Paymentech Inc.'s net income declined 21% in its second fiscal quarter, ended Dec. 31, the company reported.

The Dallas payment processor also said earnings per share had dropped to 19 cents, from 26 cents in the same period of 1996.

Paymentech attributed its lackluster performance to the competitive nature of the processing industry and pricing pressures.

The merchant processing company, which Banc One Corp. acquired last year as part of its acquisition of First USA, did report some bright spots. For the six months ended Dec. 31, its reported net income of $10.8 million was more than double the $5.1 million for the same period the year before.

In the December quarter the company processed $13.6 billion of bank card sales volume, 22% more than it had in the comparable quarter the previous year. It also processed about 476 million transactions, a 39% increase from the year before.

"We saw very strong core revenue growth from transaction processing, up 15%, to $55 million, and that is very positive," said Pamela H. Patsley, president and chief executive officer.

Ms. Patsley said the holiday season had not been great for retailers, and Paymentech's expenses had accelerated more rapidly than its revenue.

The company also reported two unusual developments in the quarter. One was the sale of its stake in PHH/Paymentech, a fleet card joint venture, to PHH's new parent company, Cendant Corp. The other was an after-tax charge of $2 million for reserves established for equipment, inventory, and receivables.

Franco Turrinelli, a research analyst at William Blair & Co. in Chicago, said Paymentech had some "disappointing quarters" last year and the most recent results were "not out of line with expectations."

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