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On July 20, 2026, Bank of Montreal priced a new issuance of market-linked securities tied to the worst-performing stock among Amazon.com, Inc., Alphabet Inc., and Meta Platforms, Inc., as detailed in a pricing supplement. These three-year notes offer contingent quarterly coupons at a 19.70% annualized rate, feature automatic call provisions triggered if any underlying stock returns to its initial price, and expose investors to principal loss if the lowest-performing stock declines beyond 30% at maturity. The $2.749 million offering, distributed by Wells Fargo Securities, targets investors with advanced knowledge of equity-linked structured products.
Key Highlights
- NYSE: WTIU 12; Bank of Montreal senior medium-term notes linked to Amazon, Alphabet, and Meta stock performance
- Pricing date: July 20, 2026; Issue date: July 23, 2026; Maturity date: July 25, 2029
- Contingent quarterly coupons at 19.70% annual rate, payable if the lowest-performing stock closes above 70% of its initial price, with a memory feature for missed payments
- Automatic call triggered if any underlying stock reaches or exceeds its starting price on quarterly dates from January 2027 to April 2029
- Principal at risk if the lowest-performing stock closes below 70% of its initial value at maturity, potentially resulting in losses exceeding 30%
- Offering price of $1,000 per note with a $23.25 agent discount; total offering size of $2.749 million
Investment Structure and Terms of the Three-Year Notes
Bank of Montreal's unsecured senior medium-term notes have a $1,000 face value each and mature on July 25, 2029, marking a three-year investment period from the July 23, 2026 issue date. On the pricing date of July 20, 2026, the closing prices were Amazon.com, Inc. at $249.99, Alphabet Inc. Class A at $351.99, and Meta Platforms, Inc. Class A at $645.85.
The notes’ returns depend exclusively on the lowest-performing stock among the three technology giants. Regardless of the other stocks’ outcomes, the investor’s coupon eligibility and principal repayment hinge on the stock with the poorest relative performance, recalculated quarterly.
Contingent Coupon Payments and Memory Feature Explained
These securities pay a contingent coupon quarterly at an annualized 19.70%, provided the lowest-performing stock’s closing price on the coupon calculation date is at least 70% of its initial price. The coupon thresholds are $174.993 for Amazon, $246.393 for Alphabet, and $452.095 for Meta.
A memory feature allows accumulation of missed coupon payments. If the lowest-performing stock closes below the threshold on a coupon date, no payment is made that quarter. However, if it later recovers to or above the threshold, investors receive the current quarter’s coupon plus all previously unpaid coupons simultaneously, without interest on deferred amounts. If the stock never recovers above the threshold during the term, no coupons are paid.
Automatic Call Provisions and Early Redemption Conditions
The notes include automatic call provisions allowing Bank of Montreal to redeem early if, on any quarterly date between January 2027 and April 2029, the lowest-performing stock’s closing price equals or surpasses its initial price. Upon automatic call, investors receive the $1,000 principal plus the final and any accrued unpaid contingent coupons.
This feature limits upside potential since early redemption occurs regardless of other stocks’ performance or investor preferences. Investors receive par and accrued coupons but forgo further gains if the stocks continue appreciating post-call.
Principal Risk and Downside Exposure at Maturity
If not called early, investors face principal risk at maturity. The downside threshold matches the 70% coupon threshold. Investors receive full principal only if the lowest-performing stock closes at or above 70% of its initial price on July 25, 2029.
If the lowest-performing stock closes below this threshold, investors incur losses exceeding 30%, potentially losing a substantial portion or all of their principal. For example, a 50% decline in Amazon stock would reduce investor principal to $500 per $1,000 invested. Notably, returns do not benefit from better-performing stocks or dividends.
Underlying Technology Stocks and Risk Asymmetry
The notes are linked to Amazon.com, Alphabet, and Meta Platforms, leading U.S. technology firms with high market caps and liquidity. By focusing on the lowest-performing stock, the investment exposes investors to concentrated downside risk without upside participation from better performers.
The filing clarifies: "You will not benefit in any way from the performance of the better performing Underliers. Therefore, you will be adversely affected if any Underlier performs poorly, even if the other Underliers perform favorably." This asymmetry defines the product’s risk profile and complexity.
Offering Details and Pricing Information
The notes were offered at $1,000 each with a $23.25 agent discount, totaling 2,749 notes and gross proceeds of $2.749 million. After agent discounts of $63,914.25, net proceeds to Bank of Montreal were $2,685,085.75. The estimated initial value per note was $946.26, indicating sales above estimated fair value.
Wells Fargo Securities, LLC acted as distribution agent and principal. Bank of Montreal’s affiliate, BMO Capital Markets Corp., may pay up to $2.00 per note in marketing fees to selected dealers. The securities are unlisted and intended for holding until maturity or automatic call, not for active trading.
Issuer Credit Risk and Default Considerations
These unsecured obligations expose investors to Bank of Montreal’s credit risk. All payments, including coupons, call payments, and principal, depend on the bank’s financial health. Investors have no recourse to the underlying stocks for payment. Default by Bank of Montreal could result in partial or total loss, even if the stocks perform well.
The filing states: "All payments on the securities are subject to our credit risk, and you will have no ability to pursue any Underlier for payment; if Bank of Montreal defaults on its obligations, you could lose some or all of your investment." The notes are not insured by FDIC, Canada Deposit Insurance Corporation, or any governmental agency and are not subject to bail-in or conversion under Canadian regulations.
Complexity, Valuation, and Risk Disclosures
Bank of Montreal highlights the securities’ complexity and associated risks, noting they differ significantly from conventional debt. The initial estimated value of $946.26 per note is below the $1,000 offering price, reflecting valuation challenges. The filing underscores that the securities’ value fluctuates based on multiple factors and cannot be precisely predicted.
Risk factors are detailed in accompanying product and prospectus supplements. Regulatory bodies including the SEC have neither approved nor disapproved the securities or their disclosures. The bank warns that false claims of approval constitute a criminal offense.
Investor Suitability and Considerations
These structured notes require investors to understand the interplay of three technology stocks, the lowest-performer mechanism, and the memory feature for coupons. The combination of contingent coupons, automatic call, and principal-at-risk elements makes them fundamentally different from traditional bonds.
Investors anticipating strong technology stock appreciation might prefer direct equity ownership to capture unlimited upside, as the automatic call caps gains here. Those seeking principal protection below 70% of initial values will find none. Suitability depends on risk tolerance, views on stock volatility, and confidence that all three stocks will remain above 70% of their initial prices through at least the first call date in January 2027.
