Countrywide Credit Industries, the nation's second-largest mortgage lender, is once again trying to sell mutual funds.

The company announced last week that it would acquire Cincinnati-based Leshner Financial Inc., an investment adviser and mutual fund manager. Leshner manages about $1.1 billion of its own funds.

For Pasadena, Calif.-based Countrywide, the move is yet another effort to diversify from its bread-and-butter business of originating and servicing conventional mortgage loans. The company started originating subprime and home equity loans in 1995.

But Countrywide has already tried to compete with the Fidelitys and Putnams of the world once before and met with little success.

Anne McCallion, Countrywide's senior vice president for investor relations, said that when Countrywide first tried selling funds in 1994, the strategy did not work because it was selling funds managed by other companies.

"We weren't satisfied with the operation. We decided it would be more effective if we acquired a mutual fund company," Ms. McCallion said.

With the Leshner acquisition, Countrywide would have its own funds. And Ms. McCallion said Countrywide would have opportunities on the servicing side because Leshner also services more than $7 billion in accounts for other fund management companies.

Leshner's operations are focused in the Midwest, but Ms. McCallion said that Countrywide plans to expand nationwide once the transaction closes. She added that Countrywide intends to keep Leshner's existing management team.

The deal, expected to close by February, is being financed by the issuance of about $16 million in new Countrywide stock.

Smith Barney analyst Thomas O'Donnell said that the acquisition was a good one for Countrywide because the mortgage business - beset with overcapacity and aggressive price cutting - is a tough one to make money in.

He added that Countrywide should fare better in the mutual fund arena this time around because the company is adding retail offices and also has established a stronger brand name identity since 1994.

Still, some mortgage industry observers said that as an independent mortgage bank Countrywide was at a disadvantage for cross- selling other financial services. Many of Countrywide's larger competitors are owned by commercial banks that already have significant mutual fund, credit card, and other consumer operations.

But Mr. O'Donnell said no one financial institution had emerged as a leading one-stop shop yet, and that Countrywide was big enough to compete with large banks and other financial companies.

"You can't discount this company in light of what it has done in the mortgage business. When they set their mind to do something, it usually happens," Mr. O'Donnell said.

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