Another local bank has agreed to settle a class-action lawsuit over how it charges its customers overdraft fees on debit card transactions.

Representatives of Central Pacific Bank signed papers Wednesday for a $1.2 million settlement, said John Perkin, one of the lawyers for named plaintiffs Gregory and Camila Peterson.

The proposed settlement, which is subject to state Circuit Court approval, will allow CPB customers to recover improperly assessed overdraft fees they paid in the five-year statute of limitations period ending when the lawsuit was filed in March.

CPB spokesman Wayne Kirihara said the bank is working on a settlement through mediation and was unable to confirm whether the bank has reached an agreement.

Bank of Hawaii, the state’s second-largest bank, reached a $9 million settlement in July in a similar class-action lawsuit.

Another class-action lawsuit, against American Savings Bank, the state’s third-largest bank, is pending.

CPB is the state’s fourth-largest bank.

All three lawsuits allege that the banks post transactions from the highest amount to the lowest to subtract funds from customers’ accounts as quickly as possible to maximize the number of overdrafts and overdraft fees.

Bank of Hawaii said it changed its policy in January to post the transactions from the lowest dollar amount to the highest.

The Federal Deposit Insurance Corp. said in a recent report that overdraft fees account for an estimated 74 percent of all service charges imposed on deposit accounts in the United States. In 2007 that amounted to $17.5 billion. Overdraft fees amounted to $37.1 billion by 2009.