Large-bank capital returns and regional M&A advanced

Federal Reserve stress-test results preserved large-bank capital requirements. All 32 tested banks stayed above minimum common equity tier 1 requirements under a scenario that included a 39% commercial real estate price decline, a 30% house-price decline and peak unemployment of 10%. Aggregate capital fell 1.6 percentage points after more than $708 billion of modeled loan losses, and the Fed will preserve stress capital buffers while weighing stress-test process changes as soon as next year.

JPMorgan Chase and Morgan Stanley announced larger capital returns. JPMorgan Chase authorized a new $50 billion common-share repurchase program effective July 1, 2026 and plans to raise its third-quarter 2026 dividend to $1.65 per share. Morgan Stanley increased its quarterly common dividend to $1.15 from $1.00 and reauthorized a $20 billion multi-year buyback beginning in the third quarter of 2026; BNY Mellon plans a 19% dividend increase to $0.63, while Goldman Sachs plans to raise its common dividend to $5.00 subject to board approval.

U.S. Bancorp and Old Second set narrower capital actions. U.S. Bancorp said its stress capital buffer will remain 2.6% until October 1, 2027 and its quarterly common dividend will rise to $0.54 from $0.52 starting in the third quarter of 2026. Old Second Bancorp authorized up to $61.2 million of common-stock repurchases from July 1, 2026 through June 30, 2027, subject to Federal Reserve nonobjection.

Catalyst-Lakeside, Columbia-Northfield and Esquire-Signature moved through approvals. Lakeside shareholders approved the pending merger with Catalyst, all required regulatory approvals were received, and closing is expected on or about July 14, 2026. Columbia Bank MHC shareholders approved the plan of conversion and merger agreement with Northfield Bancorp, including Columbia Financial merger-share issuance; Northfield Bancorp shareholders approved the merger agreement and advisory merger-related compensation. Esquire Financial Holdings stockholders approved issuance of Esquire shares for Signature holders, and Esquire and Signature announced the final exchange ratio for their proposed merger.

Colony-First Reliance, MidFirst-Dallas Capital and Keweenaw-Range added scale. Colony Bankcorp entered a definitive merger agreement with First Reliance Bancshares, with First Reliance to merge into Colony and closing expected in the fourth quarter of 2026; reporting also put the deal value at $163 million and the combined company near $5 billion of assets. MidFirst Bank agreed to buy Dallas Capital Bank for an undisclosed sum, bringing a $1.2 billion-asset Dallas Capital into $42 billion-asset MidFirst and extending MidFirst’s Texas footprint. Keweenaw Financial agreed to acquire Range Financial, targeting a fourth-quarter close and a combined institution with $1.68 billion of assets and $1.43 billion of deposits.

Megabanks split on the GSIB short-term funding proposal. The Federal Reserve proposal would remove risk-weighted assets from the denominator of the short-term wholesale funding component of the global systemically important bank surcharge. JPMorgan Chase and Bank of America objected that the change could distort risk measurement, while Goldman Sachs and Morgan Stanley supported the revisions, creating a capital-competitiveness split among the largest U.S. banks.

FirstBank Puerto Rico and First BanCorp face Epstein AML allegations. A proposed civil class action alleges FirstBank Puerto Rico maintained more than 30 accounts for Epstein-related entities, ignored standard anti-money-laundering protocols and did not file suspicious activity reports until two weeks after Epstein’s 2019 arrest. The claims create a legal and compliance risk item for FirstBank Puerto Rico and parent First BanCorp, but the cited report describes allegations in a complaint rather than findings.