Bank of Montreal Issues $9.5 Million Autocallable Notes Linked to NVIDIA Stock

Structured Product Terms and Pricing Framework

Bank of Montreal established the offering details for these autocallable notes through a pricing supplement dated July 15, 2026. The notes carry a principal amount of $9,523,000 and are priced at par (100% of principal). The filing indicates that BMO Capital Markets Corp., a subsidiary of Bank of Montreal, serves as both the agent and selling agent for the offering. Investors purchasing the notes receive minimum denominations of $1,000 with integral multiples thereof, and settlement occurred on July 20, 2026.

The pricing structure incorporates an agent's commission of 2.00%, with proceeds to Bank of Montreal representing 98.00% of the offering amount. The filing notes that these commission and proceeds figures reflect aggregate amounts established when Bank of Montreal set its hedge positions on or prior to the pricing date, which may have varied based on market conditions. Certain dealers who distributed the notes to fee-based advisory accounts foregone some or all selling concessions, with public offering prices in those accounts ranging between $980.00 and $1,000 per $1,000 in principal amount. The filing states that the estimated initial value of the notes was $968.06 per $1,000 in principal amount as of the pricing date.

NVIDIA Stock as Reference Asset and Initial Pricing Level

The notes are structurally linked to the common stock of NVIDIA Corporation, identified by ticker symbol NVDA. The filing establishes an initial level for NVIDIA stock at $212.50 per share as of the pricing date of July 15, 2026. This initial level serves as the baseline measurement for determining whether contingent coupon payments will be made and whether the automatic redemption feature will be triggered during the note term.

Investors in these notes do not participate directly in NVIDIA equity ownership or voting rights. Instead, they receive economically-linked payments based on the closing price of NVIDIA stock on specified observation dates. The filing explicitly states that investing in the notes is not equivalent to a direct investment in the reference asset. The notes will not be listed on any securities exchange, limiting liquidity and secondary market trading opportunities for investors seeking to exit their positions prior to maturity or redemption.

Contingent Coupon Payment Mechanics and Barrier Levels

The notes are designed to deliver quarterly contingent coupon payments at a rate of 4.8125% per quarter, representing approximately 19.25% per annum if applicable. Contingent coupon payments are contingent on the performance of NVIDIA stock relative to the coupon barrier level established at $159.38 per share, which represents 75.00% of the initial level. On each quarterly observation date, if the closing price of NVIDIA stock is greater than or equal to the coupon barrier level, investors receive a contingent coupon payment equal to $48.125 for each $1,000 in principal amount on the corresponding payment date.

The observation dates for coupon determinations begin on September 30, 2026, and occur quarterly thereafter through March 29, 2029. The corresponding coupon payment dates follow shortly after each observation date. However, if the closing price of NVIDIA stock falls below the coupon barrier level on any observation date, no contingent coupon payment is made for that period. This structure means that investors forego quarterly income during periods of NVIDIA stock weakness, creating a cash flow timing risk alongside the underlying equity price risk inherent in the product structure.

Automatic Redemption Feature and Early Exit Mechanism

The notes include an automatic redemption feature that can terminate the investment prior to the July 5, 2029 maturity date. Beginning on the first observation date of September 30, 2026, if the closing price of NVIDIA stock is greater than 100% of the initial level ($212.50 per share), the notes will be automatically redeemed on that observation date. Upon automatic redemption, investors receive their full principal amount plus any contingent coupon otherwise due on the following contingent coupon payment date, referred to as the call settlement date.

Once the notes are automatically redeemed, investors receive no additional payments and the investment terminates. This feature reflects the product's design to benefit from moderate upside movement in NVIDIA stock while simultaneously capping the investor's exposure to such appreciation. The filing states that investors must be willing to have their notes automatically redeemed prior to maturity, indicating that early redemption should be anticipated as a possible outcome if NVIDIA stock appreciates above its initial pricing level during the three-year term.

Downside Risk and Principal Loss Mechanics at Maturity

The notes carry substantial downside risk if neither automatic redemption nor trigger avoidance occurs. If the notes are not automatically redeemed and mature on July 5, 2029, the return of principal depends on whether a trigger event has occurred. A trigger event is deemed to occur if the final level of NVIDIA stock on the valuation date of June 29, 2029 falls below the trigger level of $159.38 per share, representing a 25% decline from the initial level of $212.50.

If a trigger event has occurred, investors experience a direct loss proportional to the percentage decline in NVIDIA stock price. For each 1% decrease in NVIDIA stock from the initial level to the final level, investors lose 1% of their principal amount. This means that if NVIDIA stock declines to $100 per share by the valuation date, investors would experience approximately a 53% loss of principal. At maturity, investors receive a cash payment equal to $1,000 plus the percentage change in NVIDIA stock multiplied by the principal amount, along with the final contingent coupon if payable. The filing emphasizes that this payment at maturity may be zero or substantially less than the principal amount invested.

Credit Risk and Issuer Obligations

All payments on the notes are subject to the credit risk of Bank of Montreal as the issuer and obligor. The notes represent unsecured obligations of Bank of Montreal and are not savings accounts or deposits insured by the United States Federal Deposit Insurance Corporation, the Deposit Insurance Fund, the Canada Deposit Insurance Corporation, or any other governmental agency or instrumentality. Investors in these notes bear the full credit risk of Bank of Montreal for all principal and interest payments throughout the note term.

The notes will not be subject to conversion into Bank of Montreal common shares or the common shares of any of its affiliates under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act. This means investors have no rights to convert their notes into equity, limiting potential recovery mechanisms in stress scenarios. The combination of credit risk and structured downside exposure means investors are relying on both the stability of Bank of Montreal and the price performance of NVIDIA stock.

Valuation Timeline and Settlement Dates

The structured timeline for this offering spans from the pricing date of July 15, 2026, through final maturity on July 5, 2029, a period of approximately three years. Settlement occurred on July 20, 2026, marking the date when investors' funds were exchanged for note ownership. The critical valuation date for determining final payoff calculations and trigger event status is June 29, 2029, which precedes the final maturity date by six days.

During this three-year period, investors experience multiple decision points and outcome scenarios. Quarterly observation dates beginning September 30, 2026, determine whether contingent coupons are paid and whether automatic redemption occurs. The final valuation date on June 29, 2029, determines whether principal loss will be experienced at maturity. These multiple valuation points create complexity in return calculations and require investors to monitor NVIDIA stock performance across multiple time periods rather than at a single point in time.

Investment Suitability and Risk Acknowledgments

The filing emphasizes that investors purchasing these notes must be willing to have their investment automatically redeemed prior to maturity, must be willing to forego potential participation in NVIDIA stock appreciation, and must be willing to lose some or all of their principal amount. The product is explicitly not recommended for investors seeking direct equity exposure to NVIDIA or those seeking traditional fixed-income stability. Investors purchasing these notes are accepting a combination of equity risk, credit risk, and structural complexity in exchange for the potential for enhanced quarterly income through the contingent coupon structure.

The filing directs investors to review selected risk considerations beginning on page P-5 of the pricing supplement, additional risk factors in the product supplement, and further risk factors in both the prospectus supplement and the base prospectus. The magnitude and breadth of these risk disclosures underscore the complexity and multi-layered risks inherent in the structured note product. The filing also notes that neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the notes or passed upon the accuracy of the pricing supplement, product supplement, prospectus supplement, or base prospectus documentation.

Distribution Channels and Advisory Account Exceptions

Bank of Montreal Capital Markets Corp. serves as the primary distribution agent for these notes. The filing discloses that certain dealers who purchased the notes for sale to fee-based advisory accounts were permitted to forgo some or all of their selling concessions, fees, or commissions. This arrangement resulted in different pricing for investors in these advisory accounts compared to standard public offering prices. Investors in fee-based advisory accounts could purchase notes at prices ranging between $980.00 and $1,000 per $1,000 in principal amount, compared to the standard public offering price of $1,000 per $1,000 in principal amount.

This tiered pricing structure reflects common industry practice where advisory accounts operating on fee-based business models receive pricing concessions compared to commission-based distribution channels. The filing transparency regarding these pricing variations allows investors to understand the cost structure embedded in their specific purchase transactions. The notes will not be listed on any securities exchange, meaning secondary market trading for these notes would occur only through over-the-counter channels if available at all.