While the markets celebrated that majority of the big banks passed the Fed's annual stress test, TheStreet's Jim Cramer says that many of the banks are overvalued. 

"The average large bank sells at 10 to 11 times" earnings, says Cramer, founder and manager of the Action Alerts PLUS portfolio. "That can't be justified given the lack of growth."

As the second quarter comes to an end, investors are waiting to see how big banks will fair following the Fed's decision not to raise interest rates this quarter, low energy prices, the strong dollar and the aftermath of the Brexit vote.

"The banks trade on earnings and the earnings are going to be terrible," Cramer said. "These are really challenged companies where you have to start realizing they should sell at 5 and 6 and 7 times earnings, like airlines." 

However, Cramer does see a silver lining with Citigroup (C) - Get Report , which trades at 8 times earnings, he said. 

EXCLUSIVE LOOK INSIDE: Citigroup is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio. Want to be alerted before he buys or sells this stock? Learn more now.

The New York-based company tripled its quarterly dividend from 5 cents to 16 cents a share, following the Fed's approval of its capital distribution plan Wednesday, and said it would buy back up to $8.6 billion shares. 

Cramer says that Citi's tangible book value is $62 a share, compared to its current trading price of around $42, which means, "there's actual cash" that the company is buying back. 

Cramer highlights that buybacks tend not to be additive to earnings, unless there is a large disparity between the tangible book value and the common stock value, which is the case with Citigroup. 

"That's a rather remarkable thing when you think about it," he added."Citi deserves to be able to maintain a lead."

Citigroup's share are trading at $42.30, up 0.43% Thursday and down over 18% for the year. The KBW Index, that tracks the performance of the banking sector, is up 1.32% today.