Bank of Montreal Launches $1.1 Million Trigger Callable Contingent Yield Notes Linked to Russell 2000, S&P 500, and EURO STOXX 50

Note Structure and Coupon Payment Conditions

The Bank of Montreal Trigger Callable Contingent Yield Notes are senior unsecured debt securities linked to the Russell 2000, S&P 500, and EURO STOXX 50 indexes. Quarterly contingent coupon payments are made only if each index’s closing value on observation dates remains at or above its coupon barrier. The coupon barriers are set at 70% of initial values: 2,059.700 for Russell 2000 (initial 2,942.429), 5,210.30 for S&P 500 (initial 7,443.28), and 4,359.18 for EURO STOXX 50 (initial 6,227.40).

If any index falls below its coupon barrier on an observation date, the issuer will not pay the contingent coupon for that quarter, regardless of the other indexes’ performance. Observation and optional redemption dates occur quarterly throughout the five-year term until the final valuation on July 21, 2031.

Downside Exposure and Principal Repayment at Maturity

At maturity on July 28, 2031, full principal repayment plus any final contingent coupon occurs only if all indexes close at or above their downside thresholds, set at 50% of initial values: 1,471.215 for Russell 2000, 3,721.64 for S&P 500, and 3,113.70 for EURO STOXX 50. If any index closes below its threshold, investors will receive less than their principal or potentially nothing, bearing the full loss equivalent to the worst performing index’s decline.

Issuer’s Redemption Rights and Investor Considerations

Bank of Montreal may redeem the notes at its discretion on any quarterly optional redemption date, paying principal plus any due contingent coupon, terminating further payments. This call feature limits investor upside if indexes rise significantly, as early redemption caps gains and shortens investment horizon. Investors have no control over early redemption decisions and must weigh this structural limitation against the quarterly coupon potential.

Pricing, Distribution, and Terms Overview

Priced at $10.00 per note with a $0.15 underwriting discount, net proceeds to Bank of Montreal were $9.85 per note. The $1.1 million offering generated $16,500 in underwriting fees, with net proceeds of $1,083,500. The trade date was July 20, 2026, and settlement occurred July 27, 2026. Minimum investment was $1,000 (100 notes). Initial estimated value was $9.94 per note, reflecting the fixed-income component valued at the issuer’s internal funding rate.

Distribution was managed by BMO Capital Markets Corp., a Bank of Montreal subsidiary, and UBS Financial Services Inc. as joint agents. The offering was registered under SEC filing 333-285508 pursuant to Rule 424(b)(2). The pricing supplement was amended on July 27, 2026, after the initial July 20 pricing. The notes carry CUSIP 063929871 and ISIN US0639298712.

Credit Risk and Issuer Obligations

All payments depend solely on Bank of Montreal’s creditworthiness. These senior unsecured notes lack collateral and rank equally with the issuer’s other unsecured debt. In case of default, investors have no priority claims and may lose their entire investment. The notes are not insured by FDIC, Canada Deposit Insurance Corporation, or any government agency, nor are they subject to bail-in or conversion under Canadian deposit insurance laws.

Index Performance Risk and Dividend Exclusion

Investors bear the full market risk of all three indexes without offsetting diversification. Losses are determined by the lowest performing index, meaning a 30% decline in one index results in a 30% principal loss regardless of others’ gains. Additionally, note holders do not receive dividends paid by the underlying indexes, reducing total return compared to direct index ownership, especially for the dividend-paying S&P 500 and EURO STOXX 50.

Coupon Barrier Risks and Market Volatility

Coupon barriers at 70% of initial index values mean a 30% decline can eliminate quarterly coupon payments. The Russell 2000 coupon barrier of 2,059.700 reflects this 30% buffer below its initial 2,942.429 value. Historical volatility suggests a substantial chance of missed coupon payments during the term. Higher coupon rates, such as the 10.80% for Russell 2000, correspond to increased risk of coupon loss.

Valuation Approach and Market Liquidity

Bank of Montreal’s initial valuation combines a fixed-income debt component at the issuer’s funding rate plus the embedded contingent equity features, resulting in an estimated $9.94 value per $10 note. The $0.06 discount accounts for option costs, distribution expenses, and issuer profit. Market value will fluctuate with index performance, interest rates, volatility, credit spreads, and time to maturity. These notes are not exchange-listed and lack continuous liquidity, requiring negotiated sales for early exit, potentially at prices differing from intrinsic value.

Comparison to Traditional Debt and Regulatory Disclosures

The notes carry substantially higher risk than conventional Bank of Montreal debt, combining issuer credit risk with equity market exposure tied to the least performing index. The SEC and state regulators have neither approved nor disapproved the notes or their disclosures. The offering complies with Rule 424(b)(2) under the Securities Act of 1933. Extensive risk information is provided across the pricing supplement, product supplement, underlying supplement, prospectus supplement, and base prospectus documents.

Investment Suitability and Risk Summary

Bank of Montreal advises that these notes are suitable only for investors who fully understand and accept the significant risks, including possible total loss of principal, no guaranteed coupon payments, full downside exposure to the worst performing index, lack of upside participation, no dividend income, and issuer credit risk. The notes’ five-year term and quarterly structure require tolerance for market cycles and potential coupon suspension. The issuer earns $16,500 in distribution revenue from the $1.1 million principal, highlighting the financial incentives involved in marketing these high-risk structured products.