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Bank of Montreal has priced $9.977 million in market-linked securities maturing July 20, 2029, which automatically call if the lowest-performing stock among Apple Inc., Amazon.com Inc., and Oracle Corporation reaches its initial value on any quarterly calculation date from January 2027 through April 2029. These securities offer a 21.10% annual contingent coupon but carry the risk of losing over 50% of principal if the lowest-performing stock falls below 50% of its starting value at maturity. The offering was priced on July 17, 2026, with Wells Fargo Securities acting as distribution agent.
Key Highlights
- NYSE: WTIU 026 026 026 Bank of Montreal issued $9.977 million aggregate principal of auto-callable equity linked securities.
- Securities linked to the lowest-performing stock among Apple Inc., Amazon.com Inc., and Oracle Corporation.
- Original offering price of $1,000 per security with an agent discount of $23.25; priced July 17, 2026, issued July 22, 2026.
- Automatic call triggered if the lowest-performing stock reaches its starting value on any quarterly calculation date from January 2027 to April 2029.
- Contingent coupon rate of 21.10% per annum payable quarterly if the lowest performer closes at or above 50% of its initial value on calculation days.
- Investors face full downside risk and potential loss exceeding 50% of principal if the lowest performer falls below 50% of its starting value at maturity.
Security Framework and Underlying Stocks
Bank of Montreal structured these market-linked securities to track the performance of three leading technology and retail stocks: Apple Inc., Amazon.com Inc., and Oracle Corporation. The securities’ payments depend solely on the performance of the lowest-performing stock among the three on each quarterly calculation date. The starting values as of the July 17, 2026 pricing date are Apple at $333.74, Amazon at $247.23, and Oracle at $126.41. Investors bear the risk of the worst-performing stock without benefiting from any of the others’ gains.
The contingent coupon and downside thresholds are set at 50% of each stock’s starting value. If the lowest-performing stock closes at or above this threshold on a quarterly calculation day, the securities pay a 21.10% annual contingent coupon. A memory feature allows investors to receive previously unpaid coupons if the stock recovers above the threshold after a decline, although no interest accrues on missed payments.
Contingent Coupon Structure and Memory Feature
The securities’ contingent coupon payments are made quarterly, triggered only when the lowest-performing stock’s closing price meets or exceeds 50% of its initial value. The 21.10% annual coupon translates to approximately $52.75 per quarter per $1,000 security. The memory feature accumulates unpaid coupons during periods when the stock falls below the threshold and pays them in lump sum once the stock recovers above 50%, but if the stock remains below the threshold for the entire term, no coupons are paid.
Automatic Call Provisions and Early Redemption
Automatic call provisions allow the securities to terminate early if the lowest-performing stock’s closing value equals or exceeds its starting value on any quarterly calculation date from January 2027 through April 2029. In such cases, investors receive the principal plus the final contingent coupon and any unpaid coupons. This feature offers potential early recovery of principal and accrued coupons if the weakest stock rebounds to its initial level.
This early call mechanism operates independently of the July 20, 2029 maturity date, providing an 18-month window for early termination based on the lowest-performing stock’s performance. Because the securities are linked to the lowest performer, strong gains by Apple, Amazon, or Oracle cannot offset losses if one stock underperforms significantly.
Principal Risk and Downside Exposure at Maturity
If the securities reach maturity without being called and the lowest-performing stock closes below 50% of its starting value, investors face substantial principal loss, potentially exceeding 50%. The filing clarifies that investors have no recourse against the underlying companies and bear full credit risk of Bank of Montreal. The asymmetric payoff means investors do not participate in any stock appreciation or dividends but are fully exposed to downside risk.
Valuation and Pricing Details
The estimated initial value per security on the July 17, 2026 pricing date was $938.23, reflecting the $23.25 agent discount off the $1,000 offering price. This valuation accounts for factors such as stock volatility, interest rates, time decay, and probability of early call. The total principal amount issued is $9.977 million, representing 9,977 securities. Wells Fargo Securities, LLC served as distribution agent and principal, while BMO Capital Markets Corp., an affiliate of Bank of Montreal, may pay up to $3.00 per security in fees to dealers for marketing and distribution.
Issuer Credit Risk and Non-Insured Status
Bank of Montreal is the sole issuer responsible for all payment obligations, exposing investors to issuer credit risk. The securities are not insured by the FDIC, Canada Deposit Insurance Corporation, or any other government agency. The filing confirms these are not bail-inable notes and are not convertible into common shares under Canadian deposit insurance regulations. While Bank of Montreal is a major North American financial institution with credit ratings from leading agencies, no explicit credit rating is disclosed in the filing.
Complexity, Risk Factors, and Investor Suitability
The filing highlights the securities’ complexity and risks, which differ significantly from traditional debt. Investors are directed to detailed risk disclosures in the pricing supplement, product supplement, prospectus supplement, and prospectus. The structure involves tracking the lowest of three stocks, quarterly observations, automatic call features, contingent coupons with memory, and full downside exposure without upside participation. These features make the securities suitable only for investors with sophisticated knowledge of equity-linked products, tolerance for principal loss, and capacity to hold until maturity or call.
Market Conditions at Pricing and Security Features
On July 17, 2026, the pricing date, Apple closed at $333.74, Amazon at $247.23, and Oracle at $126.41. These values set the coupon and downside thresholds at 50% of each stock’s starting price. The quarterly observation schedule runs through the July 20, 2029 maturity, with approximately 13 calculation dates. The 21.10% annual coupon reflects market volatility, interest rate expectations, and payoff probabilities as of pricing. The automatic call window from January 2027 to April 2029 aligns with anticipated recovery periods for the stocks, subject to market uncertainty.
Regulatory Filing and Offering Timeline
Bank of Montreal filed the pricing supplement under SEC Rule 424(b)(2) as part of Registration Statement No. 333-285508. This supplements a product supplement, prospectus supplement, and prospectus all dated March 25, 2025, following SEC protocols for complex equity-linked offerings. The filing date and pricing date coincide on July 17, 2026, with an issue date of July 22, 2026, allowing a standard five-business-day settlement.
Wells Fargo Securities served as distribution agent and principal, with BMO Capital Markets Corp. facilitating marketing and dealer distribution. The offering was a negotiated placement of a fixed principal amount rather than a shelf registration. The July 22, 2026 issue date complies with the industry’s three-business-day clearing convention.
