Assets of the country's largest credit unions grew to $214 billion in the third quarter, up 7% from the year-earlier period.

However, a trade group analyst said call reports from the largest institutions indicate the industry is continuing to retreat from the highs of the early 1990s.

"We're continuing on the road to normal if you consider the world before 1992 to be normal," said Keith Peterson, an economist for the Credit Union National Association.

According to call report data collected by the National Credit Union Administration, pre-reserve return on assets for the 1,160 credit unions exceeding $50 million in assets slipped to 1.1% in the third quarter from 1.2% a year earlier.

Mr. Peterson predicted the return on assets could decline to a hair above 1% before the year is out. Such a figure is the industry's historic average despite higher showings in the early 1990s, he said.

The rising cost of funds will help pull down the group's returns through next year, Mr. Peterson said.

He pointed out that certificates of deposit drove the group's deposit growth to $188.7 billion, up 7% from the year-earlier period.

"Looking into 1996, their cost of funds is probably going to keep going up even as interest rates fall down," he said.

The group's loan portfolio grew to $131.2 billion, up 14% from the year- earlier period, according to the NCUA figures.

First mortgages were the largest component of the portfolio, totaling $31.4 billion.

But although credit unions are pumping deposits into loans with yields higher than investments, they still will be faced with tightening margins as they lower rates to remain competitive, Mr. Peterson said.

Delinquency and chargeoffs remained steady at 0.7% and 0.4%, according to the figures.

Mr. Peterson expected these two indicators to rise later this year as more loans mature.

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