John M. (Jay) Dalton, 54, a former banker in Washington and Montgomery County, died of cancer Sunday at the Washington Home Hospice.

He began his banking career here in 1951 with the American Security and Trust Co. and became a branch manager. Later he was a vice president and senior executive officer of the Maryland National Bank.

In 1965, Mr. Dalton helped organize and was president and chief executive officer of the Old Line National Bank in Rockville. Six years later he became an officer of another new bank, the Free State Bank and Trust Co.

More recently he had been president of the American General Leasing Co.

Mr. Dalton was a past president of the D.C. Junior Chamber of Commerce and had been a member of the Washington, D.C. Small Business Advisory Council.

He was born in Derby, Conn., and graduated from Seton Hall University in New Jersey. He served in Europe with the Army in World War II.

Mr. Dalton was general chairman of the President's Christmas Pageant for Peace during 1962-68. He had participated actively in the United Givers Fund, March of Dimes and Montgomery County Cancer Society drives.

He belonged to the Congressional Country Club and was a member of the Catholic Shrine of the Most Blessed Sacrament.

He is survived by his wife, Gloria W., and a daughter, Susan Jayne, of the home in Chevy Chase Village, and his mother, Marguerite Dalton, and two brothers, Ronald and Robert, all of Shelton, Conn.

The family suggests that expressions of sympathy be in the form of contributions to the American Cancer Society or the Washington Home Hospice.