may only do so with respect to Qualified Investors. Neither BofA Finance nor BAC has authorized, nor does it authorize, the making
of any offer of Notes other than to Qualified Investors. The expression “Prospectus Regulation” means Regulation (EU)
2017/1129.
PROHIBITION OF SALES TO EEA AND UNITED KINGDOM
RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered,
sold or otherwise made available to any retail investor in the EEA or in the United Kingdom. For these purposes: (a) a retail investor
means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as
amended (“MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97 (the Insurance Distribution Directive)
where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not
a qualified investor as defined in the Prospectus Regulation; and (b) the expression “offer” includes the communication
in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an
investor to decide to purchase or subscribe for the Notes. Consequently no key information document required by Regulation (EU)
No 1286/2014, as amended (the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available
to retail investors in the EEA or in the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise
making them available to any retail investor in the EEA or in the United Kingdom may be unlawful under the PRIIPs Regulation.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-20
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
United Kingdom
The communication of this pricing supplement,
the accompanying product supplement, the accompanying prospectus supplement, the accompanying prospectus and any other document
or materials relating to the issue of the Notes offered hereby is not being made, and such documents and/or materials have not
been approved, by an authorized person for the purposes of section 21 of the United Kingdom’s Financial Services and Markets
Act 2000, as amended (the “FSMA”). Accordingly, such documents and/or materials are not being distributed to, and must
not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial
promotion is only being made to those persons in the United Kingdom who have professional experience in matters relating to investments
and who fall within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”)), or who fall within Article
49(2)(a) to (d) of the Financial Promotion Order, or who are any other persons to whom it may otherwise lawfully be made under
the Financial Promotion Order (all such persons together being referred to as “relevant persons”). In the United Kingdom,
the Notes offered hereby are only available to, and any investment or investment activity to which this pricing supplement, the
accompanying product supplement, the accompanying prospectus supplement and the accompanying prospectus relates will be engaged
in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this pricing
supplement, the accompanying product supplement, the accompanying prospectus supplement or the accompanying prospectus or any of
their contents.
Any invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the Notes may only be communicated
or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to BofA Finance, as Issuer, or
BAC, as Guarantor.
All applicable provisions of the FSMA must be
complied with in respect to anything done by any person in relation to the Notes in, from or otherwise involving the United Kingdom
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-21
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Structuring the Notes
The Notes are our debt securities, the return
on which is linked to the performance of the Underlyings. The related guarantee is BAC’s obligation. As is the case for all
of our and BAC’s respective debt securities, including our market-linked notes, the economic terms of the Notes reflect our
and BAC’s actual or perceived creditworthiness at the time of pricing. In addition, because market-linked notes result in
increased operational, funding and liability management costs to us and BAC, BAC typically borrows the funds under these types
of notes at a rate, which we refer to in this pricing supplement as BAC’s internal funding rate, that is more favorable to
BAC than the rate that it might pay for a conventional fixed or floating rate debt security. This generally relatively lower internal
funding rate, which is reflected in the economic terms of the Notes, along with the fees and charges associated with market-linked
notes, typically results in the initial estimated value of the Notes on the pricing date being less than their public offering
price.
In order to meet our payment obligations on the
Notes, at the time we issue the Notes, we may choose to enter into certain hedging arrangements (which may include call options,
put options or other derivatives) with BofAS or one of our other affiliates. The terms of these hedging arrangements are determined
based upon terms provided by BofAS and its affiliates, and take into account a number of factors, including our and BAC’s
creditworthiness, interest rate movements, the volatility of the Underlyings, the tenor of the Notes and the hedging arrangements.
The economic terms of the Notes and their initial estimated value depend in part on the terms of these hedging arrangements.
BofAS has advised us that the hedging arrangements
will include hedging related charges, reflecting the costs associated with, and our affiliates’ profit earned from, these
hedging arrangements. Since hedging entails risk and may be influenced by unpredictable market forces, actual profits or losses
from these hedging transactions may be more or less than any expected amounts.
For further information, see “Risk Factors”
beginning on page PS-8 above and “Supplemental Use of Proceeds” on page PS-19 of the accompanying product supplement.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-22
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
U.S. Federal Income Tax Summary
The following summary of the material U.S. federal
income tax considerations of the acquisition, ownership, and disposition of the Notes supplements, and to the extent inconsistent
supersedes, the discussions under “U.S. Federal Income Tax Considerations” in the accompanying prospectus and under
“U.S. Federal Income Tax Considerations” in the accompanying prospectus supplement and is not exhaustive of all possible
tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations
promulgated under the Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary regulations),
rulings, current administrative interpretations and official pronouncements of the IRS, and judicial decisions, all as currently
in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance
can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences
described below. This summary does not include any description of the tax laws of any state or local governments, or of any foreign
government, that may be applicable to a particular holder.
Although the Notes are issued by us, they will
be treated as if they were issued by BAC for U.S. federal income tax purposes. Accordingly throughout this tax discussion, references
to “we,” “our” or “us” are generally to BAC unless the context requires otherwise.
This summary is directed solely to U.S. Holders
and Non-U.S. Holders that, except as otherwise specifically noted, will purchase the Notes upon original issuance and will hold
the Notes as capital assets within the meaning of Section 1221 of the Code, which generally means property held for investment,
and that are not excluded from the discussion under “U.S. Federal Income Tax Considerations” in the accompanying prospectus.
You should consult your own tax advisor concerning
the U.S. federal income tax consequences to you of acquiring, owning, and disposing of the Notes, as well as any tax consequences
arising under the laws of any state, local, foreign, or other tax jurisdiction and the possible effects of changes in U.S. federal
or other tax laws.
General
Although there is no statutory, judicial, or
administrative authority directly addressing the characterization of the Notes, we intend to treat the Notes for all tax purposes
as contingent income-bearing single financial contracts with respect to the Underlyings and under the terms of the Notes, we and
every investor in the Notes agree, in the absence of an administrative determination or judicial ruling to the contrary, to treat
the Notes in accordance with such characterization. In the opinion of our counsel, Sidley Austin LLP, it is reasonable to treat
the Notes as contingent income-bearing single financial contracts with respect to the Underlyings. However, Sidley Austin LLP has
advised us that it is unable to conclude that it is more likely than not that this treatment will be upheld. This discussion assumes
that the Notes constitute contingent income-bearing single financial contracts with respect to the Underlyings for U.S. federal
income tax purposes. If the Notes did not constitute contingent income-bearing single financial contracts, the tax consequences
described below would be materially different.
This characterization of the Notes is not
binding on the IRS or the courts. No statutory, judicial, or administrative authority directly addresses the characterization of
the Notes or any similar instruments for U.S. federal income tax purposes, and no ruling is being requested from the IRS with respect
to their proper characterization and treatment. Due to the absence of authorities on point, significant aspects of the U.S. federal
income tax consequences of an investment in the Notes are not certain, and no assurance can be given that the IRS or any court
will agree with the characterization and tax treatment described in this pricing supplement. Accordingly, you are urged to consult
your tax advisor regarding all aspects of the U.S. federal income tax consequences of an investment in the Notes, including possible
alternative characterizations.
Unless otherwise stated, the following discussion
is based on the characterization described above. The discussion in this section assumes that there is a significant possibility
of a significant loss of principal on an investment in the Notes.
We will not attempt to ascertain whether the
issuer of any component stocks included in an Underlying would be treated as a “passive foreign investment company”
(“PFIC”), within the meaning of Section 1297 of the Code, or a United States real property holding corporation, within
the meaning of Section 897(c) of the Code. If the issuer of one or more stocks included in an Underlying were so treated, certain
adverse U.S. federal income tax consequences could possibly apply to a holder of the Notes. You should refer to information filed
with the SEC by the issuers of the component stocks included in the Underlyings and consult your tax advisor regarding the possible
consequences to you, if any, if any issuer of a component stock included in an Underlying is or becomes a PFIC or is or becomes
a United States real property holding corporation.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-23
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
U.S. Holders
Although the U.S. federal income tax treatment
of any Contingent Coupon Payment on the Notes is uncertain, we intend to take the position, and the following discussion assumes,
that any Contingent Coupon Payment constitutes taxable ordinary income to a U.S. Holder at the time received or accrued in accordance
with the U.S. Holder’s regular method of accounting. By purchasing the Notes you agree, in the absence of an administrative
determination or judicial ruling to the contrary, to treat any Contingent Coupon Payment as described in the preceding sentence.
Upon receipt of a cash payment at maturity or
upon a sale, exchange, or redemption of the Notes prior to maturity, a U.S. Holder generally will recognize capital gain or loss
equal to the difference between the amount realized (other than amounts representing any Contingent Coupon Payment, which would
be taxed as described above) and the U.S. Holder’s tax basis in the Notes. A U.S. Holder’s tax basis in the Notes will
equal the amount paid by that holder to acquire them. This capital gain or loss generally will be long-term capital gain or loss
if the U.S. Holder held the Notes for more than one year. The deductibility of capital losses is subject to limitations.
Alternative Tax Treatments. Due to the
absence of authorities that directly address the proper tax treatment of the Notes, prospective investors are urged to consult
their tax advisors regarding all possible alternative tax treatments of an investment in the Notes. In particular, the IRS could
seek to subject the Notes to the Treasury regulations governing contingent payment debt instruments. If the IRS were successful
in that regard, the timing and character of income on the Notes would be affected significantly. Among other things, a U.S. Holder
would be required to accrue original issue discount every year at a “comparable yield” determined at the time of issuance.
In addition, any gain realized by a U.S. Holder at maturity or upon a sale, exchange, or redemption of the Notes generally would
be treated as ordinary income, and any loss realized at maturity or upon a sale, exchange, or redemption of the Notes generally
would be treated as ordinary loss to the extent of the U.S. Holder’s prior accruals of original issue discount, and as capital
loss thereafter.
In addition, it is possible that the Notes could
be treated as a unit consisting of a deposit and a put option written by the Note holder, in which case the timing and character
of income on the Notes would be affected significantly.
The IRS released Notice 2008-2 (the “Notice”),
which sought comments from the public on the taxation of financial instruments currently taxed as “prepaid forward contracts.”
This Notice addresses instruments such as the Notes. According to the Notice, the IRS and Treasury are considering whether a holder
of an instrument such as the Notes should be required to accrue ordinary income on a current basis, regardless of whether any payments
are made prior to maturity. It is not possible to determine what guidance the IRS and Treasury will ultimately issue, if any. Any
such future guidance may affect the amount, timing and character of income, gain, or loss in respect of the Notes, possibly with
retroactive effect.
The IRS and Treasury are also considering additional
issues, including whether additional gain or loss from such instruments should be treated as ordinary or capital, whether foreign
holders of such instruments should be subject to withholding tax on any deemed income accruals, whether Section 1260 of the Code,
concerning certain “constructive ownership transactions,” generally applies or should generally apply to such instruments,
and whether any of these determinations depend on the nature of the underlying asset.
In addition, proposed Treasury regulations require
the accrual of income on a current basis for contingent payments made under certain notional principal contracts. The preamble
to the regulations states that the “wait and see” method of accounting does not properly reflect the economic accrual
of income on those contracts, and requires current accrual of income for some contracts already in existence. While the proposed
regulations do not apply to prepaid forward contracts, the preamble to the proposed regulations expresses the view that similar
timing issues exist in the case of prepaid forward contracts. If the IRS or Treasury publishes future guidance requiring current
economic accrual for contingent payments on prepaid forward contracts, it is possible that you could be required to accrue income
over the term of the Notes.
Because of the absence of authority regarding
the appropriate tax characterization of the Notes, it is also possible that the IRS could seek to characterize the Notes in a manner
that results in tax consequences that are different from those described above. For example, the IRS could possibly assert that
any gain or loss that a holder may recognize at maturity or upon the sale, exchange, or redemption of the Notes should be treated
as ordinary gain or loss.
Because each Underlying is an index that periodically
rebalances, it is possible that the Notes could be treated as a series of contingent income-bearing single financial contracts,
each of which matures on the next rebalancing date. If the Notes were properly characterized in such a manner, a U.S. Holder would
be treated as disposing of the Notes on each rebalancing date in return for new Notes that mature on the next rebalancing date,
and a U.S. Holder would accordingly likely recognize capital gain or loss on each rebalancing date equal to the difference between
the holder’s tax basis in the Notes (which would be adjusted to take into account any prior recognition of gain or loss)
and the fair market value of the Notes on such date.
Non-U.S. Holders
Because the U.S. federal income tax treatment
of the Notes (including any Contingent Coupon Payment) is uncertain, we will withhold U.S. federal income tax at a 30% rate (or
at a lower rate under an applicable income tax treaty) on the entire amount of any Contingent Coupon Payment made unless such payments
are effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the U.S. (in which case, to avoid
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-24
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
withholding, the Non-U.S. Holder will be required
to provide a Form W-8ECI). We will not pay any additional amounts in respect of such withholding. To claim benefits under an income
tax treaty, a Non-U.S. Holder must obtain a taxpayer identification number and certify as to its eligibility under the appropriate
treaty’s limitations on benefits article, if applicable. In addition, special rules may apply to claims for treaty benefits
made by Non-U.S. Holders that are entities rather than individuals. The availability of a lower rate of withholding under an applicable
income tax treaty will depend on whether such rate applies to the characterization of the payments under U.S. federal income tax
laws. A Non-U.S. Holder that is eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may
obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.
Except as discussed below, a Non-U.S. Holder
generally will not be subject to U.S. federal income or withholding tax for amounts paid in respect of the Notes (not including,
for the avoidance of doubt, amounts representing any Contingent Coupon Payment which would be subject to the rules discussed in
the previous paragraph) upon the sale, exchange, or redemption of the Notes or their settlement at maturity, provided that the
Non-U.S. Holder complies with applicable certification requirements and that the payment is not effectively connected with the
conduct by the Non-U.S. Holder of a U.S. trade or business. Notwithstanding the foregoing, gain from the sale, exchange, or redemption
of the Notes or their settlement at maturity may be subject to U.S. federal income tax if that Non-U.S. Holder is a non-resident
alien individual and is present in the U.S. for 183 days or more during the taxable year of the sale, exchange, redemption, or
settlement and certain other conditions are satisfied.
If a Non-U.S. Holder of the Notes is engaged
in the conduct of a trade or business within the U.S. and if any Contingent Coupon Payment and gain realized on the settlement
at maturity, or upon sale, exchange, or redemption of the Notes, is effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.),
the Non-U.S. Holder, although exempt from U.S. federal withholding tax, generally will be subject to U.S. federal income tax on
such Contingent Coupon Payment and gain on a net income basis in the same manner as if it were a U.S. Holder. Such Non-U.S. Holders
should read the material under the heading “—U.S. Holders,” for a description of the U.S. federal income tax
consequences of acquiring, owning, and disposing of the Notes. In addition, if such Non-U.S. Holder is a foreign corporation, it
may also be subject to a branch profits tax equal to 30% (or such lower rate provided by any applicable tax treaty) of a portion
of its earnings and profits for the taxable year that are effectively connected with its conduct of a trade or business in the
U.S., subject to certain adjustments.
A “dividend equivalent” payment is
treated as a dividend from sources within the United States and such payments generally would be subject to a 30% U.S. withholding
tax if paid to a Non-U.S. Holder. Under Treasury regulations, payments (including deemed payments) with respect to equity-linked
instruments (“ELIs”) that are “specified ELIs” may be treated as dividend equivalents if such specified
ELIs reference an interest in an “underlying security,” which is generally any interest in an entity taxable as a corporation
for U.S. federal income tax purposes if a payment with respect to such interest could give rise to a U.S. source dividend. However,
IRS guidance provides that withholding on dividend equivalent payments will not apply to specified ELIs that are not delta-one
instruments and that are issued before January 1, 2023. Based on our determination that the Notes are not delta-one instruments,
Non-U.S. Holders should not be subject to withholding on dividend equivalent payments, if any, under the Notes. However, it is
possible that the Notes could be treated as deemed reissued for U.S. federal income tax purposes upon the occurrence of certain
events affecting the Underlyings or the Notes, and following such occurrence the Notes could be treated as subject to withholding
on dividend equivalent payments. Non-U.S. Holders that enter, or have entered, into other transactions in respect of the Underlyings
or the Notes should consult their tax advisors as to the application of the dividend equivalent withholding tax in the context
of the Notes and their other transactions. If any payments are treated as dividend equivalents subject to withholding, we (or the
applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect
to amounts so withheld.
As discussed above, alternative characterizations
of the Notes for U.S. federal income tax purposes are possible. Should an alternative characterization, by reason of change or
clarification of the law, by regulation or otherwise, cause payments as to the Notes to become subject to withholding tax in addition
to the withholding tax described above, tax will be withheld at the applicable statutory rate. Prospective Non-U.S. Holders should
consult their own tax advisors regarding the tax consequences of such alternative characterizations.
U.S. Federal Estate Tax. Under current
law, while the matter is not entirely clear, individual Non-U.S. Holders, and entities whose property is potentially includible
in those individuals’ gross estates for U.S. federal estate tax purposes (for example, a trust funded by such an individual
and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty
benefit, a Note is likely to be treated as U.S. situs property, subject to U.S. federal estate tax. These individuals and entities
should consult their own tax advisors regarding the U.S. federal estate tax consequences of investing in a Note.
Backup Withholding and Information Reporting
Please see the discussion under “U.S. Federal
Income Tax Considerations — Taxation of Debt Securities — Backup Withholding and Information Reporting” in the
accompanying prospectus for a description of the applicability of the backup withholding and information reporting rules to payments
made on the Notes.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-25
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Contingent Income Issuer Callable Yield Notes Linked to the Least Performing of the Dow Jones Industrial Average®, the Russell 2000® Index and the EURO STOXX 50® Index
Where You Can Find More Information
The terms and risks of the
Notes are contained in this pricing supplement and in the following related product supplement, prospectus supplement and prospectus,
which can be accessed at the following links:
These documents (together,
the “Note Prospectus”) have been filed as part of a registration statement with the SEC, which may, without cost, be
accessed on the SEC website at www.sec.gov or obtained from BofAS by calling 1-800-294-1322. Before you invest, you should read
the Note Prospectus, including this pricing supplement, for information about us, BAC and this offering. Any prior or contemporaneous
oral statements and any other written materials you may have received are superseded by the Note Prospectus. Certain terms used
but not defined in this pricing supplement have the meanings set forth in the accompanying product supplement or prospectus supplement.
Unless otherwise indicated or unless the context requires otherwise, all references in this document to “we,” “us,”
“our,” or similar references are to BofA Finance, and not to BAC.
The Notes are our senior debt
securities. Any payments on the Notes are fully and unconditionally guaranteed by BAC. The Notes and the related guarantee are
not insured by the Federal Deposit Insurance Corporation or secured by collateral. The Notes will rank equally in right of payment
with all of our other unsecured and unsubordinated obligations, and the related guarantee will rank equally in right of payment
with all of BAC’s other unsecured and unsubordinated obligations, in each case, except obligations that are subject to any
priorities or preferences by law. Any payments due on the Notes, including any repayment of the principal amount, will be subject
to the credit risk of BofA Finance, as Issuer, and BAC, as Guarantor.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-26
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