UPDATE 1-Small Georgia bank is 16th US bank failure in 2008

WASHINGTON Fri Oct 24, 2008 5:15pm EDT

WASHINGTON Oct 24 (Reuters) - U.S. bank regulators on Friday closed tiny Alpha Bank & Trust in Georgia, the 16th U.S. bank to fail this year as the weakening economy and falling home prices take their toll on financial institutions.

Customers of the banks' two branches can access their insured deposits over the weekend by check, teller machine, or debit card, the U.S. Federal Deposit Insurance Corp said.

Stearns Bank NA agreed to assume the failed bank's insured deposits, the FDIC said. Alpha Bank, based in Alpharetta, Georgia, will reopen on Monday as branches of Stearns Bank, which is based in St. Cloud, Minnesota.

Alpha Bank had total assets of $354.1 million and total deposits of $346.2 million as of Sept. 30, the regulator said.

The failure is expected to cost the FDIC's insurance fund about $158.1 million. The insurance fund stood at about $45 billion at the end of June, which is the most updated figure publicly available.

A financial rescue plan passed by Congress earlier this month temporarily raised the limits on deposit insurance to $250,000 per account from $100,000.

The FDIC said the deposit assumption at Alpha Bank was the least costly alternative for its insurance fund, dented by increased bank failures this year, including Washington Mutual, the largest bank failure in U.S. history.

In 2007, three U.S. banks failed. (Reporting by Karey Wutkowski, editing by Richard Chang)

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