---

# FORM 10-KSB

# SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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| | [ X ] | ANNUAL REPORT UNDER SECTION 13 OR 15(d)
     OF THE
SECURITIES EXCHANGE ACT OF 1934     
| | ----- | ----------------------------------------------------------------------------------------
|
| |       | For the Fiscal Year Ended March 31, 2003                                                
|
| | [   ] | TRANSITION  REPORT UNDER SECTION 13 OR 15(d)
     OF THE
SECURITIES EXCHANGE ACT OF 1934
|
| |       | For the transition period from  to  .                                                   
|

Commission File No. 08117

CHURCH LOANS & INVESTMENTS TRUST
(Name of small business issuer in its charter)

| | Texas                                                                    |  | 75-6030254                       
| | ------------------------------------------------------------------------ |  | ---------------------------------
| | (State or other jurisdiction of
incorporation or organization)           |  | (IRS Employer
Identification No.)
| |                                                                          | 
| | 5305 I-40 West, Amarillo, Texas
(Address of principal executive offices) |  | 79106
(Zip Code)                 

(806) 358-3666
(Issuer's telephone number)



Securities
registered pursuant to Section 12(b) of the Exchange Act: None

Securities  registered pursuant to Section 12(g) of the Exchange
Act: Shares of Beneficial Interest



> 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

# 

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> Check if there is no disclosure of delinquent  filers in response to Item 405 of
> Regulation S-B contained in this form, and no disclosure  will be contained,  to
> the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
> statements  incorporated  by  reference  of Part III of this Form  10-KSB or any
> amendment to this Form 10-KSB.  [ X ]

Issuer's revenues for its most recent fiscal year: $4,902,182.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant is $22,492,596 as of May 28, 2003.

> The  number of shares  outstanding  of each of the  issuer's  classes  of common
> stock,   as  of   March   31,   2003   is   7,000,806   shares   of   beneficial
> interest.

Documents Incorporated by Reference:

> Portions of the Annual Report to Shareholders for the year ended March 31, 2003,
> are incorporated by reference into Parts II and III.
> 
> Exhibits  3(a) and 3(b)  included  in Form  S-11  under  File  No.  2-51235  are
> incorporated by reference into the List of Exhibits, Item 13(a) of Part III.

# -2-

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# TABLE OF CONTENTS
INDEX
FORM 10-KSB ANNUAL REPORT - 2003
CHURCH LOANS & INVESTMENTS TRUST

|Part I.   |                                                                                                                 | Page
|--------- | --------------------------------------------------------------------------------------------------------------- | ----
|Item 1:   | Description of Business                                                                                         | 4   
|Item 2:   | Description of Property                                                                                         | 6   
|Item 3:   | Legal Proceedings                                                                                               | 6   
|Item 4:   | Submission of Matters to a Vote of Security Holders                                                             | 6   
|Part II.  |                                                                                                                 |     
|Item 5:   | Market for Common Equity and Related Stockholder Matters                                                        | 7   
|Item 6:   | Management's Discussion and Analysis or Plan of Operation                                                       | 8   
|Item 7:   | Financial Statements                                                                                            | 13  
|Item 8:   | Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure                            | 13  
|Part III. |                                                                                                                 |     
|Item 9:   | Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act | 14  
|Item 10:  | Executive Compensation                                                                                          | 15  
|Item 11:  | Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters        | 16  
|Item 12:  | Certain Relationships and Related Transactions                                                                  | 17  
|Item 13:  | Exhibits and Reports on Form 8-K                                                                                | 17  
|Item 14:  | Controls and Procedures                                                                                         | 17  
|Item 15:  | Principal Accountant's Fees and
          Services                                                              | 18  

# -3-

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# PART I

## Item 1 - DESCRIPTION OF BUSINESS

Church Loans &  Investments  Trust ("the Trust") is a real estate investment
trust organized under the laws of the State of Texas in March 1963. Although the
Trust has the authority to engage in the business of buying, selling and leasing
of real estate,  the Trust has  heretofore  restricted  its business  activities
primarily  to making  loans to churches and other  nonprofit  organizations  and
assisted  living  centers  which are secured by a first  mortgage on real estate
owned by such borrowers.

The period of duration of the Trust, unless dissolved in accordance with law, or
by the consent of the owners of shares of beneficial  interest in the Trust,  is
perpetual.  The Trust may be dissolved by the affirmative  vote of not less than
two-thirds of the owners of outstanding shares of the Trust.

The control and management of the Trust properties,  and all powers necessary or
appropriate  to  effect  any and all of the  purposes  for  which  the  Trust is
organized, is vested in the Board of Trust Managers.

The  number of shares of  beneficial  interest  in the Trust  which the Trust is
authorized to issue is unlimited.

The Trust is  qualified  as a "real  estate  investment  trust"  under  Sections
856-858 of the Internal  Revenue Code of 1986 as amended (the "Internal  Revenue
Code" or "Code").  It is the  intention of the Trust to continue to qualify as a
real estate investment trust under the Code.

The Trust  maintains  an office  located at 5305 I-40 West,  Amarillo,  TX 79106
(telephone 806/358-3666).

As mentioned  above,  the Trust is  primarily  engaged in the business of making
mortgage loans to churches and other nonprofit organizations and assisted living
centers.  The  Declaration  of Trust  restricts the  investments of the Trust to
loans  secured by a first  mortgage,  deed of trust or other lien  covering real
property with the amount of such loans not to exceed 66 2/3% of the value of the
real  property  securing  such loan as  determined  by a  competent  independent
appraiser.  Although  the Trust has been  primarily  in the  business  of making
long-term  mortgage  loans,  during  the past  several  years  it has also  been
actively involved in making short-term  interim or construction loans to finance
the  construction  of church  buildings,  the  construction  of assisted  living
centers,   the  purchase  of  real  estate,   or  the  refinancing  of  existing
indebtedness.  Most of the interim loans  presently  being made by the Trust are
associated with bond offerings of churches and other nonprofit organizations and
assisted living centers. These interim loans are scheduled to be repaid from the
proceeds of the bond offerings.

The Trust is not limited to the location of the  property  securing any loans in
which it may invest and seeks to spread its  investments  in areas of the United
States where favorable yields prevail.

As of March 31, 2003, the Trust has 87 permanent and interim  mortgage loans and
investments in church bonds having a principal balance of $54,772,437,  with the
average  principal  amount thereof

# -4-

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being  $629,568.  The  interest  rates on these loans vary from 4.75% to 12% per
annum with the weighted average interest rate of mortgage loans and church bonds
being 7.80% per annum at March 31,  2003.The  original terms of these loans vary
from one year to  thirty  years,  with the  majority  being for a term of twenty
years.

During the fiscal year of the Trust ending March 31, 2003, the net income of the
Trust was  $3,113,639,  as compared to  $3,281,795 in fiscal 2002, a decrease of
5.12%.  Such  decrease  in net income of the Trust was due to a decrease  in the
Trust's  net  interest  income.  Net  interest  income of the Trust was lower in
fiscal 2003 as compared to fiscal 2002 due to several  reasons,  including:  (a)
the  payment in 2002 of several  loans  owing to the Trust that were  previously
characterized  as  non-performing,  and (b) a decrease in the net interest  rate
margin of the Trust.

The net income of the Trust for each of the quarters  during  fiscal 2003 was as
follows:    first   quarter-   $767,801;    second    quarter-$646,919;    third
quarter-$747,012; and fourth quarter-$951,907.

The operational  expense of the Trust increased from $785,512 during fiscal 2002
to  $830,160  in fiscal  2003.  The  operational  expense of the Trust  included
general and administrative  expenses and compensation to members of the Board of
Trust Managers.

During fiscal 2003, the Trust advanced loan proceeds of $25,465,901 on 13
interim loans and 15  permanent  loans.  Most,  if not all,  of such loans bear
interest at a variable  rate  varying from 1.5% to 2% per annum in excess of the
prime rate of interest  published  by the Wall  Street  Journal and known as the
"Wall Street Journal Prime."

During  fiscal 2003,  the Trust  employed a total of 5 full time  employees  and
employed,  as needed,  two additional  part-time  persons who work on a contract
basis

The business  conditions in which the Trust operates has become more competitive
in the past several years as more and more banks are re-entering the business of
making loans to churches,  especially  the more  desirable,  less risky,  church
loans.  If this trend  continues,  the rates and fees which the trust can charge
may decrease.  However,  loan demand  remains good as evidenced by the number of
loan  requests  received  by the  Trust  and  the  number  of  loan  commitments
outstanding as of March 31, 2003.

At your request,  we will provide you, without charge, a copy of any exhibits to
this Annual Report on Form 10-KSB.  If more information is needed,  please call,
write or e-mail us at:

> Church Loans & Investments Trust
> Attn: Mr. Kelly Archer
> 5305 I-40 West
> Amarillo, Texas 79106
> Telephone: (806) 358-3666
> E-mail: karcher@churchloans.com

The Trust's fiscal year ends on March 31. The Trust files annual,  quarterly and
other information with the Securities and Exchange  Commission (the "SEC").  You
may read and copy any materials the Trust files with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C.

# -5-

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20549. You may obtain  information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330.  Furthermore,  the Trust's SEC filings are
also  available  to  the  public  at  the  SEC   maintained   internet  site  at
http://www.sec.gov.     The     internet     address    of    the    Trust    is
http://www.churchloans.com. The Trust website includes a link to the SEC website
referred to above at which the Trust's SEC filings are available.

## Item 2 - DESCRIPTION OF PROPERTY

The Trust  maintains as its only place of business  its offices  located at 5305
I-40  West,  in  Amarillo,  Texas.  Such  building  is owned by the Trust and is
occupied  solely by the  Trust.  There is no debt owed by Trust in regard to its
real property.

The real properties of the Trust,  net of depreciation and excluding real estate
acquired  through  foreclosure,  are not a  significant  portion of the  Trust's
assets, representing less than 1% of the Trust's total assets.

As previously mentioned, the Trust's primary business is the making of
mortgage loans to churches and other nonprofit organizations and assisted living
centers. The Declaration of Trust restricts the investments of the Trust to
loans secured by a first mortgage, deed of trust, or other lien covering real
property with the amount of such loans not to exceed 66 2/3% of the value of the
real property securing such loan. However, the Trust has made one loan in May of
2003 for $150,000 that is secured by a second mortgage lien against real estate having
a total  estimated  value of  $7,312,100.  Such loan is second and inferior to a
loan secured by a first mortgage in the approximate amount of $2,500,000. The
Declaration  of Trust may not be amended  without the  affirmative  vote of two-thirds (2/3rds) of the Certificates of Beneficial Interest entitled to vote. The
Board of Trust Managers'  general policy is to limit  investment of Trust assets
in any one mortgage loan to not more than $3,000,000. However, at the discretion
of the Board of Trust Managers,  the Trust may make and has made loans in excess
of such  limit.  All such  investment  in  mortgage  loans is for the purpose of
earning income for the Trust.

## Item 3 - LEGAL PROCEEDINGS

None

## Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

None

# -6-

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# PART II

## Item 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

# (a) Market Information

There is no  established  public  trading  market for the  shares of  beneficial
interest of the Trust.  During  fiscal year 2003 a total of 104,742  shares were
sold in the  secondary  market at prices  ranging from $2.90 to $4.00 per share.
The last sale during the fiscal year was at $3.10 per share.  During fiscal year
2002 a total of  210,422  shares  were  sold in the  secondary  market at prices
ranging from $2.90 to $3.06 per share.

The range of high and low bid information  for shares of beneficial  interest of
the Trust for each quarter within the last two fiscal years is as follows:

`Fiscal 2003     Fiscal 2002
                  Quarter              High   Low      High   Low
                  ---------------      ----   ----     ----   ----
                  April-June           3.10   2.90     2.90   2.90

                  July-September       3.10   3.00     3.00   2.90

                  October-December     3.50   2.00     3.06   2.90

                  January-March        4.00   3.00     3.00   2.90`

The source of the above information is the Trust's own records. The Trust serves
as the Transfer Agent for its own shares.

(b) Holders

At March 31, 2003 there were 2,358 shareholders of the Trust.

(c) Dividends

Cash dividends on all outstanding shares of beneficial interest in the Trust
are declared twice annually, for the 3 month period ending March 31, and the 9
month period ending December 31. In fiscal year 2002, the Trust paid a cash
dividend of $.46 per share. In fiscal year 2003 the Trust paid a total cash
dividend of $.40 per share.

(d) Securities authorized for issuance under equity compensation plans.

None.

# -7-

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(e) Sales of Unregistered Securities.

## Item 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION

Forward-looking Statement Disclaimer

> The following  Management's  Discussion  and Analysis  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  herein  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. Such 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  the
> following:
> 
> Competition in the business of making loans to churches;
>   A decline in the general economic conditions;
>   A decline in real estate values thereby affecting the value of the collateral securing the loans
>                   made by the Trust;
>   A rise in interest rates resulting in higher cost of funds to the Trust prior to the re-pricing of the
>                   loans owing to the Trust;
>   Inability of the Trust to borrow funds and at reasonable rates of interest;
>   General risks of lending;
>   Change in federal or state laws affecting the Trust's 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 herein.

Results of Operations 2003 compared to 2002

> During the fiscal year ended  March 31,  2003,  interest  income and fees of the
> Trust decreased by $389,632 (7.36%) over the previous fiscal year. However,  the
> interest  income of the Trust  for the  fiscal  year  ended  March 31,  2002 was
> significantly influenced by the payment of several loans owing to the Trust that
> were  previously  characterized  as  non-performing.  The pay-off of these loans
> resulted  in an  additional  recognition  of  interest  income of  approximately
> $586,000 in fiscal 2002 as compared  with interest  income  recognized in fiscal
> 2003 on the pay-off of loans  previously  characterized  as non-  performing  of
> approximately  $164,000,  a difference of $422,000.  Interest income and fees of
> the Trust after  deducting the interest  income received on the payment of loans
> which were previously  characterized as  nonperforming  was $4,738,182 in fiscal
> 2003 as compared to $4,705,814 in fiscal 2002, an increase of $32,368 or 0.69%.

# -8-

---

> The  decrease in  interest  income and fees of the Trust in fiscal 2003 was also
> attributable  to a decrease in the interest rates on the Trust's loan portfolio.
> The average  interest rate on loans and church bonds held by the Trust decreased
> from 9.14% as of March 31, 2002, to 7.80% as of March 31, 2003.
> 
> There was a slight  increase in the amount of  performing  interim loans held by
> the Trust from  $15,317,011 as of March 31, 2002, to $15,672,768 as of March 31,
> 2003,  and there was an increase in performing  mortgage  loans and church bonds
> during  the  recent  fiscal  year  from  $30,507,636  as of March 31,  2002,  to
> $35,689,239 as of March 31, 2003. In addition,  non-performing  loans  increased
> from  $1,151,907  as of March 31,  2002,  to  $2,834,574  as of March 31,  2003.
> Therefore,  the total performing and non-performing mortgage loans, church bonds
> and interim loans held by the Trust  increased from  $46,976,554 as of March 31,
> 2002, to $54,196,581 as of March 31, 2003. This increase is partially the result
> of a decrease in the  payments  received on mortgage  and interim  loans  during
> fiscal 2003 of $17,755,086 as compared to $27,454,632  during fiscal 2002.  This
> represents a decrease of $9,699,546 or 35.33%.  The increase in mortgage  loans,
> church bonds and interim loans held by the Trust was offset by a decrease in the
> investment by the Trust in mortgage and interim loans from  $32,691,886  for the
> fiscal year ended March 31, 2002,  to  $25,465,901  during the fiscal year ended
> March 31, 2003.  The decrease in the  investment by the Trust in mortgage  loans
> also contributed to a decrease of $19,145 in commitment fees earned by the Trust
> in fiscal 2003 as compared to fiscal 2002.
> 
> The net income of the Trust for fiscal 2003 was $3,113,639  ($.44 per share),  a
> decrease of $168,156  (5.12%) from the previous  fiscal year.  Such decrease was
> primarily  attributable  to a decrease in the Trust's net interest  income.  Net
> interest income decreased from $4,302,595 in fiscal 2002 to $3,927,582 in fiscal
> 2003, a decrease of $375,013 (8.72%) from fiscal 2002.
> 
> The  decrease  in the net  income of the Trust for  fiscal  2003 was offset by a
> slight  decrease  in the  interest  expense of the Trust.  In fiscal  2003,  the
> average  aggregate  amount of total debt outstanding was $7,945,467 more than in
> fiscal 2002.  However,  the weighted  average interest rate decreased from 5.12%
> for the year ended March 31,  2002,  to 3.58% for the year ended March 31, 2003.
> The interest  expense of the Trust  decreased  from $989,219 for the fiscal year
> ended March 31,  2002,  to $974,600  for the fiscal year ended March 31, 2003, a
> decrease of $14,619 or 1.48%. The average  month-end balance of the indebtedness
> owing by the Trust  increased from  $19,125,126  for the fiscal year ended March
> 31, 2002, to $27,070,593 for the fiscal year ended March 31, 2003. Such increase
> was due to an increase in the debt of the Trust  resulting  from the decrease in
> the payments  received by the Trust on mortgage and interim loans. The effect on
> interest  expense of  increased  debt was offset by the  decrease in the Trust's
> cost of funds as previously mentioned.
> 
> Income from the realization of loan discounts from loan purchases decreased from
> $264,694 for the year ended March 31, 2002,  to $40,528 for the year ended March
> 31, 2003, a decrease of $224,166.
> 
> General and administrative expenses of the Trust increased from $733,957 for the
> fiscal year ended March 31,  2002,  to $771,378  for the fiscal year ended March
> 31, 2003, an increase of $37,421 or 5.10%.
> 
> Dividends  related to fiscal 2003,  without  regard to dates they were declared,
> were  $2,730,315  or $.39 per share as compared to  $3,360,387 or $.48 per share
> for fiscal 2002. The decrease in dividends paid was primarily  attributable to a
> decrease in the net income of the Trust. As a real estate  investment trust,

# -9-

---

> the Trust was required by Section 857 of the Internal Revenue Code to distribute
> not less  than 95% of its  taxable  net  income  to its  shareholders.  In 1999,
> Section 857 of the Code was amended to reduce this  requirement to not less than
> 90%. In fiscal 2002 and 2003,  the Trust elected to reduce its  dividends  based
> upon this lower requirement.  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).  In fiscal  2002,  the Trust  distributed
> dividends  equal to 92.7% of its net  taxable  income  as  compared  to 92.5% in
> fiscal 2003.  Future  dividends may be more or less than the net income reported
> in the financial statements because of variances in these temporary differences.
> 
> During  fiscal  2003,  the  prime  interest  rate  decreased  from  4.75% at the
> beginning  of the fiscal year to 4.25% at the close of the fiscal  year.  Should
> the prime interest rate decrease during fiscal 2004, the interest expense of the
> Trust will  generally  decrease  and the net income of the Trust will,  in turn,
> generally increase.  Should the prime interest rate increase during fiscal 2004,
> the interest expense of the Trust will generally  increase and the net income of
> the Trust will, in turn, generally decrease.
> 
> Other income of the Trust  increased from $32,203 for fiscal 2002 to $86,145 for
> fiscal  2003.  Included in fiscal 2003 income is a gain of $9,320 on the sale of
> properties which the Trust had obtained through foreclosure.

Liquidity and Capital Resources

> The Trust is 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.  At March 31, 2003, the Trust had five loans to two different borrowers
> which are  secured  by  assisted  living  centers  which  totaled  approximately
> $7,961,000.   Three  of  these  loans  were  to  affiliated  borrowers  totaling
> approximately  $1,660,000  and with the remaining two loans to another  borrower
> totaling approximately $6,301,000.
> 
> The assets of the Trust  primarily  consist of its loan  portfolio,  real estate
> acquired  through  foreclosure  and its  office  building  and  facilities.  The
> operational  expense of the Trust is comprised of the  maintenance of its office
> building,  the payment of the  salaries  of its  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 the  Trust  assets  are
> invested  in the  permanent  and  interim  loans  made by the  Trust.  The  only
> potential  liquidity  problems of the Trust are related to the timely and proper
> repayment by the Trust of the  leveraged  funds it has borrowed to make loans in
> excess of its  capital and the ability to fund loan  commitments  which  totaled
> approximately $8,300,000 at March 31, 2003. All of the indebtedness of the Trust
> is generally classified as short term having maturities ranging from "on demand"
> to maturities repayable over various periods extending through fiscal 2004.
> 
> All of the debt  obligations  of the Trust  outstanding as of March 31, 2003, in
> the amount of  $32,370,714  will mature in fiscal 2004.  These debt  obligations
> primarily consist of the Trust's bank line of credit and Master Note Agreements.
> As of April 14, 2003,  the Trust  modified its loan  agreement with the Amarillo
> National  Bank  thereby  increasing  the  line of  credit  from  $24,000,000  to
> $35,000,000. Although the Trust's bank line of credit matures in fiscal 2004, it
> is anticipated  that the line of credit will

# -10-

---

> be renewed annually.  In the event that the bank elects not to renew the line of
> credit,  the Trust 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 all real  estate  lien notes of the Trust  which are
> pledged to secure the bank line of credit.
> 
> At March 31, 2003, loans to the Trust under Master Note Agreements, which are in
> effect demand notes, total $13,448,714.  In the past, the Trust has utilized its
> bank line of credit and the  principal  paid to the Trust  upon its  outstanding
> loan portfolio in order to meet its maturing obligations.
> 
> At March 31,  2003,  the  balance  which could be borrowed by the Trust upon its
> bank line of credit was  $5,078,000.  The  principal  payments  scheduled  to be
> received by the Trust upon its loan  portfolio  for the years  ending  March 31,
> 2004 and 2005 are  $17,512,433  and  $2,140,143,  respectively.  Assuming all of
> these scheduled principal payments are received,  these payments,  together with
> the balance available to the Trust on its bank line of credit, would not provide
> the Trust with sufficient  funds to meet its maturing  obligations and fund loan
> commitments  without  the  necessity  of the Trust  borrowing  funds  from other
> sources.
> 
> As mentioned  above,  the Trust  obtained an increase in its bank line of credit
> from $24,000,000 to $35,000,000 effective April 14, 2003. Based upon the success
> of the Trust to obtain  borrowings  in the past,  the Trust is  confident  that,
> should it be necessary,  it will be able to obtain  additional bank financing in
> the  future  in  sufficient  amounts  for the  Trust to  timely  meet all of its
> obligations.
> 
> Should all the scheduled  principal payments upon loans made by the Trust not be
> received,  and should the Trust be unable to borrow  against its line of credit,
> and should borrowings from other sources not be available, it would be necessary
> for the Trust to sell a portion of its mortgage  loan  portfolio in order for it
> to meet all of its  financial  obligations.  At March 31,  2003,  the  principal
> balance of the loan and church bond portfolio of the Trust was $54,196,581,  net
> of unamortized  purchase discounts.  The weighted average interest rate on loans
> and church  bonds was 7.80% per annum.  In view of the normal  marketability  of
> conventional  loans, the Trust 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 $35,227,778, $30,195,236, and $26,420,831,  respectively. There
> is no  assurance  that the Trust would be able to sell all, or a portion of, its
> portfolio  of loans,  in which  event,  it would be  necessary  for the Trust to
> secure a loan,  or  loans,  from a lender  in  order  for the  Trust to meet its
> financial  obligations.  There is no  assurance  that the Trust would be able to
> secure a loan in such instance.  The Trust has sold only one of the loans in its
> mortgage loan portfolio and, therefore, has limited experience in this area.
> 
> Principal payments scheduled to be received by the Trust upon its permanent loan
> portfolio  during the years ending March 31, 2004 and 2005,  if not used to fund
> new loan  commitments,  would be used to reduce the outstanding  indebtedness of
> the  Trust.  Should  the Trust use the  payments  of  principal  which  shall be
> received upon its loan  portfolio to reduce its  outstanding  indebtedness,  the
> interest  expense of the Trust 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 by the
> Trust upon its mortgage loan  portfolio is generally  based upon a fixed rate of
> interest or a variable rate of interest that

# -11-

---

> periodically  reprices,  while the  interest  to be paid by the  Trust  upon its
> outstanding debts is directly, or indirectly, tied to the prime rate of interest
> charged by major domestic banks.
> 
> As of March 31, 2003, a substantial  portion of the promissory  notes evidencing
> the loans made by the Trust have been pledged to secure the Trust's bank line of
> credit. Promissory notes totaling $22,258,871 were pledged against the bank line
> of credit which had a total  outstanding  balance of  $18,922,000.  The required
> collateral for this bank loan was  $20,814,200,  leaving an excess of promissory
> notes  which have been  pledged to secure said bank notes of  $1,444,671.  These
> excess promissory notes may be reassigned by the bank to the Trust to be sold in
> order for the Trust to meet its financial  obligations.  Should it be necessary,
> in order for the Trust to meet its  financial  obligations,  these  excess notes
> amounting to $1,444,671 and other additional promissory notes in the approximate
> amount of $31,937,710 (for a total amount of $33,382,381)  would be available to
> be sold by the  Trust to meet  its  financial  obligations.  Should  the  excess
> promissory  notes be assigned by the bank to the Trust as heretofore  described,
> the bank line of credit would  continue to be secured by the  required  ratio of
> notes pledged to the principal  balance of the bank line of credit.  There is no
> assurance  that the Trust would be able to sell all,  or any  portion of,  these
> notes.
> 
> Cash flows from  operating  activities  consists  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.  Although  there was an increase in the
> amount of non-performing loans as of March 31, 2003, compared to March 31, 2002,
> 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 the
> success of the Trust to obtain  borrowings  in the past,  the Trust is confident
> that it will be able to obtain  borrowings in the future in sufficient  amounts,
> along with payments to be received on loans, to timely meet its obligations.

Inflation

> At March 31, 2003, the weighted  average  interest rate on the mortgage loan and
> church  bond  portfolio  of the Trust was  7.80%  per annum  while the  weighted
> average  interest  rate upon all  borrowings  of the Trust was 3.25% per  annum.
> Although a majority of the loans  constituting  the loan  portfolio of the Trust
> have been made at  variable  rates of interest  that  generally  reprice  either
> daily, annually, or otherwise periodically,  a portion of the loans constituting
> the  Trust's  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 the indebtedness of the Trust 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

# -12-

---

> period the  interest  expense of the Trust would  increase.  Since the  interest
> income of the Trust would not  increase as rapidly,  an increase in the interest
> expense  of the Trust  would  decrease  the net  income of the  Trust.  However,
> interest  income should  subsequently  increase as variable rate loans  reprice.
> Should the amount of the loans and the amount of the  indebtedness  of the Trust
> remain  constant,  and  should  the  weighted  average  interest  rate  upon the
> indebtedness increase to approximately 13.06% per annum, the interest income and
> the interest expense of the Trust would be substantially equal.

New Accounting Standards

> In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
> Financial  Accounting  Standards No. 141,  Business  Combinations,  and No. 142,
> Goodwill and Other Intangible Assets, effective for fiscal years beginning after
> December 15, 2001. Under these rules,  goodwill and intangible  assets deemed to
> have indefinite  lives will no longer be amortized but will be subject to annual
> impairment tests in accordance with the Statements. Other intangible assets will
> continue to be amortized over their useful lives.
> 
> The Trust applied the new rules on accounting for goodwill and other  intangible
> assets as of April 1, 2002. Application of the nonamortization provisions of the
> statement  did not have an effect on net  income as the Trust  currently  has no
> goodwill or other intangibles.
> 
> The Trust does not believe the adoption of any recently issued pronouncements by
> the Financial  Accounting  Standards Board will have a significant impact on its
> financial statements.

## Item 7: FINANCIAL STATEMENTS

> Financial  Statements  at March 31, 2003,  and 2002 and for each of the years in
> the two-year  period ended March 31, 2003,  are  incorporated  by reference from
> Pages 17 through 33 of the 2003 Annual Report to Shareholders.
> 
> The report of independent  auditors with respect to the financial  statements at
> March 31, 2003, and 2002 and for each of the years in the two-year  period ended
> March 31,  2003 is  incorporated  by  reference  from Page 16 of the 2003 Annual
> Report to Shareholders.

## Item  8:  CHANGES  IN  AND  DISAGREEMENTS   WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

> None

# -13-

---

# PART III

## Item 9: DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS
AND  CONTROL   PERSONS;   COMPLIANCE   WITH   SECTION   16(a)  OF  THE  EXCHANGE
ACT

> (a) Board of Trust Managers.  The following  information is furnished as to each
> individual  who now  serves as a member of the  Board of Trust  Managers  of the
> Trust:
> 
> B. R.  McMorries,  age 76, is a  consulting  engineer.  He has served as a Trust
> Manager  since 1963. He serves as Chairman of the Board of Trust  Managers.  Mr.
> McMorries  was  recently  elected to the Board of  Directors  of Colonial  Trust
> Company, also a reporting company.
> 
> Larry Brown,  age 60, is the  President of Larry Brown  Realtors,  Inc. and is a
> licensed  realtor.  He has served as a Trust  Manager  since 1981.  He serves as
> Vice-Chairman of the Board of Trust Managers.
> 
> Alfred J. Smith, age 68, is in the independent oil and gas production  business.
> Mr. Smith has served as a Trust  Manager  since 1999.  He serves as Secretary of
> the Board of Trust Managers.
> 
> Jack R. Vincent, age 73, is engaged in farming and ranching  operations.  He has
> served as a Trust Manager since 1989.
> 
> Steve  Rogers,  age 55, is the  President  of Steve  Rogers  Co., a real  estate
> appraisal firm. He has served as a Trust Manager since 1990.
> 
> Mike  Bahn,  age 59, is the  President  of  Amarillo  Blueprint  Co.,  an office
> equipment  and supply and  reproduction  services  business.  He has served as a
> Trust Manager since 1997.
> 
> Terry  Hays,  age 52, is the  Information  Systems  Manager  for the law firm of
> Perdue,  Brandon,  Fielder,  Collins  and Mott.  Mr.  Hays has served as a Trust
> Manager since 1998.
> 
> Michael W.  Borger,  age 48, is the  President  of  Turnkey  Leasing,  Ltd.,  an
> equipment  leasing  business.  Mr.  Borger  was  elected  to the  Board of Trust
> Managers by the existing  Board of Trust  Managers in April of 2002.  Mr. Borger
> previously  served as a Trust Manager from 1988 to 1990. Mr. Borger was recently
> elected to the Board of Directors of Colonial  Trust  Company,  also a reporting
> company
> 
> (b)  Executive  Officers.  The  following  information  is  furnished as to each
> individual  who now  serves  as an  executive  officer  of the  Trust who is not
> mentioned under "Board of Trust Managers" above:
> 
> M. Kelly Archer,  age 51, serves as President,  Manager of Operations  and Chief
> Financial  Officer of the Trust. As such, Mr. Archer  functions as the Executive
> Officer of the Trust. Mr. Archer has served in this capacity for 21 years.
> 
> Robert E. Martin,  age 53, serves as the Senior  Vice-President-Lending  for the
> Trust.  Mr. Martin has served in such capacity  since 1999.  Prior to serving in
> such capacity, Mr. Martin served as the President/CEO of Santa Fe Federal Credit
> Union.  Mr. Martin also served as a member of the Board of Trust Managers of the
> Trust prior to becoming an employee of the Trust.

# -14-

---

> Robert E. Fowler,  age 50,  serves as the Senior  Vice-President-Accounting  and
> Information Systems for the Trust. Mr. Fowler has served in such capacity for 21
> years.
> 
> (c) Compliance with Section 16(a) of the Securities  Exchange Act of 1934. Based
> upon  information  provided  to the  Trust  by  individual  Trust  Managers  and
> Executive Officers, the Trust believes that during the preceding fiscal year the
> Trust  Managers and Executive  Officers  have complied with all such  applicable
> filing requirements.
> 
> (d) The Trust has an Audit Committee which consists of Messers McMorries, Smith,
> Hays,  Vincent and Borger.  This committee,  which met fourteen times during the
> Trust's last fiscal year, is primarily responsible for: reviewing the activities
> of the Trust's independent auditors; reviewing and evaluating recommendations of
> the  auditors;  recommending  areas  of  review  to the  Trust  management;  and
> reviewing and evaluating the Trust's accounting  policies,  reporting  practices
> and internal controls.

## Item 10: EXECUTIVE COMPENSATION

> (a) Executive Officers:
> 
> The following table sets forth certain information  regarding  compensation paid
> during each of the Trust's  last three  fiscal  years to the Trust's  Manager of
> Operations  (CEO).  The  Trust has no other  executive  officers  whose  salary,
> bonuses and other  compensation  earned during fiscal 2003 exceeded $100,000 for
> services rendered in all capacities.
> 
>   Annual Compensation
>                                           -------------------------------
>                                   Fiscal                     Other Annual
> Name and Principal Position        Year    Salary    Bonus   Compensation
> ------------------------------     ----   --------   ------  ------------
>   CEO-M. Kelly Archer              2003   $107,625   $4,500   $ 18,900
>          Manager of Operations     2002    108,350      0       18,225
>                                    2001    108,510      0       14,490
> 
> (b) Trust Managers' Compensation:
> 
> The Board of Trust  Managers  of the Trust were paid  $57,300 in cash as a group
> during the last fiscal year for services as Trust Managers.  The Chairman of the
> Board of Trust Managers, B. R. McMorries,  is paid $500 per month for serving in
> such  capacity.  The remaining  members of the Board of Trust  Managers are paid
> $300 per month for serving as a member of the board. All Trust Managers are paid
> an additional $100 per board or committee meeting attended. In addition, a Trust
> Manager  receives  $400  per day for  their  services  when out of town on trust
> business.
> 
> The  members  of the Board of Trust  Managers  of the  Trust  are not  otherwise
> employed or compensated by the Trust.

# -15-

---

## Item 11: SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

> (a) No persons  owned  beneficially  more than five (5) percent of the shares of
> beneficial interest in the Trust as of March 31, 2003.
> 
> (b) The following table  indicates the number of shares of beneficial  ownership
> interest  in the  Trust  owned  by the  Board of Trust  Managers  and  Executive
> Officers, individually and as a group:

`Name and Address of                Amount of and Nature          Percent
     Beneficial Owner                  of Beneficial Ownership *     of Class
     ----------------------------      -----------------------       --------

           B. R. McMorries                    302,583                 4.322%

             Larry Brown                      50,989                  0.728%

           Jack R. Vincent                     9,576                  0.137%

            Steve Rogers                       1,300                  0.019%

              Mike Bahn                        1,650                  0.024%

             Terry Hays                        2,566                  0.037%

           Alfred J. Smith                    38,393                  0.548%

          Michael W. Borger                   13,850                  0.198%

           M. Kelly Archer                    144,855                 2.069%

          Robert E. Fowler                     5,176                  0.074%

          Robert E. Martin                    3,412                   0.049%

       All Trust Managers and                 574,350                 8,204%
         Executive Officers
             as a Group`

> * The nature of beneficial  ownership of such shares is either  directly by such
> named  person,  indirectly  through such person's  spouse or through  Individual
> Retirement Accounts directed by such person or their spouse.
> 
> (c) Change in control.

# -16-

---

> There are no arrangements which may result in a change of control of the Trust.

## Item  12:  CERTAIN   RELATIONSHIPS  AND  RELATED
TRANSACTIONS

> The Trust issues a limited  number of "Master  Notes" which are  unsecured  debt
> instruments  of the Trust.  The Trust pays the obligee of such notes interest at
> the rate of one  percent  per annum  (1%) less  than the prime  lending  rate of
> Amarillo  National Bank, the Trust's primary  lender.  As of March 31, 2003, the
> Trust had entered into Master Note Agreements with B. R. McMorries,  Chairman of
> the Board of Trust  Managers,  as Trustee of the McMorries  Family Trust, in the
> amount of $163,448;  Larry Brown,  Vice-Chairman  of the Board of Trust Managers
> and related  persons,  in the amount of $357,087;  the First State Bank,  Happy,
> Texas of which Jack R.  Vincent,  member of the Board of Trust  Managers,  owns,
> either  directly or indirectly,  10% or more of the  outstanding  stock,  in the
> amount of $750,000; Jack R. Vincent, a member of the Board of Trust Managers, in
> the amount of $167,499;  Morgan  Financial,  a  partnership  in which Michael W.
> Borger,  member of the Board of Trust Managers,  owns a controlling interest, in
> the amount of $406,200; and M. Kelly Archer, President and Manager of Operations
> of the  Trust,  in the amount of  $68,918.  The terms of such  Master  Notes and
> Certificates  are the same as Master  Notes and  Certificates  entered into with
> other unrelated persons, except as to the amounts thereof.

## Item   13:   EXHIBITS   AND   REPORTS   ON  FORM
8-K

> (a) Exhibits
> 
> The Exhibits listed on the accompanying Index to Exhibits are filed as a part
> of this Annual Report.
> 
> (b) Reports on Form 8-K
> 
> The Trust filed Form 8-K on June 9, 2003 reporting that pursuant to authority
> granted by the Board Trust Managers of the Trust, on Tuesday, June 3, 2003, the
> Strategic Planning Committee of the Board of Trust Managers authorized the Trust
> to proceed to register an offering of an additional 7,000,000 shares of
> beneficial interest in the Trust at a price of $3.00 per share. It is the intent of the Trust to immediately pursue the registration of such shares.

## Item 14:     CONTROLS AND PROCEDURES

> The Trust's Chief Executive Officer and it's Senior Vice President are in charge
> of making an evaluation of the Trust's disclosure controls and procedures. These
> controls and procedures are designed to ensure that  information  required to be
> disclosed  and  reports  mandated  by the  Securities  Exchange  Act of  1934 is
> recorded, communicated to management and accurately reported within the required
> time period.  Within ninety (90) days prior to the date of filing of this Annual
> Report, the Trust's Chief Executive Officer and Senior Vice President carried an
> evaluation  of the design and operation of the Trust's  disclosure  controls and
> procedures.  Based upon this evaluation, the Trust's Chief Executive Officer and
> Senior Vice President have  concluded that the Trust's  disclosure  controls and
> procedures are effective.

# -17-

---

> There have been no significant  changes in the Trust's  internal  controls or in
> the factors that could significantly  affect these controls  substantiate to the
> date of their evaluation.

## Item 15: PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

> The Board of Trust  Managers has selected  Clifton  Gunderson  LLP,  independent
> certified public accountants, as the auditors of the financial statements of the
> Trust for the fiscal year ending March 31, 2004. At the meeting the shareholders
> to be held on July 18,  2003,  the  shareholders  will vote upon a  proposal  to
> ratify the  selection of this firm as auditors.  No member of such firm,  or any
> associate thereof, has any financial interest in the Trust.
> 
> The aggregate fees billed for  professional  services  rendered for the audit of
> the Trust's  annual  financial  statements  for the most recent fiscal year, the
> review of the financial  statements included in the Trust's Form 10-QSB for such
> fiscal year or for services  that are  normally  provided by the  accountant  in
> connection with statutory and regulatory  filings or engagements were $51,675 as
> compared to $51,225 for the fiscal year ended March 31, 2002. The aggregate fees
> billed the Trust for tax  services,  including  preparation  of the  Trust's  tax
> return and tax related  matters,  were $5,970 for the most recent  fiscal year as
> compared to $7,130 for the fiscal year ended March 31, 2002. There were no other
> fees billed in each of the last two fiscal  years for  services  rendered by the
> principal  accountant,  Clifton  Gunderson  LLP for other  services not included
> above.
> 
> Before  Clifton  Gunderson  LLP was  engaged  by the  Trust to  render  audit or
> non-audit  services,  the engagement is approved by the Trust's Audit Committee.
> Furthermore, the accountant's engagement to render tax services is also approved
> by  the  Trust's  Audit  Committee  prior  to  the  engagement.  There  were  no
> audit-related  fees that were not included under the Audit Fees set forth above.
> Nor were  there any other  fees not  included  within the Audit Fees and the Tax
> Services Fees.
> 
> All hours expended on the principal accountant's engagement to audit the Trust's
> Financial  Statements  for the most recent  fiscal year were  attributed to work
> performed by Clifton Gunderson LLP's full-time, permanent employees.

# -18-

---

# CHURCH LOANS & INVESTMENTS TRUST

INDEX TO EXHIBITS
Item 13(a)

| | (2) | None
| | --- | ----

| | (3) | Declaration of Trust of Church Loans & Investments Trust, as amended, has been previously
filed under File No. 2-51235 and is incorporated herein by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Bylaws of Church Loans & Investments Trust, as amended,  has been previously filed under
File No. 2-51235 and is incorporated herein by reference.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | None other than those listed in (3) above.
| | --- | ------------------------------------------

| | (9) | None
| | --- | ----

| | (10) | None
| | ---- | ----

| | (11) | Statement regarding computation of per share earnings  -omitted since information necessary to
make the computation is included in the Financial Statements and Note 4 thereto.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (13) | Pages 16 through 33 of the 2003 Annual Report to Shareholders
| | ---- | -------------------------------------------------------------

| | (16) | None
| | ---- | ----

| | (18) | None
| | ---- | ----

| | (21) | None
| | ---- | ----

| | (22) | None
| | ---- | ----

| | (23) | None
| | ---- | ----

| | (24) | None
| | ---- | ----

| | (99.1) | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002: President and Chief Financial Officer
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (99.2) | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
 of the Sarbanes-Oxley Act of 2002: Senior Vice President
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------

# -19-

---

SIGNATURES

In accordance with Section 13
or 15(d) 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

|By | /s/ B. R. McMorries
         ______________________________
                 B. R. McMorries
                 Chairman of the Board of
                 Trust Managers | Dated: June 26, 2003 | 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | 

In accordance with the
Exchange  Act,  this report has been signed  below by the  following  persons on
behalf   of  the   Registrant   and  in  the   capacities   and  on  the   dates
indicated.

|Signature | Capacity | Date
|--------- | -------- | ----

|/s/ B. R. McMorries
         ______________________________
                 B. R. McMorries | Chairman of the Board ofTrust Managers | June 26, 2003
|-------------------------------------------------------------------------------------------- | -------------------------------------- | -------------

|/s/ Larry Brown
         ______________________________
                 Larry Brown | Vice-Chairman of the Boardof Trust Managers | June 26, 2003
|------------------------------------------------------------------------------------ | ------------------------------------------- | -------------

|/s/ Alfred J. Smith
         ______________________________
                 Alfred J. Smith | Secretary of the Boardof Trust Managers | June 26, 2003
|-------------------------------------------------------------------------------------------- | --------------------------------------- | -------------

|/s/ M. Kelly Archer
         ______________________________
                 M. Kelly Archer | President, Principal Financialand Accounting Officer | June 26, 2003
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------

|/s/ Jack R. Vincent
         ______________________________
                 Jack R. Vincent | Trust Manager | June 26, 2003
|-------------------------------------------------------------------------------------------- | ------------- | -------------



|/s/ Steve Rogers
         ______________________________
                 Steve Rogers | Trust Manager | June 26, 2003
|-------------------------------------------------------------------------------------- | ------------- | -------------

# -20-

---

|/s/ Mike Bahn
         ______________________________
                 Mike Bahn | Trust Manager | June 26, 2003
|-------------------------------------------------------------------------------- | ------------- | -------------

|/s/ Terry Hays
         ______________________________
                 Terry Hays | Trust Manager | June 26, 2003
|---------------------------------------------------------------------------------- | ------------- | -------------

|/s/ Michael W. Borger
         ______________________________
                 Michael W. Borger | Trust Manager | June 26, 2003
|------------------------------------------------------------------------------------------------ | ------------- | -------------

# -21-

---

EXHIBIT 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS BY
                                       THE PRESIDENT & CFO

|I, Kelly
                                           Archer, certify that:
|-------------------------------------------------------------------------
|1.                                                                       
|2.                                                                       
|3.                                                                       
|4.                                                                       
|                                                                         
|                                                                         
|                                                                         
|5.                                                                       
|                                                                         
|                                                                         
|6.                                                                       

|Dated: June 26, 2003 |  | /s/ Kelly Archer
         ______________________________
                 Kelly Archer, President & CFO
|-------------------- |  | -------------------------------------------------------------------------------------------------------

--

---

EXHIBIT 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS BY
                                       THE SENIOR VICE PRESIDENT

|I,
                                           Robert Fowler, certify that:
|--------------------------------------------------------------------------
|1.                                                                        
|2.                                                                        
|3.                                                                        
|4.                                                                        
|                                                                          
|                                                                          
|                                                                          
|5.                                                                        
|                                                                          
|                                                                          
|6.                                                                        

|Dated: June 26, 2003 |  | /s/ Robert Fowler
         ______________________________
                 Robert Fowler, Senior Vice President
|-------------------- |  | ---------------------------------------------------------------------------------------------------------------

--

---

---

Independent Auditor's Report

> The Board of Trust Managers and Shareholders
>   Church Loans & Investments Trust
>   Amarillo, Texas
>   We  have  audited  the  accompanying   balance  sheets  of  Church  Loans  &
> Investments  Trust (a real  estate  investment  trust) as of March 31,  2003 and
> 2002, and the related statements of income, shareholders' equity, and cash flows
> for the years then ended.  These financial  statements are the responsibility of
> the Trust's  management.  Our  responsibility  is to express an opinion on these
> financial statements based on our audits.
>   We conducted our audits in accordance with auditing standards generally accepted
> in the  United  States of  America.  Those  standards  require  that we plan and
> perform the audit to obtain  reasonable  assurance  about  whether the financial
> statements are free of material misstatement.  An audit includes examining, on a
> test basis,  evidence  supporting  the amounts and  disclosures in the financial
> statements.  An audit also includes assessing the accounting principles used and
> significant  estimates  made by  management,  as well as evaluating  the overall
> financial  statement  presentation.   We  believe  that  our  audits  provide  a
> reasonable basis for our opinion.
>   In our opinion,  the financial  statements  referred to above present fairly, in
> all material respects,  the financial position of Church Loans & Investments
> Trust as of March 31, 2003 and 2002,  and the results of its  operations and its
> cash flows for the years then ended in  conformity  with  accounting  principles
> generally accepted in the United States of America.
> 
> /s/ Clifton Gunderson LLP
> Amarillo, Texas
> May 5, 2003

``

# -16-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Balance Sheets
March 31, 2003 and 2002

`ASSETS
                                                                       2003                2002
                                                                 ----------------   -----------------
CASH AND CASH EQUIVALENTS                                        $        273,432   $         134,889

RECEIVABLES
     Mortgage loans and church bonds - performing                      35,689,239          30,507,636
     Interim construction loans - performing                           15,672,768          15,317,011
     Nonperforming mortgage loans, church bonds
         and interim construction loans                                 2,834,574           1,151,907
     Less: Allowance for credit losses                                 (1,733,249)         (1,748,172)
                                                                 ----------------   -----------------
                                                                       52,463,332          45,228,382
     Accrued interest receivable                                          445,778             580,139
     Notes receivable                                                     302,719             695,361
                                                                 ----------------   -----------------
                  Net receivables                                      53,211,829          46,503,882
                                                                 ----------------   -----------------
PROPERTY AND EQUIPMENT, net of accumulated
     depreciation of $528,568 and $523,411 in 2003
     and 2002, respectively                                               129,774             134,931
OTHER REAL ESTATE OWNED                                                 1,433,087           1,256,298
OTHER ASSETS                                                               58,275              30,716
                                                                 ----------------   -----------------
TOTAL ASSETS                                                     $     55,106,397   $      48,060,716
                                                                 ================   =================

                                       LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
     Notes payable and line of credit:
         Related parties                                         $      2,236,993   $       3,616,397
         Other                                                         30,133,721          22,238,158
                                                                 ----------------   -----------------
                                                                       32,370,714          25,854,555
     Accrued interest payable                                             135,235              43,784
     Federal income tax payable                                                -               73,810
     Other                                                              1,160,660             962,095
                                                                 ----------------   -----------------
                  Total liabilities                                    33,666,609          26,934,244
                                                                 ----------------   -----------------
SHAREHOLDERS' EQUITY
     Shares of beneficial interest, no par value; authorized
         shares unlimited, 7,007,402 shares issued                     20,623,866          20,623,866
     Undistributed net income                                             832,412             519,096
     Treasury shares, at cost (6,596 shares)                              (16,490)            (16,490)
                                                                 ----------------   -----------------
                  Total shareholders' equity                           21,439,788          21,126,472
                                                                 ----------------   -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $     55,106,397   $      48,060,716
                                                                 ================   =================

These financial statements should be read only in connection with the accompanying
                   summary of significant accounting policies
                       and notes to financial statements.`

# -17-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Statements of Income
Years ended March 31, 2003 and 2002

`2003              2002
                                                                ----------------   -----------------
INTEREST INCOME AND FEES ON RECEIVABLES                         $      4,902,182   $       5,291,814
DEBT EXPENSE
     Interest                                                            974,600             989,219
                                                                ----------------   -----------------
                  Net interest income                                  3,927,582           4,302,595

PROVISION FOR CREDIT LOSSES                                                   -              180,000
                                                                ----------------   -----------------
                  Net interest income less provision
                      for possible credit losses                       3,927,582           4,122,595
                                                                ----------------   -----------------
OTHER INCOME, including gains on sale of other
     real estate owned of $9,320 in 2003                                  86,145              32,203

OTHER OPERATING EXPENSES
     General and administrative                                          771,378             733,957
     Board of Trust Managers' fees                                        58,782              51,555
                                                                ----------------   -----------------
                  Total other operating expenses                         830,160             785,512
                                                                ----------------   -----------------
                  Income before provision for income taxes             3,183,567           3,369,286

PROVISION FOR INCOME TAXES                                                69,928              87,491
                                                                ----------------   -----------------
NET INCOME                                                      $      3,113,639   $       3,281,795
                                                                =================  =================
NET INCOME PER SHARE                                                    $ .44               $ .47
                                                                        =====               =====

These financial statements should be read only in connection with the accompanying
                   summary of significant accounting policies
                       and notes to financial statements.`

# -18-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Statements of Shareholders' Equity
Years ended March 31, 2003 and 2002

`Shares of beneficial interest
                                     -----------------------------    Undistributed      Treasury
                                         Shares          Amount         net income        shares          Total
                                     ------------    -------------    -------------    ----------    --------------
Balance, March 31, 2001                 7,007,402    $  20,623,866     $    457,671    $  (16,490)   $   21,065,047
    Net income                                 -                -         3,281,795            -          3,281,795
    Cash dividends ($.46 per share)            -                -        (3,220,370)           -         (3,220,370)
                                     ------------    -------------    -------------    ----------    --------------
Balance, March 31, 2002                 7,007,402       20,623,866          519,096       (16,490)       21,126,472

    Net income                                 -                -         3,113,639            -          3,113,639
    Cash dividends ($.40 per share)            -                -        (2,800,323)           -         (2,800,323)
                                     ------------    -------------    -------------    ----------    --------------
Balance, March 31, 2003                 7,007,402    $  20,623,866     $    832,412    $  (16,490)   $   21,439,788
                                     ============    =============    =============    ==========    ==============

These financial statements should be read only in connection with the accompanying
                   summary of significant accounting policies
                       and notes to financial statements.`

# -19-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Statements of Cash Flows
Years ended March 31, 2003 and 2002

`2003              2002
                                                                  --------------   ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                    $    3,113,639   $     3,281,795
    Adjustments to reconcile net income to net cash
       provided by operating activities:
          Depreciation                                                     5,157            15,672
          Amortization of loan discounts                                 (40,528)         (264,694)
          Provision for credit losses                                         -            180,000
          Gain on sale of other real estate owned                         (9,320)               -
          Changes in:
              Accrued interest receivable                                134,361          (147,063)
              Accrued interest payable                                    91,451          (103,014)
              Federal income tax payable                                 (73,810)           73,810
              Other liabilities                                          198,565           230,123
          Other, net                                                     (27,559)          (23,298)
                                                                  --------------   ---------------
                  Net cash provided by operating activities            3,391,956         3,243,331
                                                                  --------------   ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in mortgage and interim construction
       loans and church bonds                                        (25,465,901)      (32,691,886)
    Payments received on mortgage and interim construction
       loans and church bonds                                         17,755,086        27,454,632
    Advances on notes receivable                                        (254,408)         (511,502)
    Payments received on notes receivable                                647,050           568,788
    Proceeds from sale of other real estate owned                        378,627                -
    Additional investment in other real estate owned                     (29,703)               -
                                                                  --------------   ---------------
                  Net cash used by investing activities               (6,969,249)       (5,179,968)
                                                                  --------------   ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings on notes payable and line of credit                    32,392,568        31,265,173
    Payments on notes payable and line of credit                     (25,876,409)      (26,086,419)
    Cash dividends paid                                               (2,800,323)       (3,220,370)
                                                                  --------------   ---------------
                  Net cash provided by financing activities            3,715,836         1,958,384
                                                                  --------------   ---------------
                  Increase in cash and cash equivalents                  138,543            21,747
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             134,889           113,142
                                                                  --------------   ---------------
CASH AND CASH EQUIVALENTS, END OF YEAR                            $      273,432   $       134,889
                                                                  ==============   ===============

These financial statements should be read only in connection with the accompanying
                   summary of significant accounting policies
                       and notes to financial statements.`

# -20-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Summary of Significant Accounting Policies
March 31, 2003 and 2002

#### NATURE OF OPERATIONS

Church Loans &  Investments Trust (Church Loans) is a real estate investment
trust that  invests  primarily  in mortgage  and interim  construction  loans to
churches and other borrowers (see note 1) across the United States, particularly
in the southern  portion of the United  States.  Church Loans requires that real
estate properties be pledged against loans as security which could be foreclosed
by Church  Loans  should the  borrower  default.  Repayment  of each  borrower's
obligations is generally  expected to be repaid from  contributions  from church
members  or  from  operations  of  the  borrower,  or in  the  case  of  interim
construction loans, by permanent financing provided by Church Loans or others.

#### USE OF ESTIMATES

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

#### CURRENT OPERATING ENVIRONMENT

Church Loans has historically invested in long-term,
fixed-rate mortgage loans, generally funded by relatively short-term debt
obligations. The volatility of interest rates and increased competition to
attract customers' funds have caused Church Loans' liability structure to become
short-term and rate sensitive. Church Loans reflected an average interest yield
on its loan and church bond portfolio, an average interest rate on its total
indebtedness and a net interest rate margin at March 31, 2003 and 2002 as
follows:

`Loan and church         Total         Net interest
                    bond portfolio      indebtedness       rate margin
                    ---------------     ------------      ------------
March 31, 2003           7.80%              3.25%             4.55%
March 31, 2002           9.14%              3.75%             5.39%`

Church Loans finances maturities of debt obligations through its available lines
of  credit  and  principal   payments  received  on  its  mortgage  and  interim
construction loans.

#### CHURCH BONDS

Church bonds,  secured by first mortgage liens on church facilities,  are stated
at cost,  as there is no traded market for the bonds and  management  intends to
hold such securities until maturity.

# -21-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Summary of Significant Accounting Policies
March 31, 2003 and 2002

#### LOANS

Loans that Church  Loans has the intent and ability to hold for the  foreseeable
future or until maturity or pay-off  generally are reported at their outstanding
unpaid principal  balances  adjusted for  charge-offs,  the allowance for credit
losses,  and any deferred fees or costs on originated loans.  Interest income is
accrued on the unpaid principal  balance.  Loan origination fees, net of certain
direct  origination  costs,  are deferred and recognized as an adjustment of the
related loan yield.

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.

All interest  accrued but not  collected for loans that are placed on nonaccrual
or charged-off is reversed against interest income.  The interest on these loans
is accounted for on the cash-basis or cost-recovery method, until qualifying for
return to accrual.  Loans are returned to accrual  status when all the principal
and interest amounts  contractually  due are brought current and future payments
are reasonably assured.

Commitment fees received on interim  construction  loans are recognized over the
interim commitment period for loans that are not permanently  financed by Church
Loans  and over the life of the  mortgage  loan for loans  that are  permanently
financed by Church Loans.  Amounts are being amortized  using the  straight-line
method.  This method was not  materially  different from the method of deferring
commitment fees until the commitment is exercised and  recognizing  such fees as
an adjustment to yield by the interest  method over the related  loans' lives as
prescribed by generally accepted accounting principles for the years ended March
31, 2003 and 2002.

Purchase discounts on loans are amortized based on the interest method.

#### ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is  established  as losses are estimated to have
occurred through a provision for credit losses charged to earnings.  Loan losses
are   charged   against  the   allowance   when  Church   Loans   believes   the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any,
are credited to the allowance.

The  allowance for credit losses is evaluated on a regular basis by Church Loans
and is based upon management's and the board of trust managers'  periodic review
of the collectibility of the loans in light of historical experience, the nature
and  volume  of the loan  portfolio,  adverse  situations  that may  affect  the
borrower's  ability to repay,  estimated value of any underlying  collateral and
prevailing economic conditions.  This evaluation is inherently  subjective as it
requires  estimates  that  are  susceptible  to  significant  revision  as  more
information becomes available.

# -22-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Summary of Significant Accounting Policies
March 31, 2003 and 2002

#### ALLOWANCE FOR CREDIT LOSSES (CONTINUED)

A loan is considered  impaired when, based on current information and events, it
is probable that Church Loans will be unable to collect the  scheduled  payments
of principal or interest when due according to the contractual terms of the loan
agreement.  Factors considered by Church Loans in determining impairment include
payment status,  collateral  value, and the probability of collecting  scheduled
principal and interest  payments when due. Loans that  experience  insignificant
payment delays and payment shortfalls generally are not classified as impaired.

Church  Loans   determines  the  significance  of  payment  delays  and  payment
shortfalls  on a  case-by-case  basis,  taking  into  consideration  all  of the
circumstances surrounding the loan and the borrower, including the length of the
delay, the reasons for the delay,  the borrower's prior payment record,  and the
amount  of the  shortfall  in  relation  to the  principal  and  interest  owed.
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  obtainable market price, or the fair value of the collateral if the loan
is collateral dependent.

#### PROPERTY AND EQUIPMENT

Property  and  equipment  are  stated at cost,  less  accumulated  depreciation.
Depreciation is provided on the  straight-line  method over the estimated useful
lives of the assets.

#### OTHER REAL ESTATE OWNED

Real estate acquired through,  or in lieu of, loan foreclosure is to be sold and
is  initially   recorded  at  estimated  fair  value  at  date  of  foreclosure,
establishing a new cost basis. Other real estate owned,  after  foreclosure,  is
carried at the lower of carrying  amount or the property's  estimated fair value
minus  estimated costs to sell (fair value).  Impairment  losses are measured as
the amount by which the  carrying  amount of a property  exceeds its fair value,
and losses are charged to operations.

#### INCOME TAXES

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

# -23-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
Summary of Significant Accounting Policies
March 31, 2003 and 2002

#### OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

In  the   ordinary   course  of   business,   Church   Loans  has  entered  into
off-balance-sheet  financial  instruments  consisting of  commitments  to extend
credit. Such financial instruments are recorded in the financial statements when
they become payable.

#### CASH FLOWS

For  purposes  of  reporting  cash  flows,  cash  and cash  equivalents  include
cash-on-hand  investments  in a money  market  mutual fund and  certificates  of
deposit with maturities of less than 90 days at the time of acquisition.

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

# -24-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 1 - LOANS AND CHURCH BONDS

Mortgage loans  receivable  consist of  conventional  loans of  $38,434,079  and
$30,640,302  and church  bonds of  $621,132  and  $751,809 at March 31, 2003 and
2002, respectively. Interim construction loans of $15,717,226 and $15,760,519 at
March 31, 2003 and 2002,  respectively,  consist  primarily of loans to churches
for the construction of church facilities and assisted living centers.  Mortgage
loans,  church bonds and interim  construction  loans are  generally  secured by
first liens on real estate  comprised  primarily of church  buildings  and other
real  estate.  The  amount of a loan is  generally  limited  to  66-2/3%  of the
appraised  value of the  related  property.  Certain  loans  are  guaranteed  by
individual  members of the  congregations or other individuals or congregations,
depending on the circumstances.

Church  Loans'  portfolio  included  mortgage  loans,  church  bonds and interim
construction  loans with interest rates ranging from 4.75% to 12.0% at March 31,
2003.  The weighted  average  annual  interest  rates of Church  Loans' loan and
church  bond  portfolio  were  7.80%  and  9.14% at  March  31,  2003 and  2002,
respectively.

In addition to a concentration of loans to churches,  Church Loans makes certain
interim real estate  construction  loans and permanent  loans to entities  other
than  churches.  At March 31, 2003 and 2002,  Church Loans had five loans to two
borrowers   which  were   secured  by  assisted   living   centers  and  totaled
approximately $7,961,000 and $8,042,000, respectively.

The following schedule is a summary of the combined  mortgage,  church bonds and
interim construction loan portfolios by size of loan at March 31, 2003 and 2002:

`2003                         2002
                                       --------------------------    -------------------------
                                       No. of          Carrying      No. of        Carrying
      Description                       loans           amount        loans         amount
--------------------                   ------       -------------    ------     --------------
Over $1,500,000                           9         $  25,430,512       8       $   21,153,925
$1,300,000-1,499,999                      3             4,283,969       -                   -
$1,000,000-1,299,999                      5             5,568,314       6            6,641,465
$900,000-999,999                          1               980,629       -                   -
$800,000-899,999                          -                    -        1              830,000
$700,000-799,999                          4             2,895,489       1              731,358
$600,000-699,999                          2             1,241,913       4            2,508,509
$500,000-599,999                          7             3,804,691       5            2,666,948
$400,000-499,999                          5             2,178,238       6            2,690,649
$300,000-399,999                          6             2,075,793       6            2,121,277
$200,000-299,999                         16             3,899,741      18            4,598,901
$100,000-199,999                         11             1,611,154      14            2,041,367
Under $100,000                           18               801,994      27            1,168,231
                                       ------       -------------   ------      --------------
                                         87            54,772,437      96           47,152,630
                                       ------                       ------
Less:  unamortized purchase discounts
        on mortgage loans                                (575,856)                    (176,076)
Less:  allowance for credit losses                     (1,733,249)                  (1,748,172)
                                                    -------------               --------------
Total                                               $  52,463,332               $   45,228,382
                                                    =============               ==============`

# -25-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 1 - LOANS AND CHURCH BONDS (CONTINUED)

`The mortgage and interim  construction  loan  portfolios  included the following
loans at March 31, 2003, with  individual  balances in excess of 3% of the total
carrying amount of the combined portfolios:

Faith Bible Church, Arvada, Colorado; interest at prime plus 1%, with
    a floor of 7.75% (7.75% at March 31, 2003); principal and interest
    due at maturity on January 1, 2004                                      $      7,700,000

Great Plains Assisted Living L.L.C., Omaha, Nebraska; interest at
    prime plus .5%, with a floor of 10.0% (10.0% at March 31, 2003);
    monthly payments of $31,130 to maturity on January 1, 2026                     3,346,991 (a)

Great Plains Assisted Living L.L.C., Sioux City, Iowa; interest at
    prime plus .5%, with a floor of 10.0% (10.0% at March 31, 2003);
    monthly payments of $27,450 to maturity on January 1, 2026                     2,954,017 (a)

Meade Ministries, Lake City, Florida; interest at prime plus 2%,
    with a floor of 6.25% (6.25% at March 31, 2003); monthly
    payments of $29,000 to maturity on March 1, 2012                               2,378,149

West Freeway Church of Christ, Fort Worth, Texas; interest at prime
    plus 2%, with a floor of 6.75% (6.75% at March 31, 2003); monthly
    payments of $17,493 to maturity on November 1, 2022                            2,282,165

Center of Praise Ministries, Sacramento California; interest at
    prime plus 2%, with a floor of 6.25% (6.25% at March 31, 2003);
    principal and interest due at maturity on January 1, 2004                      2,100,000

Longley Baptist Church, Little Rock Arkansas; interest at prime plus
    2%, with a floor of 7.50% (7.50% at March 31, 2003); principal and
    interest due at maturity on November 1, 2002                                   1,633,018
                                                                            ----------------
                                                                            $     22,394,340
                                                                            ================
(a)  Same borrower - Great Plains Assisted Living L.L.C.`

# -26-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 1 - LOANS AND CHURCH BONDS (CONTINUED)

The  original  terms of the  individual  loans  included  in the loan  portfolio
generally vary from 1 to 30 years.  Scheduled  maturities  during the five years
subsequent to March 31, 2003, are:

`2004              17,512,433
              2005               2,140,143
              2006               2,222,424
              2007               2,296,326
              2008               2,404,738`

A summary of transactions in the allowance for credit losses for the years ended
March 31, 2003 and 2002 follows:

`2003              2002
                                                --------------   ---------------
Balance at beginning of year                    $    1,748,172   $     1,568,172

Charge-offs                                            (14,923)              -
Provisions charged to operating expenses                    -            180,000
                                                --------------   ---------------
Balance at end of year                          $    1,733,249    $    1,748,172
                                                ==============   ===============`

At March  31,  2003 and  2002,  the  recorded  investment  for  loans  for which
impairment was recognized in accordance with Statement No. 114 was approximately
$2,835,000  and  $1,152,000,  respectively.  There was no related  allowance for
credit  losses at March 31, 2003 and 2002.  The average  investment  in impaired
loans was approximately  $1,993,000 and $3,404,000 for the years ended March 31,
2003 and 2002,  respectively.  Interest  income  which would have been  recorded
under  the  original  terms of  impaired  loans and  church  bonds  amounted  to
approximately $200,000 and $126,000 for the years ended March 31, 2003 and 2002,
respectively.  Interest income actually recognized for the years ended March 31,
2003 and 2002 was approximately $14,000 and $109,000, respectively.

# -27-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 2 - DEBT OBLIGATIONS

Information relating to debt obligations follows:

`Weighted          Maximum                       Weighted
                                                          average          amount            Average      average
                                      Balance at     interest rate at  outstanding at       month-end  interest rate
                                     end of period     end of period    any month-end        balance  for the period
                                     -------------     -------------    -------------        -------  --------------
     March 31, 2003
     --------------
Line of credit payable to bank       $  18,922,000        3.25%*        $ 18,922,000     $ 13,628,154       3.56%
Other demand notes payable              13,448,714        3.25%           14,470,406       13,442,439       3.61%
                                     -------------        -----         -------------    ------------       -----
TOTAL                                $  32,370,714        3.25%         $ 33,392,406     $ 27,070,593       3.58%
                                     =============        ====          ============     ============       ====
     March 31, 2002
     --------------

Line of credit payable to bank       $  10,660,000        3.75%*        $ 10,660,000     $  4,758,077       4.99%
Other demand notes payable              15,194,555        3.75%           15,680,620       14,367,049       5.16%
                                     -------------        -----         -------------    ------------       -----
TOTAL                                $  25,854,555        3.75%         $ 26,340,620     $ 19,125,126       5.12%
                                     =============        ====          ============     ============       ====

* Does not consider commitment fees.`

Debt  obligations of  $32,370,714  mature during the year ending March 31, 2004,
including other demand notes payable of $13,448,714.

All debt obligations,  except for other demand notes payable, are secured by the
pledge of specific mortgage notes receivable.

Maturities of debt obligations are financed through principal  payments received
on loans,  advances on other  demand  notes  payable and advances on the line of
credit which is expected to be renewed on an annual basis.

# -28-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 2 - DEBT OBLIGATIONS (CONTINUED)

#### LINE OF CREDIT PAYABLE TO BANK

The line of credit payable to bank consists of borrowings under a loan agreement
effective  through  December 30, 2003,  that provides for a $24,000,000  line of
credit with certain commitment fees. The loan agreement requires Church Loans to
pledge  mortgage  loans  receivable  having  unpaid  principal  balances with an
aggregate  present  value,  discounted at 2% over the prime rate (6.25% at March
31, 2003), of not less than 110% of all indebtedness owed to the bank.  Interest
accrued at the prime rate less one percent on  $20,000,000  and prime less three
quarters  of one  percent  on the  remaining  $4,000,000.  Interest  is  payable
semiannually.

Additionally,  the line of credit  requires  that Church  Loans' net worth be no
less than  $18,000,000 and its total  indebtedness  shall not exceed 200% of its
net worth. At March 31, 2003, Church Loans' total indebtedness was approximately
$10,000,000 less than the maximum amount permitted under the agreement.

As of April 14, 2003, Church Loans modified its agreement with the bank. The new
agreement  increases the available  line of credit to  $35,000,000  and requires
that Church Loans' total indebtedness not exceed 250% of its net worth.

#### Demand Notes Payable

The demand notes  payable bear  interest at 1% less than the prime rate (payable
monthly) and are unsecured (see note 6).

#### NOTE 3 - INCOME TAX PROVISION

Church Loans has elected to be taxed as a real estate investment trust under the
provisions of the Internal Revenue Code. To qualify as a real estate  investment
trust under the Code, Church Loans must, among other things, distribute at least
90% of its taxable income to its shareholders through dividends. Church Loans is
required to pay  dividends  of at least 85% of its calendar  year  undistributed
income by subsequent February 1 or be subject to a special federal excise tax of
4% on the undistributed amount.

# -29-

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#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 3 - INCOME TAX PROVISION (CONTINUED)

Deferred  taxes were not  significant  to Church Loans' 2003 and 2002  financial
statements.

Total income tax  provision  for the years ended March 31, 2003 and 2002 is less
than the amount computed by applying the applicable statutory federal income tax
rate (35%) to income before provision for income taxes as follows:

`2003              2002
                                                      --------------   ---------------
Computed "expected" federal income tax provision      $    1,114,248   $     1,179,250
Increases (decreases) in taxes resulting from:
    Dividends                                               (955,610)       (1,176,135)
    Graduated rate differential                               (7,860)           (6,108)
    Difference in provision for credit losses for
       financial and tax purposes                             (4,523)          164,500
    Difference in accounting for interest
       recognized for financial and tax purposes             (76,327)          (74,497)
    Other                                                         -                481
                                                      --------------   ---------------
Actual provision for income taxes                     $       69,928   $        87,491
                                                      ==============   ===============`

#### NOTE 4 - NET INCOME PER SHARE

Net income per share of  beneficial  interest is based on the  weighted  average
number of shares outstanding,  which was 7,000,806 for the years ended March 31,
2003 and 2002.  There were no share  equivalents or other  potentially dilutive
securities outstanding during any of the periods presented.

#### NOTE 5 - DIVIDENDS

All dividends paid by Church Loans are taxable to the  recipient.  A schedule of
dividends paid during the years ended March 31, 2003 and 2002 follows:

`Dividend amount
                                              ----------------------------
    Date of record             Date paid      Per share              Total
    --------------             ---------      ---------              -----

March 31, 2001                  May 2001        .10              $     700,080
December 31, 2001           January 2002        .36                  2,520,290
March 31, 2002                  May 2002        .12                    840,097
December 31, 2002           January 2003        .28                  1,960,226`

# -30-

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#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 6 - RELATED PARTY TRANSACTIONS

Other demand notes  payable at March 31, 2003 and 2002 included  notes  totaling
$2,236,993 and $3,616,397, respectively, which represent borrowings from related
parties.  The  notes  bear  interest  at 1% less  than  the  prime  rate and are
unsecured. Interest expense incurred on related party other demand notes payable
was approximately $87,000 and $177,000 in 2003 and 2002, respectively.

#### NOTE 7 - CASH FLOW INFORMATION

Supplemental information on cash flows and noncash transactions is as follows:

`2003              2002
Supplemental cash flow information:                            --------------     -------------
    Interest paid                                              $      883,149     $   1,092,233
                                                               ==============     =============
    Income taxes paid                                          $      161,774     $      12,945
                                                               ==============     =============
 Schedule of noncash investing and financing activity:
    Real estate acquired through foreclosure                   $      516,393     $   1,256,298
                                                               ==============     =============`

#### NOTE 8 - COMMITMENTS AND CONTINGENCIES

Church Loans is a party to financial instruments with  off-balance-sheet risk in
the normal course of business.  Commitments  to extend credit are  agreements to
lend to a customer as long as there is no violation of any condition established
in the contract.  Commitments  generally  have variable  interest  rates,  fixed
expiration  dates or other  termination  clauses and  require  payment of a fee.
Since some of the  commitments  may expire  without being drawn upon,  the total
commitment amounts do not necessarily represent future cash requirements. Church
Loans  evaluates each  customer's  credit  worthiness on a  case-by-case  basis.
Collateral  generally  includes real estate  properties.  The exposure to credit
loss in the event of  nonperformance  by the other party to the  commitments  to
extend  credit is  represented  by the  contractual  amount.  At March 31, 2003,
Church  Loans  had  outstanding  loan  commitments  (by  contract   amounts)  of
approximately $8,300,000.  Management does not anticipate any losses as a result
of these transactions.

Church Loans is involved in  litigation in the normal course of business and, in
the opinion of  management,  such  litigation  will have no  material  effect on
Church Loans' financial statements.

# -31-

---

#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE 9 - DISCLOSURE ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial  instruments,  the results of applying  such methods and
assumptions to the financial  instruments and limitations inherent in fair value
estimates:

#### Cash and Cash Equivalents

The assets are considered  short-term  instruments for which the carrying amount
is a reasonable estimate of fair value.

#### Loans and Church Bonds

Fair  values  are  estimated  for  portfolios  of loans with  similar  financial
characteristics.  Loans are  segregated  by type,  such as mortgage  and interim
construction  loans and church bonds.  Each loan  category is further  segmented
into  fixed  and  adjustable  rate  interest  terms.  For  variable-rate  loans,
primarily  interim  construction  loans,  that reprice  frequently  and with no
significant  change in credit risk,  fair values are based on carrying  amounts.
The fair value of fixed-rate  mortgage loans and bonds is generally estimated by
discounting  the future cash flows  through  the  estimated  maturity  using the
current  rates at which  similar  loans would be made to borrowers  with similar
credit  ratings.  The estimate of maturity is based on Church Loans'  historical
experience with repayments for each loan classification,  modified, as required,
by an estimate of the effect of current  economic  and lending  conditions.  The
carrying  value of loans and bonds,  net of the  allowance for credit losses was
$52,463,332  and  $45,228,382  and  the  fair  value  of  loans  and  bonds  was
approximately   $57,060,000   and  $50,600,000  at  March  31,  2003  and  2002,
respectively.

#### Notes Payable and Line of Credit

The fair value of notes payable and the line of credit are equal to the
carrying value as such liabilities are deemed to be short-term borrowings.

#### Commitments to Extend Credit

Generally, Church Loans enters into commitments to extend
credit at adjustable interest terms. Accordingly, the commitment amount is a
reasonable estimate of fair value.

#### Other

The carrying amounts of notes receivable and accrued interest approximate
fair value.

# -32-

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#### CHURCH LOANS & INVESTMENTS TRUST
(A Real Estate Investment Trust)
NOTES TO FINANCIAL STATEMENTS
March 31, 2003 and 2002

#### NOTE  9  -  DISCLOSURE  ABOUT  THE  FAIR  VALUE  OF  FINANCIAL   INSTRUMENTS
(CONTINUED)

#### Limitations

Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information  and  information  about  the  financial  instrument.  These
estimates do not reflect any premium or discount that could result from offering
for sale at one time Church  Loans'  entire  holdings of a particular  financial
instrument.  Because no market exists for a significant portion of Church Loans'
financial  instruments,  fair value  estimates are based on judgments  regarding
future   expected   loss   experience,   current   economic   conditions,   risk
characteristics  of various  financial  instruments,  and other  factors.  These
estimates  are  subjective  in nature and involve  uncertainties  and matters of
significant  judgment  and,  therefore,  cannot be  determined  with  precision.
Changes in assumptions could significantly affect the estimates.

# -33-

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