Bank of Montreal Issues Auto-Callable Equity Linked Securities Tied to Apple, Amazon, and Oracle Stock Performance

Security Structure and Underlying Stock Selection

Bank of Montreal structured these market-linked securities to track three of the technology and retail sectors' most widely held equities. The securities' value and payment behavior depend exclusively on the performance of the single lowest-performing underlier among Apple Inc., Amazon.com Inc., and Oracle Corporation on each relevant calculation day. The filing establishes specific starting values for each stock as of the July 17, 2026 pricing date: Apple at $333.74, Amazon at $247.23, and Oracle at $126.41. This structure means investors bear the risk of whichever stock underperforms most severely, while receiving no benefit from outperformance by any of the three equities.

The contingent coupon threshold and downside threshold for each underlier are set at 50% of its respective starting value. The filing discloses that if the lowest performer closes at or above its coupon threshold value on a quarterly calculation day, the securities will pay a contingent coupon at the 21.10% per annum rate. However, if the lowest performer falls below this threshold on one or more calculation days and subsequently recovers above it, the memory feature allows investors to receive previously unpaid coupon payments in addition to the current quarter's payment, without interest on amounts previously unpaid.

Contingent Coupon Mechanics and Memory Features

The contingent coupon structure incorporates a memory feature that distinguishes these securities from conventional callable equity-linked notes. Under the terms disclosed in the filing, investors receive quarterly contingent coupon payments only when the lowest performer's closing value on the relevant calculation day exceeds or equals 50% of its starting value. The contingent coupon rate of 21.10% per annum represents the basis for quarterly payment calculations applied to the $1,000 face amount per security. This means each quarterly payment, if triggered, would equal approximately $52.75 per security (one-quarter of the annual rate).

The memory feature provides meaningful protection during periods of temporary weakness. If the lowest performer declines below the 50% coupon threshold on one or more calculation days, missing coupon payments accumulate without interest. When the lowest performer subsequently rises back above the 50% threshold, investors receive not only the new quarter's contingent coupon but also all previously unpaid amounts in a single lump payment. However, the filing clarifies that if the lowest performer remains below the 50% coupon threshold on every calculation day throughout the entire term, investors will receive no contingent coupon payments whatsoever.

Automatic Call Provisions and Early Termination Scenarios

Bank of Montreal incorporated automatic call provisions that terminate the securities prior to their July 20, 2029 stated maturity under specific conditions. The filing states that if the closing value of the lowest performer equals or exceeds its starting value on any of the quarterly calculation days occurring from January 2027 through April 2029, the securities will be automatically called for the face amount plus the final contingent coupon payment and any previously unpaid contingent coupon payments. This feature allows investors to recover full principal plus accrued coupons in scenarios where the weakest-performing stock rebounds to its initial pricing level.

The automatic call mechanism operates independently of the three-year maturity date, providing early termination potential within an 18-month window spanning Q1 2027 through Q2 2029. The timing of call events depends entirely on whichever single stock performs worst among the three underliers reaching breakeven against its July 17, 2026 pricing level. Because the securities link to the lowest performer, investors cannot benefit from strong performance by Apple, Amazon, or Oracle if one of the three stocks significantly underperforms and pulls the lowest-performer metric down.

Principal at Risk and Downside Exposure at Maturity

The securities expose investors to substantial principal loss if they reach stated maturity without automatic call and the lowest performer's closing value falls below its downside threshold. The filing discloses that the downside threshold equals 50% of each underlier's starting value—identical to the coupon threshold level. If the lowest performer closes below this 50% threshold on the final calculation day at maturity, investors will receive less than the full face amount, potentially losing more than 50% of their investment depending on how far the weakest stock declines.

Bank of Montreal's disclosure emphasizes that investors have no ability to pursue any of the three underlier companies for payment and bear full credit risk on the issuer. The filing states that if the lowest performer declines substantially from its starting value, investors will have full downside exposure to that decline but will not participate in any appreciation of any underlier and will not receive dividends. This asymmetric payoff structure—downside risk without upside participation—represents a core risk factor for investors evaluating these securities against traditional fixed-income alternatives.

Estimated Valuation and Pricing Information

The pricing supplement discloses that the estimated initial value of the securities on the July 17, 2026 pricing date is $938.23 per security. This valuation reflects the agent discount of $23.25 per security and the original offering price of $1,000 per security. The filing acknowledges that the actual value of the securities at any point in time will reflect many factors and cannot be predicted with accuracy. The estimated value incorporates multiple variables including the volatility profiles of the three underlying stocks, interest rate expectations, time decay, and the probability of automatic call before stated maturity.

The total aggregate principal amount offered is $9.977 million, reflecting 9,977 securities issued at the $1,000 face amount per security. The filing discloses that Wells Fargo Securities, LLC acted as the distribution agent and principal for the offering. In addition, Bank of Montreal's affiliate, BMO Capital Markets Corp., may pay fees of up to $3.00 per security to selected securities dealers for marketing and other distribution services. These distribution economics establish the secondary-market incentives and dealer participation structure for the offering.

Issuer Credit Risk and Non-Insurance Status

Bank of Montreal, as the issuer, underwrites all payment obligations on these securities, making credit risk a primary concern for investors. The filing explicitly states that all payments on the securities are subject to Bank of Montreal's credit risk, and investors will have no ability to pursue any of the three underlying stocks or Oracle Corporation for payment. If Bank of Montreal defaults on its obligations, investors could lose some or all of their investment. Unlike deposits held at regulated banks, these securities are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund, the Canada Deposit Insurance Corporation, or any other governmental agency.

The filing further discloses that the securities are not bail-inable notes and are not subject to conversion into Bank of Montreal's common shares or the common shares of any affiliates under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act. This clarification distinguishes these market-linked securities from certain other Bank of Montreal instruments that may carry conversion features. Bank of Montreal's status as a major North American financial institution rated by leading credit agencies provides some context for assessing issuer creditworthiness, though the filing contains no explicit credit rating disclosures.

Complexity, Risk Disclosures, and Investment Suitability

Bank of Montreal's filing emphasizes that these securities possess complex features and expose investors to risks fundamentally different from conventional debt securities. The document directs investors to "Selected Risk Considerations" sections within the pricing supplement and references additional risk factor discussions in the accompanying product supplement, prospectus supplement, and prospectus. The filing notes that the Securities and Exchange Commission and state securities commissions have not approved or disapproved the securities and have not passed upon the accuracy or adequacy of the pricing supplement or related documents.

The structure combines multiple layers of complexity: tracking the lowest of three stocks rather than a single index or equity; quarterly observation dates with automatic call provisions; contingent coupon mechanics with memory features; and full downside exposure below a 50% threshold with zero upside participation. These characteristics make the securities suitable only for investors with sophisticated understanding of equity-linked products, comfort with potential principal loss, and ability to hold the securities through their anticipated maturity or call date. The filing's emphasis on complexity and risk considerations serves as notice to potential investors regarding due diligence requirements.

Market Conditions on Pricing Date and Security Features

The securities were priced on July 17, 2026, establishing the reference points for all subsequent performance measurement and payment calculations. On this date, Apple Inc. common stock closed at $333.74, Amazon.com Inc. common stock at $247.23, and Oracle Corporation common stock at $126.41. These starting values determine the coupon threshold (50% of starting value) and downside threshold (50% of starting value) for each underlier. The quarterly observation schedule runs from the pricing date through the stated maturity date of July 20, 2029, creating approximately 13 calculation days for coupon and call determination.

The 21.10% per annum contingent coupon rate reflects market conditions, volatility assumptions, and probability-weighted payoff expectations for the three underlying stocks as of the pricing date. This rate compensates investors for bearing downside equity risk, credit risk on Bank of Montreal, the illiquidity of the securities (the filing notes they have no exchange listing), and the asymmetric payoff structure. The automatic call feature's potential termination window from January 2027 through April 2029 encompasses the period during which Bank of Montreal expects reasonable probability of at least one of the three stocks recovering to or exceeding its starting value, though this expectation remains subject to unpredictable market movements.

Regulatory Filing Status and Offering Timeline

Bank of Montreal filed this pricing supplement pursuant to Securities and Exchange Commission Rule 424(b)(2) under Registration Statement No. 333-285508. The document supplements a product supplement dated March 25, 2025, a prospectus supplement dated March 25, 2025, and a prospectus dated March 25, 2025. This layered disclosure structure—with the pricing supplement providing specific terms, the product supplement providing general structure information, and the prospectus providing underwriting and disclosure frameworks—follows SEC conventions for complex equity-linked offerings. The filing was dated July 17, 2026, coinciding with the pricing date, with the issue date set for July 22, 2026, providing a standard five-business-day settlement period.

The regulatory pathway for these securities involved Wells Fargo Securities serving as the distribution agent and principal. Wells Fargo and BMO Capital Markets Corp. acted as intermediaries managing distribution and sales to investors. The offering structure reflects a negotiated placement of a defined principal amount rather than a shelf registration with ongoing distribution. The specific issue date of July 22, 2026, aligns with standard securities settlement practices under the current three-business-day clearing convention established by the industry.