UPDATE 2-Citigroup sells $4.5 bln stock, 50 pct above plan

(Recasts. adds comments from analysts, other details)

By Jonathan Stempel and Dan Wilchins

NEW YORK, April 30 (Reuters) - Citigroup Inc (C.N) said on Wednesday it sold $4.5 billion of common stock, 50 percent more than originally expected, bolstering the largest U.S. bank's balance sheet after billions of dollars of subprime mortgage write-downs and other credit charges.

The bank's stock fell 83 cents or 3.2 percent, to $25.49 in morning trading, following the sale of 178.1 million shares at $25.27 each, or 4 percent below the Tuesday closing price. The offering dilutes holdings of existing shareholders.

Citigroup said it may boost the offering to $4.95 billion to meet demand. Chief Financial Officer Gary Crittenden said the bank Increased the offering from $3 billion "in response to strong demand from a broad base of investors."

Since late last year, Citigroup has raised more than $40 billion of capital, including $10.5 billion over the last week-and-a-half. The bank has suffered more than $46 billion of credit losses and write-downs since the end of June, and lost close to $15 billion in the last two quarters.

Meredith Whitney, an Oppenheimer & Co analyst who last October correctly foresaw Citigroup's capital needs, said the bank still needs to raise $10 billion to $15 billion more, or shed several hundred billion dollars of assets.

"The fact that the company raised such a small amount of capital at this time confounds us," Whitney wrote on Tuesday evening, after Citigroup set plans to raise $3 billion.

Whitney said Citigroup may need to cut its dividend again, following January's 41 percent reduction. Even with January's cut, Citigroup's annual dividend payout would exceed $6.5 billion.

The stock sale appears to suggest a shift in thinking within Citigroup management.

In January, Crittenden said the capital-raising efforts then under way would protect the bank against "recession scenarios." On April 18, he told investors he wouldn't rule out more capital raising. "You can never say never," he said.

Citigroup shares rose 46 percent between mid-March and Tuesday's close, which likely encouraged management to sell stock now, analysts said.

FINDING A BOTTOM

New York-based Citigroup is one of many banks, including Bank of America Corp (BAC.N) and Wachovia Corp WB.N to this year raise capital by issuing preferred or common stock.

"Most of these banks keep saying they don't need more capital and then they raise more," said Walter Todd, a portfolio manager at Greenwood Capital Associates LLC in Greenwood, South Carolina, which does not own Citigroup shares. "Ending capital raises will help these stocks find a bottom."

Citigroup's market value was about $138 billion on Tuesday.