Expenses were up $114 million, or 18%, from the prior year. The increase was primarily due to higher employee compensation and marketing expenses associated with the Home Loan Center acquisition in June, increased card marketing initiatives and higher headcount.
Payment Services pretax income was $33 million in the quarter, down $9 million, or 21%, from the prior year. Revenue increased $8 million, primarily driven by an increase in point-of-sale transactions on the PULSE network. Expenses were up $17 million from the prior year mainly due to higher marketing and employee expenses, primarily related to new partnership and growth initiatives.
Payment Services dollar volume was $49.0 billion for the fourth quarter of 2012, up 13% from the prior year, driven by higher PULSE and Network Partners volume. Network Partners was formerly referred to as Third-Party Issuers. The name change does not impact the composition of the business.Dividend The company’s board declared a cash dividend of $0.14 per share of common stock, payable on Jan. 17, 2013, to stockholders of record at the close of business on Jan. 3, 2013. Share Repurchases In the fourth quarter of 2012, the company repurchased approximately 10 million shares of common stock for $401 million. Shares outstanding declined by 2% from prior quarter. Conference Call and Webcast Information The company will host a conference call to discuss its fourth quarter results on Thursday, December 20, 2012, at 10:30 a.m. Central time. Interested parties can listen to the conference call via a live audio webcast at http://investorrelations.discoverfinancial.com. About Discover Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card , America's cash rewards pioneer, and offers home loans, private student loans, personal loans, online savings accounts, certificates of deposit and money market accounts through its direct banking business. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discoverfinancial.com. A financial summary follows. Financial, statistical, and business related information, as well as information regarding business and segment trends, is included in the financial supplement filed as Exhibit 99.2 to the company’s Current Report on Form 8-K filed today with the Securities and Exchange Commission (“SEC”). Both the earnings release and the financial supplement are available online at the SEC’s website ( http://www.sec.gov) and the company’s website ( http://investorrelations.discoverfinancial.com). This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which speak to our expected business and financial performance, among other matters, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” and similar expressions. Such statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. These forward-looking statements speak only as of the date of this press release, and there is no undertaking to update or revise them as more information becomes available.