================================================

                    U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   ----------

                                  FORM 10-QSB

                     [x] QUARTERLY REPORT UNDER SECTION 13
                      OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934
               For the quarterly period ended September 30, 1996

                                       OR

                     [ ] TRANSITION REPORT UNDER SECTION 13
                      OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                                   ----------

                           Commission File No. 0-8117


                        CHURCH LOANS & INVESTMENTS TRUST


     State of Organization                      IRS Employer Identification
     ---------------------                      ---------------------------
           Texas                                       No. 75-6030254
                                 5305 I-40 West
                             Amarillo, Texas 79106

                  Registrant's telephone number: 806-358-3666


                                   ----------


     Check whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 [ _ ]


     As of June  30,  1996,  7,007,402  shares  of the  Registrant's  shares  of
beneficial interest were outstanding.

     Transitional Small Business Disclosure Format (check one)

                               Yes [ _ ] No [ X ]
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST



                                     INDEX

                                                                     Page
                                                                     ----
        Part I.

             Item 1:  Financial Information:

                      Condensed Balance Sheets at September 30, 1996
                          and March 31, 1996 .......................   1

                      Condensed Statements of Income for the
                          three-month and six-month periods ended
                          September 30, 1996 and 1995 ..............   2

                      Condensed Statements of Cash Flows
                          for the six-month periods ended 
                          September 30, 1996 and 1995 ..............   3

                      Notes to Condensed Financial Statements .....    4

             Item 2:  Management's Discussion and Analysis or 
                       Plan of Operation ..........................    6


        Part II.  Other Information ...............................    8

        Signatures ................................................    9

<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)
                          PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
                      Condensed Balance Sheets (Unaudited)
                      September 30, 1996 and March 31, 1996

                                     ASSETS

                                               SEPTEMBER 30, 1996 MARCH 31, 1996
                                               ------------------ --------------
CASH AND CASH EQUIVALENTS ......................   $  1,408,456    $    722,430
RECEIVABLES
    Mortgage loans and church bonds -
    earning ....................................     20,768,576      21,886,390
    Interim construction loans -
    earning ....................................      8,067,687       7,877,489
    Nonearning mortgage loans, church
    bonds and interim construction
     loans .....................................      3,778,739       2,769,345
    Less: Allowance for possible
     credit losses .............................       (765,213)       (728,665)
                                                   ------------    ------------
                                                     31,849,789      31,804,559
                                                   ------------    ------------
    Accrued interest receivable ................        281,425         307,291
    Notes receivable ...........................        583,220         483,631
                                                   ------------    ------------
                  Total receivables ............     32,714,434      32,595,481

PROPERTY AND EQUIPMENT, net of accumulated 
    depreciation of $437,215 and $429,377 at
    September 30, 1996 and March 31,1996,
    respectively ...............................        221,127         228,965
PROPERTY HELD FOR INVESTMENT ...................         83,714          83,714
UNAMORTIZED DEBT EXPENSE, net and
    other assets ...............................        105,260          86,730
                                                   ------------    ------------
TOTAL ASSETS ...................................   $ 34,532,991    $ 33,717,320
                                                   ============    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
    Notes payable and line of credit:
      Related party ............................   $  1,243,431    $  1,482,250
      Other ....................................      3,271,019       3,073,830
                                                   ------------    ------------
                                                      4,514,450       4,556,080
                                                   ------------    ------------
    Secured savings certificates:
      Related party ............................        485,692         485,692
      Other ....................................      7,365,792       7,059,683
                                                   ------------    ------------
                                                      7,851,484       7,545,375
    Accrued interest payable ...................         35,294          37,817
    Federal income taxes payable ...............           --             7,060
    Other ......................................        344,906         220,259
                                                   ------------    ------------
                  Total liabilities ............     12,746,134      12,366,591
                                                   ------------    ------------
SHAREHOLDERS' EQUITY
    Shares of beneficial interest, no par value;
     authorized shares unlimited, 7,007,402
     shares issued and outstanding .............     20,623,866      20,623,866
    Undistributed net income ...................      1,162,991         726,863
                                                   ------------    ------------
          Total shareholders' equity ...........     21,786,857      21,350,729
                                                   ------------    ------------
TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY ..........................   $ 34,532,991    $ 33,717,320
                                                   ============    ============

             These condensed financial statements should be read in
               connection with the accompanying notes to condensed
                              financial statements.

                                      -1-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)
                   Condensed Statements of Income (Unaudited)

                     Three-month and six-month periods ended
                           September 30, 1996 and 1995

                               THREE-MONTH PERIODS ENDED SIX-MONTH PERIODS ENDED
                                     SEPTEMBER 30,             SEPTEMBER 30,
                                  1996         1995         1996        1995
                                  ----         ----         ----        ----

INTEREST INCOME AND FEES
    Interest and fees on
      mortgage loans, church
      bonds, and interim
      construction loans ...   $1,005,626   $1,025,611   $1,894,215   $2,199,364
    Interest on temporary
       investments .........       10,006        9,136       17,733       18,868
                               ----------   ----------   ----------   ----------
         Total interest
           income and fees .    1,015,632    1,034,747    1,911,948    2,218,232
                               ----------   ----------   ----------   ----------
DEBT EXPENSE
    Interest ...............      248,897      292,209      478,077      622,858
    Amortization of:
       Registration cost ...        6,553         --         17,163         --
       Commissions paid to
        brokers ............       15,006       11,846       29,725       23,841
                               ----------   ----------   ----------   ----------
         Total debt expense       270,456      304,055      524,965      646,699
                               ----------   ----------   ----------   ----------
         Net interest income      745,176      730,692    1,386,983    1,571,533

PROVISION FOR POSSIBLE
    CREDIT  LOSSES .........       22,500       22,500       45,000       40,000
                               ----------   ----------   ----------   ----------
         Net interest income
            less provision
            for possible
            credit losses ..      722,676      708,192    1,341,983    1,531,533

OTHER INCOME ...............        2,427        3,092        5,125        5,900

OTHER OPERATING EXPENSES
  General and administrative      119,919      104,855      259,532      276,708
  Board of Trust Managers'
     fees ..................       10,014        9,794       20,782       20,058
                               ----------   ----------   ----------   ----------
          Total other
          operating expenses      129,933      114,649      280,314      296,766
                               ----------   ----------   ----------   ----------
          NET INCOME .......   $  595,170   $  596,635   $1,066,794   $1,240,667
                               ==========   ==========   ==========   ==========
WEIGHTED AVERAGE NUMBER
    OF SHARES OUTSTANDING ..    7,007,402    7,007,402    7,007,402    7,007,402
                               ==========   ==========   ==========   ==========
NET INCOME PER SHARE .......   $      .08   $      .09   $      .15   $      .18
                               ==========   ==========   ==========   ==========

DIVIDENDS PER SHARE ........         --           --            .09          .08
                               ==========   ==========   ==========   ==========

             These condensed financial statements should be read in
               connection with the accompanying notes to condensed
                              financial statements.

                                      -2-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)
                 Condensed Statements of Cash Flows (Unaudited)

               Six-month periods ended September 30, 1996 and 1995

                                                         SIX-MONTH PERIODS
                                                         ENDED SEPTEMBER 30,
                                                         -------------------
                                                       1996             1995
                                                       ----             ----
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income ................................    $ 1,066,794     $  1,240,667
    Adjustments to reconcile net income
       to net cash provided by operating
       activities:
          Depreciation ........................          7,838            7,836
          Amortization of debt expense ........         46,888           23,841
          Amortization of loan discounts ......        (50,433)        (184,049)
          Provision for possible credit
           losses .............................         45,000           40,000
          Changes in:
              Accrued interest receivable .....         25,866           66,832
              Accrued interest payable ........         (2,523)         (43,662)
              Federal income taxes
               payable ........................         (7,060)          (5,010)
              Other liabilities ...............        124,647          (70,776)
          Other, net ..........................        (61,463)          (6,356)
                                                   -----------     ------------
                  Net cash provided by
                   operating activities .......      1,195,554        1,069,323
                                                   -----------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in mortgage and interim
       construction loans and church
       bonds ..................................     (8,017,210)      (5,624,870)
    Payments received on mortgage and
       interim construction loans and
       church bonds ...........................      7,985,864       11,601,790
    Advances of notes receivable ..............       (319,737)        (218,736)
    Payments received on notes receivable .....        220,148          151,728
                                                   -----------     ------------
                 Net cash provided (used)
                  by investing activities .....       (130,935)       5,909,912
                                                   -----------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Sale of secured savings certificates ......        659,440             --
    Borrowings on notes payable ...............      5,357,265        5,838,898
    Principal payments on:
       Secured savings certificates ...........       (353,331)        (601,500)
       Notes payable ..........................     (5,398,895)     (11,167,133)
    Registration costs of secured savings
     certificates .............................         (7,732)         (44,126)
    Commissions paid to broker on
     issuance of secured savings
     certificates .............................         (4,674)            --
    Cash dividends paid .......................       (630,666)        (560,593)
                  Net cash used by
                  financing activities ........       (378,593)      (6,534,454)
                                                   -----------     ------------
                  Increase in cash and
                   cash equivalents ...........        686,026          444,781
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD ...................................        722,430          366,977
                                                   -----------     ------------
CASH AND CASH EQUIVALENTS AT
 END OF PERIOD ................................    $ 1,408,456     $    811,758
                                                   ===========     ============
SUPPLEMENTAL DISCLOSURE OF
 CASH FLOW INFORMATION
    Cash paid during the period
     for interest .............................    $   480,600     $    666,520
                                                   ===========     ============

             These condensed financial statements should be read in
               connection with the accompanying notes to condensed
                              financial statements.

                                      -3-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)
               Notes to Condensed Financial Statements (Unaudited)

 (1)   GENERAL

       See Note 1 of Notes to Financial  Statements in the Trust's Annual Report
       on Form  10-KSB405  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.

(2)    WEIGHTED AVERAGE INTEREST RATES

       Weighted  average  interest  rates  and  net  interest  rate  margins  at
       September 30, 1996 and 1995 were as follows:

                                   Mortgage Loan and      Total     Net Interest
                                 Church Bond Portfolio Indebtedness  Rate Margin
                                 --------------------- ------------  -----------

          September 30, 1996 ....        10.50             7.09          3.41
          September 30, 1995 ....        11.20             7.53          3.67

(3)    CONTRACTUAL MATURITIES

       Scheduled  principal payments on mortgage loans, church bonds and interim
       loans and indebtedness  (including secured savings certificates and notes
       payable)  outstanding  at September 30, 1996,  for the five  twelve-month
       periods subsequent to September 30, 1996, follow:

                                       Mortgage loans,
            Twelve-month period         church bonds
           ending September 30,       and interim loans             Indebtedness
           --------------------       ------------------            ------------
               1997                    $12,876,231                    9,690,169
               1998                      1,876,446                    1,965,265
               1999                      1,544,087                      710,500
               2000                      1,256,569                         --
               2001                      1,116,704                         --
                                       ===========                    =========

(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  $3,778,739  and
       $2,769,345  at September  30, 1996 and March 31, 1996,  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  $205,000  and  $175,000 for the  six-month  periods  ended
       September 30, 1996 and 1995, respectively.

                                      -4-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)
               Notes to Condensed Financial Statements (Unaudited)

       On June 27, 1996, because of recent deterioration or past due status, the
       Trust added additional loans in the total principal balance of $1,625,514
       to nonearning  assets.  Two interim loans represented  $1,297,662 of such
       amount.  Such interim  loans were moved to  non-accrual  status after the
       makers  of  loans  filed  for  protection  under  Chapter  11 of the U.S.
       Bankruptcy Code during June 1996. In connection with placing the loans on
       nonaccrual, the Trust wrote off approximately $45,000 in accrued interest
       receivable  related to the loans.  In  addition to the  nonaccrual  loans
       previously  mentioned,  management  has  doubts as to a  certain  interim
       loan's ability to comply with present  repayment  terms.  Such loan had a
       balance of  approximately  $1,556,000  at September  30, 1996 and was not
       classified as nonearning at that date. Management believes that potential
       losses related to the aforementioned  loans have been provided for in the
       Trust's allowance for possible credit losses.

(5)    SECURED SAVINGS CERTIFICATES

       Secured  Savings  Certificates  (Certificates)  are  issued in amounts of
       $1,000 or more and have  single  maturity  dates from 30 days to 10 years
       from date of issue. With respect to an individual  certificate,  interest
       rate and  frequency of payment of interest  (either  monthly,  quarterly,
       semiannually,  annually or at maturity) are fixed at the time of issuance
       of the  Certificate.  Effective  July 18, 1994,  the Trust decided not to
       register  and was not able to sell  additional  Certificates  after  that
       date. However,  during April 1995, the Board of Trust Managers decided to
       register  $20,000,000  of SSCs on Form SB-2 and during the quarter  ended
       December 31 1995,  such  registration  was  effective and SSCs were being
       issued.

       Certificates  are secured under the terms of an indenture  that requires,
       among other things,  the pledge of mortgage notes  receivable  with total
       unpaid  principal  amounts  not less than  100% or 125% of the  aggregate
       principal amount of Certificates outstanding.  Due to the fluctuations in
       the amount of sales of  Certificates as well as in the repayment of notes
       pledged to secure the  Certificates,  the Trust has on occasion failed to
       maintain the required ratio of pledged notes to outstanding  Certificates
       for a short period of time until the deficiency  could be corrected.  The
       indenture  trustee has been aware of these temporary  technical  defaults
       and has not declared a default  under the  Indenture.  At  September  30,
       1996, the Trust was in compliance with the requirement.

(6)    LINE OF CREDIT PAYABLE TO THE BANK

       The  Trust's  $10,000,000  line of credit,  of which  $85,001 was owed at
       September 30, 1996,  expired on September 1, 1996. The Trust continued to
       borrow under the line of credit under an oral  agreement  until  November
       1996, when the line of credit was renewed.

                   This information is an integral part of the
                  accompanying condensed financial statements.

                                   -5-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)

Item 2. Management's Discussion and Analysis or Plan of Operation

Results of Operations - Three-Month  and Six-Month  Periods Ended  September 30,
1996 as Compared to the  Three-Month  and Six-Month  Periods Ended September 30,
1995:

                                    REVENUES

The Trust's  revenues are derived from interest  income earned on mortgage loans
as well as, to a lesser degree,  interest  earned on church bonds and short-term
investments. The decrease in the Trust's revenues of $19,115 for the three-month
period ended  September  30, 1996,  as compared to the  corresponding  period in
1995,  is  primarily  due to a  decrease  of  $823,624  in  the total  amount of
mortgage loans,  church bonds and interim  construction  loans  outstanding from
$33,438,626  at September 30, 1995 to  $32,615,002  at September  30, 1996.  The
decrease in the Trust's  revenues of $306,284  for the  six-month  period  ended
September  30,  1996,  as  compared  to the  corresponding  period  in 1995,  is
primarily  due to a decrease in the average  total amount of mortgage  loans and
church bonds outstanding during the six-month period ended September 30, 1996 as
well as a decrease in the weighted averaged rates on loans. The weighted average
rate on mortgage loans, church bonds and interim loans at September 30, 1996 and
1995 was 10.5% and 11.2%, respectively.

                                INTEREST EXPENSE

The most  significant  expense  item is interest  expense  which  comprised  the
majority of total  operating  expense for each of the  three-month and six-month
periods ended September 30, 1996 and 1995. Interest expense decreased by $43,312
for the  three-month  period  ended  September  30,  1996,  as  compared  to the
corresponding  period  in 1995,  primarily  due to  decreases  in  average  debt
balances.  The decrease in interest expense of $144,781 for the six-month period
ended  September 30, 1996, as compared to the  corresponding  period in 1995, is
due to a decrease in the average total amount of indebtedness outstanding during
the  six-month  period  ended  September  30,  1996 as well as a decrease in the
weighted  average  interest  rate.  The weighted  average  interest  rate on all
indebtedness  was 7.53% at September  30, 1995 as compared to 7.09% at September
30, 1996.

                                NONEARNING ASSETS

On June 27, 1996, because of recent  deterioration or past due status, the Trust
added  additional  loans  in  the  total  principal  balance  of  $1,625,514  to
nonearning assets. Two interim loans represented $1,297,662 of such amount. Such
interim loans were moved to  non-accrual  status after the makers of loans filed
for protection under Chapter 11 of the U.S. Bankruptcy Code during June 1996. In
connection   with  placing  the  loans  on  nonaccrual,   the  Trust  wrote  off
approximately  $45,000 in accrued interest  receivable  related to the loans. In
addition to the nonaccrual loans previously mentioned,  management has doubts as
to a certain interim loan's ability to comply with present repayment terms. Such
loan had a balance of approximately $1,556,000 at September 30, 1996 and was not
classified as nonearning at that date. Management believes that potential losses
related  to such loans  have been  provided  for in the  Trust's  allowance  for
possible credit losses.


                                      -6-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)

                                    LIQUIDITY

Due to the cost of  registration  and of sales of Secured  Savings  Certificates
(Certificates),  the cost of these  funds are  normally  higher than the cost of
borrowing from bank sources or master notes. Therefore, the Trust decided not to
register  additional  Certificates  and the  Trust  was not  able to sell  these
Certificates  after July 18, 1994, and,  therefore,  did not have available this
source of funds to meet its liquidity  needs.  However,  during April 1995,  the
Board of Trust Managers decided to register $20,000,000 of SSCs on Form SB-2 and
during the quarter ended December 31, 1995, such  registration was effective and
SSCs were being issued.

The Trust's  $10,000,000 line of credit,  of which $85,001 was owed at September
30, 1996,  expired on September 1, 1996. The Trust continued to borrow under the
line of credit under an oral agreement  until  November  1996,  when the line of
credit was renewed.


                                      -7-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST
                        (A Real Estate Investment Trust)

                           PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders:

The annual  meeting of  shareholders  of the Trust was held on July 19, 1996. At
such meeting,  each of the  individuals  named below was elected to the Board of
Trust  Managers  of the Trust to serve  until  the next  annual  meeting  of the
shareholders of the Trust:

                                                     Number of shares
                                                  FOR             AGAINST
                                                  ---             -------

               Dr. Everett Blanton ..          3,956,375          21,203
               Larry Brown ..........          3,956,375          21,203
               Robert E. Martin .....          3,953,405          24,173
               Bill R. McMorries ....          3,956,405          21,173
               Steve Rogers .........          3,952,917          24,661
               Dr. Foy W. Shackleford          3,956,375          21,203
               Jack R. Vincent ......          3,956,405          21,173


Additionally,  shareholders  voted  to  ratify  Clifton  Gunderson  P.L.L.C.  as
auditors for the year ending March 31, 1997 as follows:

               For ..............                       3,827,324
               Against ..........                           4,066
               Abstain ..........                         146,188


Item 6. Exhibits and Reports on Form 8-K:

(a)    Exhibits:  None.

(b)    Reports on Form 8-K:  None


                                      -8-
<PAGE>


                        CHURCH LOANS & INVESTMENTS TRUST

                                   SIGNATURES

In accordance  with the  requirements  of the Exchange Act, the  registrant  has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                CHURCH LOANS & INVESTMENTS TRUST



DATE: November 14, 1996                         BY:/s/ B.R. McMorries
                                                   -----------------------------
                                                   B.R. McMorries,
                                                   Chairman of the Board of
                                                   Trust Managers


DATE: November 14, 1996                         BY:/s/ Kelly Archer
                                                   -----------------------------
                                                   Kelly Archer
                                                   Chief Financial Officer





                                      - 9 -
<PAGE>