United States
Securities and Exchange CommissionWashington, D.C. 20549____________FORM 10-QxQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2008£TRANSITION REPORT UNDER SECTION 13 OR 15[d] OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________.Commission File No. 0-8117____________CHURCH LOANS & INVESTMENTS TRUST®(Exact name of registrant as specified in its charter)Texas75-6030254(State or other jurisdiction of
incorporation or organization)(IRS Employer
Identification No.)5305 W Interstate 40, Amarillo, Texas79106-4759(Address of principal executive office)(Zip Code)(806) 358-3666(Issuers telephone number including area code)Not Applicable(Former name, former address and former fiscal year, if changed since last report)____________Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No  £Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer  £Accelerated filer  £Non-accelerated filer £Smaller reporting company xIndicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes £  No xClassOutstanding at February 13, 2009Shares of beneficial interest,
$0.00 par value per share10,217,094    CHURCH LOANS & INVESTMENTS TRUST
FORM 10-Q
For the Quarter Ended December 31, 2008INDEXPagePart I.Financial InformationItem 1.Financial Statements:a)Condensed Balance Sheets (Unaudited) December 31, 2008 and
March 31, 20081b)Condensed Statements of Income (Unaudited) for the three-month and nine-month periods ended December 31, 2008 and 20072c)Condensed Statements of Cash Flows (Unaudited) for the nine-month periods ended December 31, 2008 and 20073d)Notes to Condensed Financial Statements (Unaudited)4Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations7Item 3.Quantitative and Qualitative Disclosures About Market Risk16Item 4T.Controls and Procedures16Part II.Other InformationItem 1.Legal Proceedings16Item 2.Unregistered Sales of Equity Securities and Use of Proceeds16Item 3.Defaults Upon Senior Securities16Item 4.Submission of Matters to a Vote of Security Holders16Item 5.Other Information16Item 6.Exhibits17Index to Exhibits18Signatures19        PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCHURCH LOANS & INVESTMENTS TRUST(A Real Estate Investment Trust)Condensed Balance Sheets (Unaudited)December 31, 2008 and March 31, 2008ASSETSDecember 31,
2008March 31,
2008CASH AND CASH EQUIVALENTS$83,470$109,987RECEIVABLESMortgage loans and church bonds  performing54,908,18250,389,558Interim construction loans  performing8,802,15411,611,879Nonperforming mortgage loans, church bonds and interim construction loans6,769,2475,930,850Less: Allowance for credit losses(1,551,760)(1,786,477)68,927,82366,145,810Accrued interest receivable545,941608,930Notes receivable2,0002,000Net receivables69,475,76466,756,740PROPERTY AND EQUIPMENT,net215,448216,996OTHER REAL ESTATE OWNED-1,735,650OTHER ASSETS135,92536,950TOTAL ASSETS$69,910,607$68,856,323LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIESNotes payable and line of credit:Related parties$11,408,836$13,059,425Other24,922,18724,380,96636,331,02337,440,391Accrued interest payable36,59349,617Dividends payable2,860,786-Other133,098183,011Total liabilities39,361,50037,673,019SHAREHOLDERS EQUITYShares of beneficial interest, no par value; authorized shares unlimited, 10,223,690 shares issued29,762,29129,762,291Undistributed net income803,3061,437,503Treasury shares, at cost (6,596 shares)(16,490)(16,490)Total shareholders equity30,549,10731,183,304TOTAL LIABILITIES AND SHAREHOLDERS EQUITY$69,910,607$68,856,323These condensed financial statements should be read only in connection
with the accompanying notes to condensed financial statements.   -1-    CHURCH LOANS & INVESTMENTS TRUST(A Real Estate Investment Trust)Condensed Statements of Income (Unaudited)Three-month and Nine-month periods ended December 31, 2008 and 2007Three-month periods ended
December 31,Nine-month periods ended
December 31,2008200720082007INTEREST AND FEE INCOME:Interest income$1,330,014$1,633,527$4,249,353$4,953,003Fee income230,142238,170464,120635,681Interest and fee income1,560,1561,871,6974,713,4735,588,684INTEREST EXPENSE272,110682,180988,5672,261,364Net interest income1,288,0461,189,5173,724,9063,327,320PROVISION FOR CREDIT LOSSES--95,000125,000Net interest income less provision for
possible credit losses1,288,0461,189,5173,629,9063,202,320OTHER INCOMEGain on sale of other real estate owned76,076-76,076508,555Other21,00012,77340,12640,021Other income97,07612,773116,202548,576OTHER OPERATING EXPENSESGeneral and administrative222,565262,659746,1221,197,693Board of Trust Managers fees20,40011,60058,20034,400Total other operating expenses242,965274,259804,3221,232,093NET INCOME$1,142,157$928,031$2,941,786$2,518,803NET INCOME PER SHARE$.11$.09$.29$.25DIVIDENDS PER SHARE$.28$.25$.35$.31These condensed financial statements should be read only in connection
with the accompanying notes to condensed financial statements.  -2-    CHURCH LOANS & INVESTMENTS TRUST(A Real Estate Investment Trust)Condensed Statements of Cash Flows (Unaudited)Nine-month periods ended December 31, 2008 and 2007Nine-month periods ended
December 31,20082007CASH FLOWS FROM OPERATING ACTIVITIESNet income$2,941,786$2,518,803Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation1,5481,548Gain on sale of other real estate owned(76,076)(508,555)Amortization of loan discounts(31,291)(25,444)Amortization of commitment fees(359,399)(576,196)Provision for credit losses95,000125,000Changes in:Accrued interest receivable62,989(94,559)Accrued interest payable(13,024)(36,362)Federal income tax payable(22,739)-Other liabilities(27,174)(11,887)Other, net(98,975)(22,168)Net cash provided by operating activities2,472,6451,370,180CASH FLOWS FROM INVESTING ACTIVITIESInvestment in mortgage and interim construction loans and
church bonds(15,704,362)(26,266,728)Payments received on mortgage and interim construction loans and
church bonds13,218,03929,920,534Payments received on notes receivable-1,000Proceeds from sale of other real estate owned1,811,7261,025,000Net cash provided (used) by investing activities(674,597)4,679,806CASH FLOWS FROM FINANCING ACTIVITIESBorrowings on notes payable and line of credit22,996,51831,511,018Principal payments on notes payable and line of credit(24,105,886)(37,270,196)Overdraft payable-226,806Cash dividends(715,197)(613,026)Net cash used by financing activities(1,824,565)(6,145,398)Decrease in cash and cash equivalents(26,517)(95,412)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD109,98795,412CASH AND CASH EQUIVALENTS AT END OF PERIOD$83,470$-Supplemental disclosure of cash flow informationCash paid during the period for interest$1,001,591$2,297,726Dividends declared, not paid$2,860,786$2,554,274These condensed financial statements should be read only in connection
with the accompanying notes to condensed financial statements.  -3-     CHURCH LOANS & INVESTMENTS TRUST (A Real Estate Investment Trust) Notes to Condensed Financial Statements (Unaudited)   NOTE 1  GENERAL  See Summary of Significant Accounting Policies in the Trusts Annual Report on Form 10-K for a summary of the Trusts significant accounting policies.  The unaudited condensed financial statements included herein were prepared from the books of the Trust in accordance with generally accepted accounting principles and reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Trusts Annual Report to Shareholders. The current interim period reported herein is included in the fiscal year subject to independent audit at the end of that year and is not necessarily an indication of the expected results for the fiscal year.  NOTE 2 - WEIGHTED AVERAGE INTEREST RATES  Weighted average interest rates and net interest rate margins at December 31, 2008 and 2007, were as follows:  Mortgage loan and
church bond portfolioTotal
indebtednessNet interest rate
marginDecember 31, 20087.72%2.86%4.86%December 31, 20078.51%6.35%2.16%  NOTE 3 - CONTRACTUAL MATURITIES Scheduled principal payments on mortgage loans, church bonds and interim construction loans and indebtedness (including notes payable) outstanding at December 31, 2008, for the five twelve-month periods subsequent to December 31, 2008, follow:  Twelve-month period ending
December 31,Mortgage loans, church bonds
and interim loansTotal
Indebtedness2009$ 14,779,231$ 16,015,00020102,606,23420,316,02320112,754,921-20122,845,077-20132,596,289-  NOTE 4 - MORTGAGE LOANS, CHURCH BONDS AND INTERIM CONSTRUCTION LOANS  Mortgage loans, church bonds and interim construction loans on which the accrual of interest had been discontinued amounted to $6,769,247 and $5,947,875 at December 31, 2008 and 2007, respectively. If interest on these mortgage loans, church bonds and interim construction loans had been accrued as earned, interest and fees on loans in the accompanying condensed statements of income would have been increased by approximately $468,000 and $346,000 for the nine-month periods ended December 31, 2008 and 2007, respectively. Interest income actually recognized on such loans during 2008 and 2007 was approximately $176,000 and $128,000, respectively. In addition, impaired loans were approximately $12,257,000 and $14,456,000 at December 31, 2008 and 2007, respectively.   -4-    CHURCH LOANS & INVESTMENTS TRUST (A Real Estate Investment Trust) Notes to Condensed Financial Statements (Unaudited)   NOTE 5  FAIR VALUE MEASUREMENTS  Effective April 1, 2008, the Trust adopted SFAS No. 157, Fair Value Measurements, which requires disclosures for those assets and liabilities carried in the balance sheet on a fair value basis.  The Financial Accounting Standard Board (FASB) has deferred the effective date of SFAS No. 157 until 2009 for nonfinancial assets and liabilities which are recognized at fair value on a nonrecurring basis.  For the Trust, this deferral applies to other real estate owned.  SFAS No. 157 requires that assets and liabilities carried at fair value also be classified and disclosed according to the process for determining fair value.  There are three levels of determining fair value.  Level 1 uses quoted market prices in active markets for identical assets or liabilities.  Level 2 uses observable market based inputs or unobservable inputs that are corroborated by market data.  Level 3 uses unobservable inputs that are not corroborated by market data.  Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).  The following table presents the assets carried on the balance sheet by caption and by level with the SFAS No. 157 valuation hierarchy as of December 31, 2008:  DescriptionTotalQuoted Prices in Active Markets for Identical Assets
(Level 1)Significant Other Observable Inputs
(Level 2)Significant Unobservable Inputs
(Level 3)Assets:Impaired Loans$ 12,257,224$      -$      -$ 12,257,224  Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. On February 15, 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 159, "The Fair Value Opinion for Financial Assets and Financial Liabilities" (FAS 159). FAS 159 permits, but does not require, entities to measure selected financial assets and liabilities at fair value. Changes in fair value are recorded through the income statement in subsequent periods. The statement provides for a one time opportunity to transfer existing assets and liabilities to fair value at the point of adoption with a cumulative effect adjustment recorded against equity. After adoption, the election to report assets and liabilities at fair value must be made at the point of their inception. There has been no impact on the financial statements of the Trust as a result of the adoption of FAS 159 during fiscal year 2009 since the Trust has not elected the fair value option for any eligible items, as defined in FAS 159. NOTE 6  LEGAL CONTINGENCIES  Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Trust's financial statements.  NOTE 7  RECLASSIFICATION  Certain insignificant amounts in prior quarters have been reclassified to conform to the current year presentation.      -5-   NOTE 8  SUBSEQUENT EVENT  Effective January 31, 2009, the Trust obtained a new loan agreement with Amarillo National Bank. Under the terms of the new loan agreement, the line of credit was increased from $35,000,000 to $49,000,000 with a three year maturity and the interest rate on the line of credit adjusts in accordance with the lesser of the 30-day, 90-day or 180-day London Interbank Offered Rates (LIBOR) or the J.P. Morgan Chase & Co. prime rate. The new loan agreement provides for an interest rate floor of 4%.                                              This information is an integral part of the accompanying condensed financial statements.  -6-     Item 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  FORWARD-LOOKING STATEMENTS DISCLOSURE  This Quarterly Report includes forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements other than statements of historical fact made in this discussion are forward-looking, which can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, estimate, believe, continue or other similar words.  The forward-looking statements are based upon managements current plans and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including:  Competition in the business of making loans to churches;A decline in general economic conditions;A decline in real estate values affecting the value of the collateral securing our loans;A rise in interest rates resulting in higher cost of funds to us prior to the re-pricing of the loans owing to us;Our inability to borrow funds and at reasonable rates of interest;General risks of lending;Change in federal or state laws affecting our operations;Loss of critical management; andOther risks.  These risks and uncertainties are not intended to be exhaustive and should be read in conjunction with other cautionary statements made in this Quarterly Report.  Critical Accounting Policies  Our accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America.  Our significant accounting policies are described in the notes to the financial statements.  Certain accounting policies require management to make significant estimates and assumptions, which have a material impact on the carrying value of certain assets and liabilities, and we consider these to be critical accounting policies.  The estimates and assumptions used are based on historical experience, as well as other factors, which management believes to be reasonable under the circumstances.  Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and results of operations for the reporting periods.  We believe that the following critical accounting policies require the most significant estimates and assumptions that are particularly susceptible to a significant change in the preparation of our financial statements.  Revenue Recognition. We accrue interest income as it is earned.  All past due loans are reviewed monthly by management and the Loan Committee.  In the past, this has been the responsibility of the management and the Audit Committee.  However, effective July 1, 2008, the board of trust managers shifted the Audit Committees responsibilities relative to the review of past due loans and the classification of the past due loans to the Loan Committee.  A past due loan is evaluated based upon the payment history, opinion of the ultimate collectibility of the principal and interest and other experience factors.  The accrual of interest is generally discontinued on loans and church bonds more than 60 days past due unless the credit is well secured and in process of collection.  In all cases, loans and bonds are placed on nonaccrual or charged-off at an earlier date, if collection of principal or interest is considered doubtful.  Once a loan is placed on non-accrual, the loan will be classified as either cash basis or capital recovery.  A loan is typically classified as cash basis if the Loan Committee believes, based upon several factors, that there is a strong likelihood that the principal of the loan will be recovered, but is concerned that all of the interest will be recovered.  If a loan is classified as cash basis, then interest payments received will be applied to interest income.  A loan is typically classified as capital recovery if the Loan Committee believes, based upon several factors, that there is a strong likelihood that we may not be able to recover all of the principal balance of the loan.  In the event that a loan is classified as capital recovery, then payments received are applied to principal first and then to interest.   -7-   The actual decision to place a loan on non-accrual and the classification of the loan as either cash basis or capital recovery is made by the Loan Committee with input from management.  Non-accrual status loans are returned to an accrual status when in the opinion of the Loan Committee, based upon input from management, that such is warranted based upon the passing of a sufficient time period during which the principal and interest have become current and remain current and, therefore, the loan, both principal and interest, is anticipated to be fully collectible.  Allowance for Credit Losses.  The Audit Committee reviews the allowance for credit losses at the end of each quarter.  The provision for losses is based on an amount that is adequate, in the opinion of the Audit Committee, based upon input from management, to absorb losses inherent in the existing portfolio.  The evaluation, which includes a review of all loans on which full collection may not be reasonably assumed, considers among other factors, general economic conditions, the fair market value or estimated net realizable value of the underlying collateral securing the loan, past experience, trends in loan delinquency and other factors that warrant recognition in providing for an adequate allowance to absorb inherent losses.  The evaluation by the Audit Committee includes a review of a quarterly grading methodology performed by management on all past-due loans.  The Audit Committee, based upon its evaluation and review, then makes a recommendation to the full Board of Trust Managers as to the recommended amount of the credit loss reserve.  The Board of Trust Managers, based upon the recommendation of the Audit Committee, establishes the amount of the allowance for credit losses and any adjustments to such allowance.  Other Real Estate Owned.  Other real estate owned (OREO) represents property acquired as a result of a foreclosure of a mortgage note(s) held by Church Loans.  OREO is recorded at estimated fair value less cost to sell at date of foreclosure, establishing a new cost basis.  After foreclosure, OREO is carried at the lower of the carrying amount or estimated fair value minus estimated cost to sell.  Impairment losses are charged to operations.  Costs of the foreclosure, insurance and other costs associated with carrying the property are expensed.  Management has discussed our critical accounting policies and the development, selection and disclosure of the estimates and alternatives with the Audit Committee and the Loan Committee of the Board of Trust Managers and obtained their approval of the applicable disclosures contained in this report.  Overview  Church Loans was founded in May of 1959 and was organized to assist churches with the financing of purchases and construction of church facilities.  Church Loans has also made loans for the financing of assisted living centers.  Although we were originally organized under the corporate structure, we reorganized in 1963 as a real estate investment trust in order to take advantage of the favorable provisions of the federal tax law applicable to real estate investment trusts.  Our loan portfolio consists primarily of loans to churches and is comprised of both permanent loans and interim construction loans.  Although, we have purchased existing loans from other lenders, our primary operating strategy is to originate, either through mortgage loan brokers, church bond broker-dealers or directly to churches, mortgage loans secured by a first mortgage against a churchs buildings and related facilities.  We rarely, if ever, sell a loan and, therefore, we intend to hold our loan portfolio to maturity.  Our underwriting standards normally include compiled, reviewed or audited financial statements depending on the size of the loan, a fair market value appraisal prepared by an independent appraiser, a first mortgage on the property of the church insured by a title insurance policy issued by a national title company, applicable fire and extended casualty insurance on the collateral and such other requirements as determined by management on a case by case basis.  Also, as part of our due diligence, management normally makes, prior to funding, an onsite inspection of the property that is to secure the loan.  Originally, our Declaration of Trust required a debt-to-value ratio of not greater than 66 2/3%.  However, at our annual meeting of shareholders held on July 16, 2004, the shareholders approved an Amended and Restated Declaration of Trust and Bylaws that raised the debt-to-value ratio to 85% unless substantial justification exists because of the presence of other underwriting criteria.  Most of our present loans were made based upon the prior 66 2/3% debt-to-value ratio.  As a real estate investment trust, we are required by Section 857 of the Internal Revenue Code, as amended, to distribute not less than 90% of our taxable net income to our shareholders.  Dividends are based on taxable income which varies from net income reported in the financial statements because of temporary differences (differences between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years).   Future dividends may be more or less than the net income reported in the financial statements because of variances in these temporary differences.   -8-   Management continues to aggressively pursue quality new loans, both interim and permanent.  Results of Operations --- Nine-month period ended December 31, 2008 as compared to the Nine-month period ended December 31, 2007  Our revenues are derived from interest income and fees earned on loans as well as, to a lesser degree, interest earned on church bonds and short-term investments.  During the nine-month period ended December 31, 2008, interest income and fees decreased by $875,211 (16%) over the nine-month period ended December 31, 2007.  The components of our interest income and fees during the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007 are as follows:  Table 1  Interest Income and Fees  For the Nine-month
Period Ended 12/31/08For the Nine-month
Period Ended 12/31/07Increase
(Decrease)Mortgage loans$3,423,076$3,343,327$79,749Interim loans715,4391,505,614(790,175)Commitment fees464,120635,681(171,561)Other income and fees110,838104,0626,776Total$4,713,473$5,588,684$(875,211)  The decrease in interest income and fees for the nine-month period ended December 31, 2008, as compared to the nine-month period ended December 30, 2007 was primarily attributable to a decrease in the interest income on interim loans.  The decrease in interest income on interim loans was primarily attributable to the decrease in our portfolio of interim loans during the nine-month period ended December 30, 2008 as compared to the nine-month period ended December 31, 2007.  Interim loans as of December 31, 2007, net of deferred commitment fees, were $17,030,601 as compared to $12,402,154 as of December 31, 2008, a decrease of $4,628,447 or 27%.  The interim loan portfolio during each of the nine months during the nine-month period ended December 31, 2007 as compared to each of the nine months during the nine-month period ended December 31, 2008 are similarly and consistently larger.  Performing interim loans as of December 31, 2008 were $8,802,154 as compared to $15,930,601 as of December 31, 2007, a decrease of $7,128,447 (45%).  Also contributing to the decrease in interest income from our portfolio of interim loans was a decrease in the interest rate on such portfolio for the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007.  The rate of interest on our portfolio of interim loans was 7.50% as of December 31, 2008 as compared to 9.36% as of December 31, 2007, a decrease of 186 basis points.  Somewhat offsetting the decrease in interest income from interim loans and the decrease in commitment fees is the $79,749 increase in interest income in mortgage loans during the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007.  This increase in interest income from mortgage loans is primarily attributable to an increase in performing mortgage loans as of December 31, 2008 as compared to December 31, 2007.  Performing mortgage loans increased from $48,587,517 as of December 31, 2007 to $54,908,182 as of December 31, 2008, in increase of $6,320,665 or 13%.  The weighted average rate of interest on our portfolio of performing mortgage loans decreased from 8.25% as of December 31, 2007 to 7.76% as of December 31, 2008, a decrease of 49 basis points.  Our total loan portfolio decreased during the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007.  The following table compares our portfolio of loans, net of mortgage discounts and deferred commitment fees, as of December 31, 2008 to December 31, 2007:   -9-     Table 2  Mortgage Loans, Church Bonds and Interim Loans as of December 31, 2008 and 2007  Type of Loan12/31/0812/31/07Increase
(Decrease)Total Mortgage and church bonds$58,077,429$53,435,391$4,642,038Performing mortgage and church bonds54,908,18248,587,5176,320,665Total Interim loans12,402,15417,030,601(4,628,447)Performing interim loans8,802,15415,930,601(7,128,447)Total loan portfolio70,479,58370,465,99213,591Total performing loan portfolio63,710,33664,518,118(807,782)  Our loan portfolio decreased in eight of the nine months during the nine-month period ended December 31, 2008 as compared to each of the nine months during the nine-month period ended December 31, 2007.    Table 3 below sets forth the month ending values of our loan portfolio, net of mortgage discounts and deferred commitment fees, for each of the nine months during the nine-month period ended December 31, 2008 and December 31, 2007, respectively:  Table 3  Month-End Portfolio Values  Month20082007DifferenceApril$67,469,937$75,224,697$(7,754,760)May67,605,08273,025,212(5,420,130)June66,936,84475,834,245(8,897,401)July67,442,85975,574,185(8,131,326)August67,615,74577,199,504(9,583,759)September67,030,51076,732,462(9,701,952)October66,201,48075,134,551(8,933,071)November66,827,58272,905,373(6,077,791)December70,479,58370,465,99213,591Monthly Average:$67,512,180$74,677,358$(7,165,178)  Non-performing loans, church bonds and interim loans increased from $5,947,875 as of December 31 2007 to $6,769,247 as of December 31, 2008, an increase of $821,372.  The accrual of interest on these loans has been discontinued.  If interest on these mortgage loans, church bonds and interim loans had been accrued as earned, interest and fees on loans would have been increased by approximately $468,000 and $346,000 for the nine-month periods ended December 31, 2008 and 2007, respectively.  Interest income actually recognized on such loans during the nine-month period ended December 31, 2008 and 2007 was approximately $176,000 and $128,000, respectively. In addition, impaired loans were approximately $12,257,000 and $14,456,000 at December 31, 2008 and 2007, respectively.  The weighted average interest rate on all of our loans and church bonds decreased from 8.51% as of December 31, 2007 to 7.72% as of December 31, 2008.  This decrease in the weighted average interest rate on all loans contributed to the decrease in our interest income during the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007.  Also contributing to the decrease in interest income and fees during the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007 is the decrease in commitment fee income.   This decrease in commitment fee income is directly related to the decease in the portfolio of interim loans.  Commitment fees earned during the nine-month period ended December 31, 2008 were $464,120 as compared to $635,681 for the nine-month period ended December 31, 2007, a decrease of $171,561 or 27%.   -10-   Net income for the nine-month period ended December 31, 2008 was $2,941,786 ($.29 per share), an increase of $422,983 (17%) as compared to the nine-month period ended December 31, 2007.  This increase was primarily attributable to the increase in net interest income and to a decrease in general and administrative expenses.  Net interest income increased from $3,327,320 for the nine-month period ended December 31, 2007 to $3,724,906 for the nine-month period ended December 31, 2008, an increase of $397,586 (12%).  This increase in our net interest income for the nine-month period ended December 31, 2008 as compared to the nine-month period ended December 31, 2007 was the result of a significant decrease in our interest expense.  Our interest expense decreased from $2,261,364 for the nine-month period ended December 31, 2007 to $988,567 for the nine-month period ended December 31, 2008, a decrease of $1,272,797 or 56%.  This decrease in interest expense is the result of a significant decrease in total liabilities and a significant decrease in the weighted average interest rate on our debt.  Our total liabilities decreased from $40,869,443 as of December 31, 2007 to $39,361,500 as of December 31, 2008.  The following table illustrates the average month end liabilities during the nine-month period ended December 31, 2008 as compared to the same period ended December 31, 2007:  Table 4 - Month End Total Liabilities for Each Month in the Nine-month Period Ended December 31, 2008 and December 31, 2007   Month20082007DifferenceApril$37,441,086$45,880,132$(8,439,046)May37,192,61443,493,942(6,301,328)June36,511,92646,224,751(9,712,825)July36,630,68945,594,147(8,963,458)August36,549,53546,869,209(10,319,674)September35,966,00846,219,185(10,253,177)October32,690,58243,530,628(10,840,046)November33,075,29741,119,221(8,043,924)December39,361,50040,869,443(1,507,943)Monthly Average:$36,157,693$44,422,295$(8,264,602)   The weighted average interest rate on our debt decreased from 6.35% as of December 31, 2007 to 2.86% as of December 31, 2008.  This decrease is directly related to the decrease in the Prime Rate and LIBOR.  See Inflation on page 15 for a discussion on how these rates affect our expenses.  General and administrative expenses decreased from $1,197,693 for the nine-month period ended December 31, 2007 to $746,122 for the nine-month period ended December 31, 2008, a decrease of $451,571 or 38%.  This decrease in general and administrative expenses is primarily attributable to decrease in expenses relating to property held as a result of the foreclosure of defaulted loans.  Other income decreased from $548,576 for the nine-month period ended December 31, 2007 to $116,202 for the nine-month period ended December 31, 2008, a decrease of $432,374.  Contributing to the large amount of other income for the nine-month period ended December 31, 2007 was the recognition of gain of $508,555 from the sale of property located in Bronx, NY that was obtained through foreclosure of a defaulted loan.  Net income for the nine-month period ended December 31, 2008 and December 31, 2007 was diminished by an addition to the provision for credit losses recognized during such periods of $95,000 and $125,000, respectively.  As of December 31, 2008, there were 10,217,094 shares of certificates of beneficial interest outstanding.  Net income per share increased from $.25 per share for the nine-month period ended December 31, 2007 as compared to $.29 per share for the nine-month period ended December 31, 2008.  This increase was attributable to the increase in our net income discussed above.  Results of OperationsThree-month period ended December 31, 2008 as compared to three-month period ended December 31, 2007   -11-   During the three-month period ended December 31, 2008, interest income and fees decreased by $311,541 (17%) over the three-month period ended December 31, 2007.  The components of our interest income and fees during the three-month period ended December 31, 2008 as compared to the three-month period ended December 31, 2007 are as follows:  Table 5  Interest Income and Fees  For the Three-month
Period Ended 12/31/08For the Three-month
Period Ended 12/31/07Increase
(Decrease)Mortgage loans$1,096,432$1,128,741$(32,309)Interim loans200,201467,865(267,664)Commitment fees230,142238,170(8,028)Other income and fees33,38136,921(3,540)Total$1,560,156$1,871,697$(311,541)   Interest income on mortgage loans decreased from $1,128,741 during the three-month period ended December 31, 2007 to $1,096,432 during the three-month period ended December 31, 2008, a decrease of $32,309 (3%).  Interest income on interim loans decreased from $467,865 during the three-month period ended December 31, 2007 to $200,201 for the three-month period ended December 31, 2008, a decrease of $267,664 (57%).  Commitment fees earned during the three-month period ended December 31, 2007 as compared to December 31, 2008 decreased from $238,170 to $230,142, a decrease of $8,028 or 3%.  The decrease in interest income and fees for the three-month period ended December 31, 2008 as compared to the three-month period ended December 31, 2007 is attributable to the decrease in our portfolio of interim loans and the decrease in average interest rate on our loans as discussed above.  Our net income for the three-month period ended December 31, 2008 was $1,142,157 ($.11 per share), an increase of $214,126 (23%) as compared to the three-month period ended December 31, 2007.  This increase was attributable to a decrease in our interest expense and a decrease in general and administrative expenses.  The decrease in interest income and fees for the three-month period ended December 31, 2008 as compared to the three-month period ended December 31, 2007 was significantly offset by a decrease in interest expense.  Interest expense for the three-month period ended December 31, 2007 was $682,180 as compared to $272,110 for the three-month period ended December 31, 2008, a decrease of $410,070 or 60%.  The decrease in interest expense was attributable to a decrease in liabilities and a decrease in the weighted average interest rates on our debt.  See Table 4 above for the month-end liabilities for each of the three months during the three-month periods ending December 31, 2008 and 2007, respectively.  The weighted average interest rate on all of our debt for each of the three months during the three-month periods ending December 31, 2008 and 2007, were as follows:  Table 6  Weighted Average Interest Rates on Debt For Each of the Three Months During the Periods Ending December 31, 2008 and December 31, 2007  Month20082007DifferenceOctober3.83%6.60%(2.77%)November2.84%6.27%(3.43%)December2.86%6.35%(3.49%)  Therefore, even though interest income decreased significantly during the three-month period ended December 31, 2008 as compared to the three-month period ended December 31, 2007, as a result of the significant decrease in  -12-   interest expense, net interest income actually increased from $1,189,517 for the three-month period ended December 31, 2007 to $1,288,046 for the three-month period ended December 31, 2008, an increase of $98,529 (8%).  Other income increased from $12,773 for the three-month period ended December 31, 2007 to $97,076 for the three-month period ended December 31, 2008, an increase of $84,303.  This was the result of a gain of $76,076 on the sale of other real estate owned.  General and administrative expenses decreased from $262,659 for the three-month period ended December 31, 2007 to $222,565 for the three-month period ended December 31, 2008, a decrease of $40,094 or 15%.  This decrease is primarily attributable to a decrease in expenses related to the property obtained through foreclosures.  As of December 31, 2008, 10,217,094 shares of certificates of beneficial interest were outstanding. Net income per share increased from $.09 per share for the three-month period ended December 31, 2007 to $0.11 per share for the three-month ended December 31, 2008.  Financial ConditionDecember 31, 2008 as compared to March 31, 2008.  Our portfolio of performing mortgage loans and church bonds increased from $50,389,558 as of March 31, 2008 to $54,908,182 as of December 31, 2008.  Our portfolio of performing interim loans decreased during the nine-month period ended December 31, 2008 from $11,611,879 to $8,802,154.  Mortgage loans, interim loans and church bonds, including non-performing mortgage loans, church bonds and interim loans, held by us increased from $67,932,287 as of March 31, 2008 to $70,479,583 as of December 31, 2008, an increase of $2,547,296 (4%).  Nonperforming mortgage loans, church bonds and interim loans increased from $5,930,850 as of March 31, 2008 to $6,769,247 as of December 31, 2008.   Total performing mortgage loans, church bonds and interim loans increased from $62,001,437 as of March 31, 2008 to $63,710,336 as of December 31, 2008, an increase of $1,708,899.  Consistent with the increase in loans, total assets increased from $68,856,323 as of March 31, 2008 to $69,910,607 as of December 31, 2008, an increase of $1,054,284 (2%).  Impaired loans were $12,257,224 at December 31, 2008 as compared to approximately $11,639,000 at March 31, 2008.  The allowance for credit losses was $1,551,760 at December 31, 2008 as compared to $1,786,477 at March 31, 2008.   The allowance for credit losses is based on an amount that is adequate in the opinion of the Audit Committee, based upon input from management, to absorb losses inherent in the existing loan portfolio. This evaluation includes a review of a quarterly grading methodology performed by management on impaired loans.  Impaired loans include non-performing loans, which have been placed on non-accrual status. At December 31, 2008, impaired loans were $12,257,224 as compared to $11,639,063 at March 31, 2008 and non-performing loans were $6,769,247 at December 31, 2008 as compared to $5,930,850 at March 31, 2008.  Although impaired loans have increased slightly from March 31, 2008, the allowance has decreased reflecting changes in the portfolio. The allowance at March 31, 2008, reflects three impaired loans totaling $1,205,426 with an allowance reserve of approximately $400,000, which have subsequently paid off and are not reflected in the allowance for credit losses at December 31, 2008.  Our liabilities increased from $37,673,019 as of March 31, 2008 to $39,361,500 as of December 31, 2008.  Shareholders equity decreased by $634,197 from March 31, 2008 to December 31, 2008.  This is attributable to the decrease in undistributed net income from $1,437,503 as of March 31, 2008 to $803,306 as of December 31, 2008.  Liquidity and Capital Resources  Liquidity is a measurement of our ability to meet potential cash requirements, including the repayment of borrowings by us, fund loan commitments, maintain investments and meet our general business expenses and needs.  Additionally, to maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT taxable income.  We are engaged primarily in the business of making permanent and interim loans to churches and other non-profit organizations, and to other borrowers, including businesses engaged in the building and operation of assisted living centers.  Our assets primarily consist of our loan portfolio, real estate acquired through foreclosure and our office building and facilities.  Our operating expenses are comprised of the maintenance of our office building, the payment of the salaries of our management and support staff, office expenses, fees paid to the Board of Trust Managers, and the payment for legal and accounting services.  Substantially all of our assets are invested in the permanent and interim loans.  Our only potential liquidity problems relate to the timely and proper repayment of the leveraged funds we have borrowed to  -13-   make loans in excess of our capital and the ability to fund loan commitments.  Our primary sources of funds for liquidity consist of cash reserves, net cash provided by operations, payments received from the loans comprising our loan portfolio, and funds available through debt financing, including our line of credit agreement with the Amarillo National Bank.  Our level of liquidity based upon cash and cash equivalents decreased by $26,517 during the nine-month period ended December 31, 2008 leaving us with cash and cash equivalents of $83,470 as of December 31, 2008.  During this same period, we invested $15,704,362 in mortgage and interim construction loans using net cash provided by operating activities in the amount of $2,472,645, principal payments received on our loan portfolio in the amount of $13,218,039, the proceeds from the sale of other real estate owned of $1,811,726, and $22,996,518 in borrowing on master notes and our line of credit.  The total liquidity available to invest in mortgage and interim construction loans was reduced by $715,197 paid in cash dividends during the nine-month period ended December 31, 2008 and the reduction in our borrowings on our bank line of credit and Master Note Agreements in the amount of $24,105,886.  Our primary debt obligations consist of our bank line of credit owing to Amarillo National Bank and Master Note Agreements with various persons.  Pursuant to our January 31, 2006 loan agreement with the bank, we have a $35,000,000 line of credit for a term of three years, maturing December 31, 2008.  This line of credit was extended pursuant to an agreement with the bank dated December 31, 2008 for one month ending January 31, 2009.  On January 31, 2009, we entered into a new Loan Agreement with Amarillo National Bank for a three-year term ending January 31, 2012 and increasing the line of credit to $49,000,000.  As of December 31, 2008, our total liabilities outstanding were $39,361,500.  The amount owing on the line of credit as of December 31, 2008 was $16,015,000.  As mentioned, the January 31, 2006 loan agreement with Amarillo National Bank was renewed and extended into a new loan agreement dated January 31, 2009.  It is anticipated that the January 31, 2009 loan agreement will be renewed at the expiration of its three-year term ending January 31, 2012.  In the event that the bank elects not to renew the line of credit, we may, under the terms of the loan agreement, retire the line of credit over a period of time, not to exceed five years, equal to the weighted average remaining term of a pool of our real estate lien notes which would be pledged to secure the remaining balance of the bank line of credit.  At December 31, 2008, loans to us under Master Note Agreements, which are in effect demand notes, totaled $20,316,023.  In the past, we have utilized our bank line of credit and the principal paid to us upon our outstanding loan portfolio in order to meet our maturing obligations.  Although our cash and cash equivalents as of December 31, 2008 were only $83,470, the balance which could be borrowed by us upon our bank line of credit as of December 31, 2008 was $18,985,000.  The principal payments scheduled to be received on our loan portfolio for the fiscal year ending December 31, 2009 are $14,779,231.  Assuming all of these scheduled principal payments are received, these payments, together with the balance available to us on our bank line of credit after its recent extension to $49,000,000, should provide us with sufficient funds to meet our maturing obligations and fund loan commitments without the necessity of borrowing funds from other sources.  Based upon our success in obtaining borrowings in the past, we are confident that, should it be necessary, we will be able to obtain additional bank financing in the future in sufficient amounts for us to timely meet all of our obligations.  Should all the scheduled principal payments upon loans not be received, and should we be unable to borrow against our line of credit, and should borrowings from other sources not be available, it would be necessary to sell a portion of our mortgage loan portfolio in order to meet all of our financial obligations.  At December 31, 2008, the principal balance of our loan and church bond portfolio was $70,479,583, net of unamortized purchase discounts and deferred commitment fees.  The weighted average interest rate on loans and church bonds was 7.72% per annum.  In view of the normal marketability of conventional loans, we might be required to discount a majority of these loans in order for them to be attractive for purchase.  The principal amount of these loans if discounted to yield a weighted average interest rate of 12%, 14% and 16% would be $45,341,864, $38,864,457, and $34,006,400, respectively.  There is no assurance that we would be able to sell all, or a portion of, our portfolio of loans, in which event, it would be necessary to secure a loan, or loans, from a lender in order to meet our financial obligations.  There is no assurance that we would be able to secure a loan in such instance.  We have sold only one of our loans in our mortgage loan portfolio and, therefore, have limited experience in this area.  Furthermore, if required to discount our loans to yield a weighted average interest rate in excess of 13.82%, then we would not realize sufficient funds from the sale of the loans to retire all of our debt.  Principal payments scheduled to be received upon our permanent loan portfolio during the twelve-month period ending December 31, 2009, if not used to fund new loan commitments, would be used to reduce our outstanding indebtedness.  Should we use the payments of principal which shall be received upon our loan portfolio to reduce our  -14-   outstanding indebtedness, our interest expense will decrease.  In such instance, whether the decrease in the interest income will exceed, or be less than, the decrease in the interest expense will largely be dependent upon the prime rate of interest prevailing at such time due to the fact that the interest to be earned upon our mortgage loan portfolio is generally based upon a fixed rate of interest or a variable rate of interest that periodically reprices, while the interest to be paid upon our outstanding debts is directly, or indirectly, tied to the prime rate of interest charged by major banks.  Pursuant to the loan agreement with the bank, we have pledged all of our mortgage loans, church bonds and interim construction loans to the bank to secure the line of credit.  The amount owing on the line of credit must not exceed an amount equal to 85% of the outstanding principal amount of the performing mortgage loans and church bonds and 50% of the outstanding principal amount of the performing interim construction loans.  Applying that borrowing limit to our loan portfolio as of December 31, 2008, we can borrow up to the entire $35,000,000 line of credit limit on the January 31, 2006 loan agreement and up to the entire $49,000,000 line of credit limit on the January 31, 2009 loan agreement.  However, during the term of the loan agreement, we would not have the right to sell our loans, without the banks consent, since all of our loans have been pledged to the bank to secure the line of credit.  Therefore, under our loan agreement, it will be very difficult, if not impossible, to sell our loans to meet our financial obligations.  Cash flows from operating activities consist primarily of net income.  The primary components of net income are interest income and expense.  Interest income should continue to be the main source of cash provided by operating activities; however, the availability of this cash flow is dependent upon the ability of the borrowers to repay loans.  Cash provided by operating activities has been and is expected to be a relatively stable source of cash flow.  Cash flows from investing activities results primarily from investment in and payments received on mortgage and interim construction loans and church bonds.  Cash flows from financing activities relate primarily to the borrowings and payments on notes payable and the line of credit.  Borrowings are made as funds are needed to make loans or as current obligations become due.  Based upon our success to obtain borrowings in the past, we are confident that we will be able to obtain borrowings in the future in sufficient amounts, along with payments to be received on loans, to timely meet our obligations.  Inflation  At December 31, 2008, the weighted average interest rate on our mortgage loan and church bond portfolio was 7.72% per annum while the weighted average interest rate upon all our borrowings was 2.86% per annum resulting in a net interest rate margin of 4.86%.   By comparison, as of December 31, 2007, the weighted average interest rate on our mortgage loan and church bond portfolio was 8.51% per annum while the weighted average interest rate on our borrowings was 6.35% per annum resulting in a net interest rate margin of 2.16% per annum.  Therefore, our net interest rate margin has increased by 270 basis points as of December 31, 2008 as compared to December 31, 2007.  Although a majority of the loans constituting our loan portfolio have been made at rates of interest that generally reprice either daily, annually, or otherwise periodically, a portion of the loans constituting our loan portfolio have been made at fixed rates of interest and therefore are not subject to being increased or decreased during the term of the loan.  All of our indebtedness is either directly or indirectly tied to the prime rate of interest charged by major banking institutions and, therefore, is subject to fluctuation.  During periods of inflation, the prime rate of interest charged by major banking institutions, as well as the interest rate or cost of borrowing money from any lender, generally increases.  Consequently, during an inflationary period our interest expense would increase.  Since our interest income would not increase as rapidly, an increase in the interest expense would decrease our net income.  However, interest income should subsequently increase as variable rate loans reprice.  Should the amount of our loans and the amount of our indebtedness remain constant, and should the weighted average interest rate upon the indebtedness increase to approximately 13.82% per annum, interest income and interest expense would be substantially equal.  Under the terms of the new loan agreement with Amarillo National Bank effective January 31, 2009, the interest rate on our line of credit adjusts in accordance with the lesser of the 30-day, 90-day or 180-day London Interbank Offered Rates (LIBOR) or the J.P. Morgan Chase & Co. prime rate.  The interest rate on our Master Note Agreements adjusts as and when the Prime Rate as published by the Wall Street Journal changes.  Most of our loans are made on interest rates that are tied to the Prime Rate as published by the Wall Street Journal or a similar index used by major U.S. banking institutions.  Therefore, our cost of funds should be tied to an index that is equal to or less than the index used to price our loan portfolio.   -15-   We expect that our cost of funds will increase beginning January 1, 2009 due to several factors.  First of all, the extension of our January 31, 2006 loan agreement and the new January 31, 2009 loan agreement provides for an interest rate floor of 4%.  This interest rate floor will result in an immediate increase in the weighted average interest rate on our indebtedness beginning January 1, 2009.  Secondly, the new loan agreement dated January 31, 2009 changes the index on the rate we pay Amarillo National Bank on the line of credit from, at our option, either the LIBOR plus 1.6% or the J.P. Morgan Chase prime rate less 1% to the LIBOR plus 2.5% or the J. P. Morgan Chase prime rate.  Additionally, the new loan agreement provides for a commitment fee equal to .25% of the average quarterly unadvanced portion of the loan commitment.  Finally, effective February 1, 2009, we agreed to also place an interest rate floor of 3% on our Master Note Agreements.  The interest rate floor on the Master Note Agreements was instituted in order to encourage the maintenance of this source of funds.  Off-Balance Sheet Arrangements  We have no off-balance sheet arrangements or commitments other than our normal loan commitments.  New Accounting Standards  We do not believe the adoption of any recently issued pronouncements by the Financial Accounting Standards Board will have a significant impact on our financial statements.   Item 3. Quantitative and Qualitative Disclosures About Market Risk.  Not required   Item 4T. Controls and Procedures  We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 or 15d-15 as of the end of the period covered by this report.  Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as defined by Exchange Act Rules 13a-15(e) or 15d-15(e), were effective.  Changes in Internal Control over Financial Reporting  There has not been any change in our internal control over financial reporting during our fiscal quarter ending December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  Part II. Other Information   Item 1.  Legal Proceedings.  None   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.  None   Item 3.  Defaults Upon Senior Securities.  None   Item 4. Submission of Matters to a Vote of Security Holders.   None Item 5. Other Information.  Our existing line of credit agreement with Amarillo National Bank dated January 31, 2006 was set to expire on December 31, 2008.  This Agreement was extended pursuant to an extension dated December 30, 2008.  Thereafter, we entered into a new loan agreement dated January 31, 2009 with Amarillo National Bank renewing and extending  -16-   our line of credit facility with the bank.  The 2009 agreement increases the line of credit from $35,000,000 to $49,000,000.  However, theextension of our January 31, 2006 loan agreement and the new January 31, 2009 loan agreement provides for an interest rate floor of 4%.  Furthermore, the 2009 loan agreement changes the index on the rate we pay Amarillo National Bank on the line of credit to either the LIBOR plus 2.5% or the J. P. Morgan Chase prime rate, at our option.  This is in contrast to a more favorable index under the 2006 agreement of either the LIBOR plus 1.6% or the J.P. Morgan Chase prime rate less 1%, again at our option.  Additionally, the new loan agreement provides for a commitment fee equal to .25% of the average quarterly unadvanced portion of the loan commitment.  There was no such non-use fee under the 2006 agreement.  Finally, effective February 1, 2009, we agreed to also place an interest rate floor of 3% on our Master Note Agreements.   Item 6. Exhibits  The Exhibits listed on the accompanying Index to Exhibits are filed as a part of this Quarterly Report.  -17-    CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)INDEX TO EXHIBITS(2)None(3)(i) Amended and Restated Declaration of Trust dated July 16, 2004, previously filed as an exhibit to the Trusts Definitive Proxy Statement, Form DEF 14A, dated June 25, 2004 (File No. 000-08117) and is incorporated by reference.(ii) Amended and Restated Bylaws dated July 16, 2004, previously filed as an exhibit to the Trusts Definitive Proxy Statement, Form DEF 14A, dated June 25, 2004 (File No. 000-08117) and is incorporated by reference.(4)None other than those listed in (3) above.(10)Loan Agreement dated January 31, 2006 entered into by and between Church Loans and Amarillo National Bank included as an exhibit to Issuers Form 10-QSB for the quarterly period ended December 31, 2005, under File No. 000-08117 and is incorporated by reference.

Loan Agreement dated January 31, 2009 entered into by and between Church Loans and Amarillo National Bank.(11)Statement regarding computation of per share earnings-omitted since information necessary to make the computation is included in the Financial Statements.(15)None(18)None(19)None(22)None(23)None(24)None(31)(i)(1) Certification of President (Principal Executive Officer and CEO) Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).(2) Certification of Senior Vice-President and CFO (Principal Financial Officer) Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a).(ii) None(32)Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(99)None(100)None     -18-    SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.CHURCH LOANS & INVESTMENTS TRUSTBy:/s/ Kelly ArcherKelly Archer
President and CEODate:February 13, 2009By:/s/ Robert E. FowlerRobert E. Fowler
Chief Financial Officer
(Principal Financial Officer)Date:February 13, 2009  -19-    Trade Mark and Copyright Notice

Copyright © 2009 by Church Loans & Investments Trust
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Church Loans & Investments Trust is a federally registered service mark
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The unauthorized use of the trade mark, service mark and copyrights
of Church Loans & Investments Trust without the express,
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is strictly prohibited. All rights reserved.   -20-