After posting a modest first-quarter gain and ending 2011 with a $1.154 million profit, Mission Valley Bancorp said Tuesday it lost $42,000 during the latest quarter ending June 30.

The Sun Valley-based bank, which serves the San Fernando and Santa Clarita valleys, attributed the loss to the discounting of nonperforming loans, which it plans to shed in the third quarter.

“The bank continues to see a steady decline in problem assets,” according to the bank’s statement Tuesday. Mission Valley had reduced its nonperforming loans to $650,000, or 10 percent of the portfolio, as of Dec. 31.

CEO Tamara Gurney described the second quarter of 2012 as a mixed bag. Deposits grew by 5.13 percent to $199 million, an increase of $11 million since Dec. 31.

Net loans grew by 3 percent over the year to $180 million, and operating income grew by 11 percent over the year to $1.28 million, Gurney said.

“While it is always disappointing to report a loss such as this, we are eager to move forward and anticipate that these steps will have a positive impact on Mission Valley’s performance for the remainder of 2012 and beyond,” she said, adding that the bank is “well positioned to make tremendous strides in the months and years to come.”

Mission Valley exceeds the requirements for a “well-capitalized” institution with a Total Risk Based Capital Ratio of 19.1 percent and  reserves of 2.66 percent of total loans, the bank said.