Bank of America (BAC) Backs a One-Year ‘Digital Return’ Note Linked to the Weakest of Three Indexes

BofA Finance LLC, fully guaranteed by Bank of America Corporation (BAC), is bringing a one-year structured product called Digital Return Notes to the market that pays a fixed digital amount only if all three linked indexes avoid big losses. Bank of America confirmed the launch.

BAC stock chart

BAC

Here’s the short version: price is expected to be set on Feb. 26, 2026, the notes are expected to be issued on March 3, 2026, and they mature about 12 months later on March 3, 2027. The CUSIP for traders to track is 09711NQS2 and the public offering price will be $1,000 per note, with underwriting fees of up to $2 per $1,000 (meaning issuer proceeds could be as low as $998).

How the payout is supposed to work

This is a digital—or all-or-nothing—upside tied to three indexes: the Nasdaq-100 Technology Sector Index, the Russell 2000 Index (small caps) and the S&P 500 Index (broad large caps). If, at maturity, each of the three finishes at or above 70% of its starting value, the note pays a fixed $1,112 for every $1,000 invested. That’s an 11.20% return over roughly a year.

Translate that: each index can fall by up to 30% from its starting point and you still get the 11.2% payoff—but every index must clear that 70% line. The starting values will be determined when pricing is set.

Where the real risk hides

The flip side is brutal. If any one of those indexes finishes more than 30% below its starting value, the note stops protecting you and instead delivers a 1:1 loss based on the least‑performing index. So if the worst index is down 40%, you’d get about $600 for each $1,000—an immediate 40% loss. If the worst index collapses to zero (extreme, but possible in theory), you could lose your entire principal.

Why does that matter? Because the note’s payoff is driven by the single weakest link. A small-cap shock in the Russell or a concentrated tech selloff in the Nasdaq-tech reading could erase the upside and instead leave you fully exposed on the downside.

To see the math: a $1,000 note becomes $1,112 at maturity only if every index >= 70% of its starting value. If one index finishes at 60% of its start (a 40% drop), final payment = 60% × $1,000 = $600.

That binary structure makes the product more like a short-term directional bet on market breadth than a conservative yield play.

Credit and structure basics traders need to note

• There are no periodic interest payments—this is a single payment at maturity if conditions are met.
• The notes are fully and unconditionally guaranteed by Bank of America Corporation (BAC), which means your credit exposure is to the bank itself rather than to an issuing shell.
• The notes will not trade on an exchange and are structured products rather than ordinary bonds or deposits, so liquidity may be limited.
• The offering price is $1,000 per note; underwriters can take up to $2 per $1,000, leaving net issuer proceeds as low as $998 per note.

For context on the guarantor: Bank of America is a diversified U.S. bank with big consumer franchises—credit cards, mortgage and consumer lending—alongside commercial banking and investment and brokerage services. That mix matters because this note’s guarantee is only as strong as the bank’s balance sheet; shifts in the bank’s fortunes can affect perceived safety.

Right now BAC shares closed recently around $50.39 and are trading below their 20- and 50-day moving averages, with an RSI near 32—momentum looks soft, edging toward oversold. See a recent trading snapshot for the latest quote.

If you want to read the official pricing terms, consult the pricing document. For a refresher on the company issuing the guarantee and its business mix, read about the issuer.

Practical takeaway: this product offers a tempting headline yield—11.2% in a year—but the return is conditional and fragile. You’re effectively selling protection: you win only if all three indexes avoid a greater-than-30% drop. If you believe the next 12 months will be calm and broad markets will hold, the digital payoff could look attractive. If you worry about concentrated tech risk or small-cap volatility, this structure hands a single market stressor the power to wipe out gains and erode principal.

Watch the pricing on Feb. 26, 2026 and the starting index levels set at that time; those starting values define the 70% threshold and put a number on how close any index is to the danger zone before you buy.