Bank of Montreal Issues $2.5 Million Senior Medium-Term Notes Series K With 5.10% Fixed Rate

Pricing and Structure of the Fixed-Rate Note Offering

Bank of Montreal established pricing for the Senior Medium-Term Notes, Series K on July 15, 2026, with an issue date of July 17, 2026. The disclosure states that the offering totaled $2.5 million, comprising 2,500 notes with a principal amount of $1,000 per note. The fixed interest rate was set at 5.10% per annum, payable semi-annually on the 17th day of January and July, with the first coupon payment scheduled for January 17, 2027. The stated maturity date is July 17, 2031, representing a five-year tenor from issue.

The underwriting discount was structured at $5.30 per note, resulting in total underwriting compensation of $11,300 and net proceeds to Bank of Montreal of $2,488,700. BMO Capital Markets Corp. received the underwriting discount and was authorized to provide selling concessions to selected dealers. The pricing supplement notes that for eligible institutional investors and fee-based advisory accounts, the original issue price could vary based on market conditions and negotiated terms, provided it did not fall below $994.70 or exceed $1,000 per note. The notes are issued in denominations of $1,000 and integral multiples thereof, with CUSIP number 06376LF76.

Semi-Annual Interest Payments and Maturity Provisions

Interest on the notes accrues using a 30/360 day count convention on an unadjusted basis. The disclosure confirms that unless Bank of Montreal redeems the notes prior to maturity, holders will receive on the stated maturity date a cash payment equal to $1,000 per note plus any accrued and unpaid interest. The notes are not subject to repayment at the option of holders prior to the stated maturity date, meaning investors cannot force early redemption, unlike some callable debt instruments that permit holder puts.

The interest payment schedule is structured semi-annually, commencing on January 17, 2027 and continuing on each July 17 and January 17 thereafter until the stated maturity date or an optional redemption date, if applicable. This regular coupon schedule provides investors with predictable income from the fixed 5.10% rate over the five-year holding period, absent early redemption by the issuer.

Bank of Montreal's Optional Redemption Rights

Bank of Montreal reserved the right to redeem the notes in whole, but not in part, on optional redemption dates occurring semi-annually on the 17th day of January and July, commencing July 17, 2027 and ending January 17, 2031. When exercising this redemption right, the bank will pay holders 100% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date. The disclosure specifies that Bank of Montreal must provide notice to noteholders at least 5 business days and not more than 30 business days prior to any optional redemption date, in the manner described in the accompanying prospectus supplement.

The optional redemption structure gives Bank of Montreal flexibility to refinance the debt if market conditions become favorable, such as if interest rates decline materially below 5.10%. Investors should note that this redemption right, exercisable at par with accrued interest, means the notes could be called away if the issuer determines refinancing is economical, particularly in declining rate environments.

Bail-In Conversion Rights and Canadian Regulatory Framework

The notes are issued as bail-inable notes, subject to conversion in whole or in part into common shares of Bank of Montreal or its affiliates under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act. The disclosure states that by acquiring the notes, each holder is deemed to agree to be bound by the CDIC Act, including potential conversion of the notes into common shares and variation or extinguishment of the notes in consequence. The terms governing bail-in conversion are to be applied in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein regarding the operation of the CDIC Act.

The pricing supplement discloses that holders and beneficial owners of any note will have no further rights with respect to that note to the extent it is converted in a bail-in conversion, other than those provided under the bail-in regime itself. By acquiring an interest in a note, each holder is deemed to irrevocably consent to the converted portion of the principal amount and any accrued and unpaid interest being deemed paid in full by Bank of Montreal by issuance of common shares, which conversion will occur without further action by the holder or the trustee. This provision represents a material legal consequence for investors, as it subordinates their debt claim to the bank's regulatory capital requirements and potentially converts their investment into equity.

Credit Risk and Unsecured Status of the Notes

The disclosure explicitly states that the notes are unsecured obligations of Bank of Montreal, meaning all payments on the notes are subject to the credit risk of Bank of Montreal. The pricing supplement cautions that if Bank of Montreal defaults on its obligations, investors could lose some or all of their investment. The notes are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund, the Canada Deposit Insurance Corporation, or any other governmental agency, according to the filing.

This unsecured status means that in the event of Bank of Montreal's financial distress, noteholders would rank alongside other unsecured creditors and behind secured creditors and depositors. The filing points investors to risk disclosures beginning on page PS-4 of the pricing supplement and additional risk factors in the accompanying product supplement, prospectus supplement, and prospectus, indicating that the investment carries material risks beyond those associated with conventional debt securities.

Distribution and Marketing Arrangements

BMO Capital Markets Corp. served as the underwriter and received discounts and commissions of up to $5.30 per note from the gross offering amount. The disclosure indicates that from the underwriting discount, selected dealers were permitted a selling concession of up to $5.30 per note, with the actual amount depending on market conditions relevant to the notes' value at the time an order was submitted to BMO Capital Markets Corp. Dealers who purchased notes for sales to eligible institutional investors and fee-based advisory accounts had the option to forgo some or all selling concessions.

The pricing supplement notes that the per-note discounts and commissions in the pricing table represent the maximum amounts payable per note, and the per-note proceeds to Bank of Montreal represent the minimum proceeds per note based on maximum discounts and commissions. The total discounts and commissions reflected in the table was $11,300, representing the difference between the assumed total price to public and the actual proceeds to the issuer. The filing indicates that the notes will not be listed on any securities exchange.

Regulatory Registration and Document References

The pricing supplement was filed pursuant to SEC Rule 424(b)(2) under Registration Statement No. 333-285508. Bank of Montreal's Central Index Key on the SEC website is 927971. The disclosure directs investors to read the pricing supplement together with Product Supplement No. RLN-1 dated March 25, 2025, the Prospectus Supplement dated March 25, 2025, and the Prospectus dated March 25, 2025, for additional information about the notes. To the extent that disclosure in the pricing supplement is inconsistent with disclosure in the product supplement, prospectus supplement, or prospectus, the disclosure in the pricing supplement controls.

The filing provides specific SEC website links to access the product supplement, prospectus supplement, and prospectus. These accompanying documents contain detailed information regarding the general terms of fixed-rate notes, interest calculation methodologies, and comprehensive risk factors. Investors are directed to review these materials, which are incorporated by reference into the offering, to understand the full scope of terms, conditions, and risks associated with the notes.

Key Risk Considerations for Potential Investors

The pricing supplement highlights that the notes involve risks not associated with investments in conventional debt securities. The filing directs readers to "Selected Risk Considerations" beginning on page PS-4 of the pricing supplement and "Risk Factors" beginning on page PS-5 of the product supplement, as well as risk sections beginning on page S-2 of the prospectus supplement and page 9 of the prospectus. The most significant risk disclosed is the potential for conversion of the notes into common shares under the Canadian bail-in regime, which could result in equity holders losing their principal investment through dilution or complete loss of value.

Additional risks include the unsecured and uninsured nature of the notes, making them subject to the full credit risk of Bank of Montreal. The optional redemption feature means investors cannot rely on collecting the 5.10% coupon through maturity if the notes are called, particularly in a lower interest rate environment. The bail-in conversion mechanism also means that the notes are subject to regulatory intervention in a systemic financial stress scenario, distinguishing them from traditional subordinated debt and creating a risk profile that extends beyond conventional credit risk analysis.

Investor Agreement to Bail-In Terms and Jurisdiction

The disclosure specifies that by acquiring the notes, each holder or beneficial owner is deemed to attest and submit to the jurisdiction of the courts in the Province of Ontario with respect to the CDIC Act and applicable laws. Each investor is also deemed to represent and warrant that Bank of Montreal has not directly or indirectly provided financing to them for the express purpose of investing in the bail-inable notes. Furthermore, investors acknowledge and agree that the bail-in terms are binding on them despite any provisions in the indenture, the notes themselves, any other law governing the notes, or any other agreement or understanding with Bank of Montreal regarding the notes.

These deemed agreements constitute material contractual obligations that investors assume upon purchase. The jurisdiction provision gives Bank of Montreal and Canadian regulatory authorities significant leverage in any dispute or enforcement action, and the financing warranty requires investors to certify their financial independence in making the investment decision. The binding nature of these terms, notwithstanding other contractual or legal provisions, means that bail-in conversion could occur regardless of the terms negotiated between individual investors and any financial advisors.

Trading Information and Offering Timeline

The notes were priced on the trade date of July 15, 2026, with an official issue date of July 17, 2026. The filing was made as a 424B2 prospectus supplement pricing document pursuant to Securities and Exchange Commission regulations governing firm commitments and shelf registrations. The offering closed on or shortly after the issue date, with the pricing supplement filed to establish the final terms of the senior notes offering under the existing registration statement framework.

The issuance represents a standard medium-term debt financing by Bank of Montreal within its authorized shelf registration program. The timing and structure reflect standard market practices for institutional note offerings, with distribution through BMO Capital Markets Corp. and affiliated dealers to both retail and institutional investors. The five-year maturity and 5.10% coupon were established based on market conditions and Bank of Montreal's credit position on the pricing date.