Bank of Montreal Prices 10-Year Redeemable Fixed Rate Notes at 5.45% with Bail-In Provisions Under Senior Medium-Term Notes Series K

Structure of Bank of Montreal's Series K Redeemable Fixed Rate Notes

Bank of Montreal's pricing supplement describes these securities as Senior Medium-Term Notes, Series K — specifically structured as Redeemable Fixed Rate Notes. Each note carries a principal amount of $1,000 and is offered in denominations of $1,000 and integral multiples thereof. The notes are scheduled to mature on July 31, 2036, representing a ten-year term from the anticipated issue date of July 31, 2026, with a trade date set for July 29, 2026. These are unsecured obligations of Bank of Montreal, and the disclosure clearly states that all payments are subject to the credit risk of the issuing institution.

The notes are not listed on any securities exchange, meaning there will be no publicly quoted secondary market through a regulated venue. This structural characteristic may affect liquidity for holders who wish to exit their positions prior to maturity or prior to any optional redemption date. The absence of exchange listing is an important consideration for retail and institutional investors alike when evaluating the suitability of these instruments within a broader portfolio.

Fixed Interest Rate of 5.45% and Semi-Annual Payment Schedule

The notes pay a fixed interest rate of 5.45% per annum, calculated on the basis of a 30/360 day count convention, unadjusted. Interest payments are made semi-annually on the 31st day of each January and July, commencing January 31, 2027, and continuing through to the stated maturity date or, if the notes are redeemed early, through to the applicable optional redemption date. The first interest period runs from the issue date of July 31, 2026 through to, but excluding, January 31, 2027.

At maturity, unless the notes have been redeemed prior to that date by Bank of Montreal, holders are entitled to receive a cash payment equal to $1,000 per note, plus any accrued and unpaid interest. The disclosure does not provide any variable or contingent return component — the instrument is a straightforward fixed rate security from an interest calculation standpoint, with complexity arising principally from the redemption mechanics and the Canadian bail-in framework, both of which are described in detail within the pricing supplement.

Optional Redemption Rights Held Solely by Bank of Montreal

A defining feature of these notes is the optional redemption right, which is held exclusively by Bank of Montreal and not by any holder of the notes. The bank may redeem the notes in whole, but not in part, on any of the designated optional redemption dates. These dates fall semi-annually on the 31st day of each January and July, commencing July 31, 2027, and ending on January 31, 2036. Redemption, if exercised, occurs at 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the redemption date.

The announcement specifies that Bank of Montreal must provide notice to holders at least five business days and not more than 30 business days prior to any optional redemption date. This notification window is relatively narrow compared to some other structured note offerings and represents a practical consideration for holders managing cash flow or reinvestment risk. The notes are explicitly not subject to repayment at the option of any holder prior to the stated maturity date, which means investors have no equivalent put right under the terms disclosed.

Canadian Bail-In Powers and Conversion Risk Under the CDIC Act

One of the most significant risk disclosures in this pricing supplement concerns the bail-in nature of the notes. The filing states that the notes are "bail-inable notes" as defined under the accompanying prospectus supplement, and are subject to conversion — in whole or in part, by means of a transaction or series of transactions and in one or more steps — into common shares of Bank of Montreal or any of its affiliates. This conversion mechanism arises under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act, commonly referred to as the CDIC Act.

By acquiring an interest in these notes, each holder or beneficial owner is deemed to irrevocably consent to this potential conversion and to the extinguishment of any remaining rights in respect of the converted portion. The disclosure further states that holders and beneficial owners submit to the jurisdiction of the courts in the Province of Ontario with respect to the operation of the CDIC Act. This is a material legal and financial risk that distinguishes these notes from conventional debt instruments and warrants careful review by any prospective investor, particularly those not familiar with Canadian bank resolution frameworks.

Deemed Agreement and Holder Acknowledgements on Bail-In Terms

The pricing supplement goes further to outline the specific acknowledgements that holders and beneficial owners are deemed to have made upon acquisition of the notes. These include agreeing to be bound by the CDIC Act, confirming that Bank of Montreal has not directly or indirectly provided financing to the holder for the express purpose of investing in these bail-inable notes, and acknowledging that the bail-in terms are binding regardless of any other agreement or applicable law that might otherwise govern the notes.

The filing emphasizes that in the event of a bail-in conversion, the converted portion of the principal amount and any accrued and unpaid interest will be deemed paid in full by the issuance of Bank of Montreal common shares. This conversion occurs without any further action required from the holder or the trustee. While the disclosure notes that this consent does not limit rights that holders may otherwise have under the bail-in regime, it represents a substantive shift of risk compared to a standard unsecured debt obligation, and the pricing supplement directs readers to the accompanying prospectus supplement for further detail on this risk factor.

Pricing, Underwriting Discount, and Proceeds to Bank of Montreal

The original issue price per note is $1,000.00, with an underwriting discount of $20.00 per note, resulting in proceeds to Bank of Montreal of $980.00 per note. BMO Capital Markets Corp., referred to in the filing as BMOCM, is acting as the underwriter and will receive discounts and commissions of up to $20.00 per note. From that underwriting discount, BMOCM may allow selected dealers a selling concession of up to $20.00 per note, depending on market conditions at the time each purchase order is submitted.

The disclosure notes a variation in pricing for eligible institutional investors and investors purchasing through fee-based advisory accounts. For such buyers, the original issue price may reflect a foregone selling concession and will not be less than $980.00 per note and not more than $1,000.00 per note. The total aggregate principal amount of the offering had not been finalized at the time of this preliminary pricing supplement filing, and the filing reflects blank fields for total proceeds and total discounts, consistent with the preliminary nature of the document. The company did not disclose the total final offering size in the preliminary filing.

Unsecured Obligation Status and Absence of Government Insurance

The pricing supplement explicitly states that the notes represent unsecured obligations of Bank of Montreal. This means that in the event of a default by the bank, holders would not have a secured claim against specific assets of the institution and could lose some or all of their investment. The disclosure reiterates that this credit risk is borne entirely by the noteholder and is not mitigated by any external insurance mechanism.

Specifically, the filing states that the notes are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund, the Canada Deposit Insurance Corporation, or any other governmental agency. This is a critical distinction for investors who might otherwise assume that a structured note issued by a large bank carries deposit-like protection. The regulatory caveat that neither the Securities and Exchange Commission nor any state securities commission has approved or passed upon the accuracy or adequacy of the pricing supplement is also prominently noted in the disclosure.

Relationship to Existing Prospectus Supplement and Product Supplement Documentation

This pricing supplement is issued in conjunction with, and should be read alongside, Product Supplement No. RLN-1 dated March 25, 2025, as well as the Prospectus Supplement and Prospectus both dated March 25, 2025. The filing states that where any disclosure in this pricing supplement is inconsistent with those earlier documents, the terms set out in this pricing supplement will control. The notes are issued under Registration Statement No. 333-285508, and Bank of Montreal's Central Index Key on the SEC website is identified in the filing as 927971.

Links to the relevant underlying documents are provided within the filing via the SEC's EDGAR platform. Investors are directed to review those documents for a full understanding of the general terms governing fixed rate notes under this program, including the method of interest calculation, accrual and payment mechanics, and the complete risk factor disclosures applicable to bail-inable notes. The pricing supplement itself covers only the specific terms applicable to this particular issuance and should not be read in isolation from the broader disclosure framework.

Preliminary Status of the Pricing Supplement and Outstanding Information

It is important to note that this document is described as a preliminary pricing supplement, with the filing indicating that information contained within it is not complete and may be changed. The trade date, issue date, and final aggregate principal amount are among the items that may be subject to revision before the final pricing supplement is published. The preliminary supplement was dated July 13, 2026, with the filed date noted as July 14, 2026, and the formal trade date is anticipated to be July 29, 2026.

As a preliminary document, certain fields — including the total principal amount of the offering and the corresponding total underwriting discount and total proceeds figures — appear as blank placeholders in the filing. Investors reviewing this announcement should be aware that the finalized terms will be set out in a subsequent final pricing supplement and that the preliminary document represents the framework within which those final terms will be established, subject to then-current market conditions at the time of pricing.