Jack Henry & Associates Inc. reported slower revenue growth and a lower profit for its first fiscal quarter, but executives of the processing technology vendor said its community bank and credit union customers seem optimistic about their ability to attract deposits from larger, troubled rivals.

Jack F. Prim, the vendor's chief executive officer, said cautious optimism was "near-universal" among the 1,200 bankers who attended its national customer conference in Washington last month.

"Most reported seeing substantial deposit inflows as customers move money from some of the large banks and brokerages in the headlines," Mr. Prim told analysts Wednesday on an earnings conference call. (The results were announced Tuesday after the market closed.)

Jack Henry, the last of the four major core processing technology vendors to report earnings for the quarter that ended Sept. 30, said its image exchange revenue was down 61% from a year earlier, pulling down overall revenue growth for electronic payments to 16%. If not for the drag of falling image exchange revenue, overall revenue would have risen 19%, it said.

Executives said the company's customers are choosing to go directly to the Federal Reserve Board banks for image exchange rather than having Jack Henry do that processing.

Unlike its larger rivals, which also provide check processing, Jack Henry does not have an extensive internal check clearing network. Fiserv Inc., for instance, has a nationwide network of 50 item processing centers that can print substitute checks for delivery to paying banks that lack image processing capabilities.

This was the second consecutive quarter in which Jack Henry reported lower image exchange revenue. It fell 10% from a year earlier in the quarter that ended June 30, because more customers were turning directly to the Fed to clear checks electronically. In discussing the June quarter's results, however, executives described the service as a convenience to customers. For the three months that ended Sept. 30, Jack Henry said its image exchange revenue fell 38% compared with the previous quarter.

In the broader market, image exchange volume continues its strong growth. The Electronic Check Clearing House Organization says that image receipt volume for June, the latest month for which it has data, averaged 40.6 million images a day, 75% higher than June of 2007.

In other electronic payment processing areas, Jack Henry reported stronger results, with debit card processing up 12% and online bill-payment transactions volumes up 23%.

Jack Henry's net income fell 4% from a year earlier in the quarter ended Sept. 30, to $22.5 million.

Revenue rose 5%, to $183.1 million. Earnings of 26 cents a share missed analysts' average estimate by a penny.

Gil B. Luria, an analyst at Wedbush Morgan Securities, downgraded his recommendation on Jack Henry's shares to "hold," from "buy," on Wednesday. He noted that the stock had outperformed the broader market in the recent downdraft, falling only 8% since Sept. 12, compared with a 22% drop in the Nasdaq index.

That leaves little upside for investors, though the company's fundamentals remain sturdy, Mr. Luria wrote in a note to clients. "We continue to believe that an experienced management team, high recurring revenue and a loyal customer base will carry Jack Henry through a more challenging 2009."

Mr. Prim said he considered the results strong in light of an "unprecedented stream of progressively worse economic news," which led banks to curb discretionary hardware and software spending.

Jack Henry's software licensing revenue fell 2%, to $13.3 million, or 7% of the quarter's total, as more banks turned to outsourcing. Support and service revenue, the largest part of Jack Henrys business, grew 10%, to $151.9 million.