That surge in Bank of America’s (BAC) Basel III capital ratio didn’t come the old-fashioned way.

After taking a $1.6 billion hit to settle a lawsuit, the company paid more in dividends than it eked out in net income in the third quarter, so it didn’t build its equity buffer by retaining earnings. Instead, interest rates moved B of A’s way and credit spreads improved, leading to the one-percentage-point jump from a year earlier. At an estimated Tier 1 common ratio of 8.97% under the new rules, B of A blew away the forecast it had made just nine months earlier that it would end the year at about 7.5%. (Data on capital levels and ratios at the four largest banks in the country is shown in two tabs in the following graphic. Interactive controls are described in the captions. Text continues below.)

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