Late Monday, Wells Fargo announced that it has been approved to redeem the U.S. Treasury’s $25 billion preferred stock investment made under the Troubled Asset Relief Program (TARP), following the completion of a $10.4 billion common stock offering.

According to Wells Fargo, in addition to completing a $10.4 billion common stock offering, the authorization to repay TARP funds also requires the company to (i) “[r]aise $1.35 billion through the issuance of common stock to Wells Fargo benefit plans and in lieu of a portion of 2009 incentive cash and other compensation to certain Wells Fargo team members” and (ii) “[i]ncrease equity by $1.5 billion through asset sales to be approved by the Board of Governors of the Federal Reserve. To the extent those asset sales are not completed by the end of 2010, the company agreed it would raise a commensurate amount of common equity.”

By repaying the TARP funds, Wells Fargo noted that it will no longer be responsible for $1.25 billion in annual preferred stock dividends to the U.S. Treasury, of which the company has paid $1.4 billion. However, the U.S. Treasury will continue to hold warrants to purchase approximately 110 million shares of the company’s common stock at $34.01 per share.

Wells Fargo’s announcement coincides with Citigroup’s announcement earlier in the day that it has also reached an agreement to repay TARP funds.