Few outside Tulsa and certain financial circles have ever heard of 48-year-old Bartmann or his 11-year-old Commercial Financial Services. Yet CFS is now the world's biggest repository of bad consumer debt; it owns, and is trying to collect on, some $7 billion worth. An impressive percentage of America's vast and growing pool of credit-card delinquencies ends up here, in Tulsa's CityPlex tower, where it's worked by an army of highly trained collection agents on the floors below. Fifty more such agents are being hired every week.
Indeed, though it has already acquired substantial girth, CFS continues to grow at a rate that's normally the preserve of fledgling start-ups. Revenues have quadrupled, on average, every year since 1993 and are poised to triple this year. But that's not the shocking part.
The shocking part comes when you peek at the company's income statement. Check out this year's first-quarter results: CFS reported quarter-year net revenues of $224 million. And on those revenues it made a net profit of--you might want to sit down for this--$108 million. That gives the company an eye-popping net margin of 48%.
Something's wrong, you say. In any reasonably competitive economy, profits of that magnitude aren't supposed to exist. Surely, something has been overlooked.
But there it is, unmistakable in its obesity: a bottom line that's almost half as big as the top line. The 1996 full-year numbers tell a similar story: $137 million in profits on revenues of $349 million. A 39% margin.
For context, consider that Intel and Microsoft, two of the country's most insanely profitable corporations, can boast margins of no more than 26%. Few companies attain the double-digit range. And here is obscure CFS, quietly on track to generate nearly half a billion dollars in income this year on just under a billion in sales.
The supranormal numbers are enough to make normally circumspect Wall Streeters punchy. "He's just off the charts," gushes Steven Pasko of BT Securities in New York City. "The numbers are so mind-boggling they're hard to believe." This past spring a leading investment bank affixed a $3-billion valuation to the privately held company, of which Bartmann owns 80%. (Jones owns most of the remainder.) That would give Bartmann a net worth of roughly $2.4 billion. But some say that's too conservative: if CFS were to go public at an earnings multiple typical for a financial-services company (around 15 to 1, after taxes), Bartmann's stake would be closer to $3.5 billion. Which, according to the best information available, puts him among the 25 wealthiest people in America--just ahead of Rupert Murdoch and Ross Perot.
All of which begs the question: who is this guy--this guy who 12 years ago was a commercial dead man, with more than $1 million less than nothing?
From his perch atop Tulsa's tallest building, Bartmann can overlook the downtown skyline with the knowledge that he is, quite literally, atop everyone else in the city. This morning he's just off the phone with an employee who wanted permission to hold an office meeting on Sunday. "In'nat cool?" says the newly minted billionaire, his small frame all coiled energy as he struts ramrod straight into the glassy boardroom. "She wants to work on a Sunday!"
A high school dropout from Iowa who left his impoverished home at age 14, Bartmann exudes a sort of look-what's-become-of-this-kid giddiness--an effect that's accentuated by his slight lisp. Today he's clad in jeans, Nike Airs, and a camp-counselor T-shirt. He doesn't much look the part of a multibillionaire. True, he goes home to a 20-acre estate with a driving range, and two off-duty policemen stand watch there around the clock. And true, he's able to declare that he has "enough money that if I set it all on fire, I'd be dead before it went out." But he doesn't really reinforce F. Scott Fitzgerald's observation that the very rich are different from you and me. Bill Bartmann isn't different because he's rich.
He's rich because he's different.
The Comeback.
The bank president looked puzzled. "Gee, Bill," he finally said, "this is the most unusual request. What would I tell my board of directors?"
It was 1986, and following Bartmann's back-roads trip to the Tulsa FDIC, he had walked into the American Bank of Muskogee, which he already owed $1 million, and requested another $13,000--with which, he declared, he was going to buy bad loans. "That was a tough sell," Bartmann remarks with considerable understatement. "I was scared to death. Would they even talk to me? Would they be polite? Would I be escorted out by a guard?" To his relief, he was greeted cordially. And in what must have been a bravura performance, he wheedled the money out of the bank.
Bartmann collected $64,000 from that first $13,000 portfolio of bad loans--a tidy 400% return. He did it alone, using the telephone on his kitchen table. Returning victorious to the bank president, Bartmann made an even bolder proposition: He wanted to borrow another $100,000 to buy a larger package of FDIC loans. He'd pocket $20,000 of the collections to cover his expenses and put the rest toward paying down his bank debt. Impressed with Bartmann's earnestness, the banker consented. Several months later Bartmann returned with $204,000 in hand and asked if the bank would fund the purchase of yet a larger package. And so it went.
To continue collecting others' debts, however, he had to fight a rear-guard action against the repercussions of his own. One of Hawkeye Pipe's commercial creditors, Maverick Tube Corp., filed a petition to force him into involuntary bankruptcy. Bartmann resisted. "I said, 'Bullshit, I owe this money. I'm not bankrupt, by God, I'm broke." But Maverick pressed its case, anyway.
