(Corrects cost to insurance fund to $114 million, not $253 million, as originally sent)

WASHINGTON, June 19 (Reuters) - Bank regulators closed Southern Community Bank of Fayetteville, Georgia, on Friday, the 38th U.S. bank to fail this year as the struggling economy and falling home prices take their toll on financial institutions.

The Federal Deposit Insurance Corp said Southern Community Bank had $377 million in assets and $307 million in deposits. The failure is expected to cost the FDIC deposit insurance fund an estimated $114 million.

United Community Bank of Blairsville, Georgia, agreed to assume the insured deposits of Southern Community Bank, whose five branches will reopen on Monday as branches of United Community Bank. (Reporting by Roberta Rampton)