Bank of America

(BAC) - Get Report

says it will appeal a recent court ruling that directed the bank to pay $284 million to customers who were improperly charged overdraft fees.

Last week a California state judge ruled against the nation's third-largest bank, after finding that the lender charged overdraft fees on customer accounts containing Social Security deposits. The judge also ruled that other affected customers could be entitled to an award of $1,000 each.

The lawyers bringing the class action say the additional award could cost the Charlotte, N.C., bank an additional $1 billion in damages.

The lawsuit arose out of allegations that the bank improperly deducted check overdraft fees and other charges from customer accounts specifically set up to receive government Social Security checks.

The bank had argued that the fees were charged because the accounts contained a mix of funds, including Social Security checks. But the judge ruled that the bank's actions were improper.

"This ruling is not unexpected, but still we are disappointed in the judge's ruling," says BofA spokeswoman Shirley Norton. "The bank treats these accounts in the same way as every other bank in the industry, and there is overwhelming authority that the bank's practices are appropriate."