Time machine backup to a .sparsebundle on USB drive? I noticed that when I migrated from backing up over USB to SMB that Time Machine started using sparse bundles for backup. I was unsuccessful in using this bundle as a backup drive when connecting to the hard drive directly via USB. 

I tried mounting the bundle, but macOS complained about insufficient permissions. I then took ownership of the bundle and successfully mounted it manually — still not listed in the Time Machine settings.

Is it possible to back up to a local sparsebundle? I would like to default to SMB backups, but have the choice to use USB3 for speed.
Time Machine should automatically mount the .sparsebundle if you set the drive that contains it as the backup location.
Failing that, you can double click the .sparsebundle to mount it, then tell Time Machine to backup to the mounted volume (something like /Volumes/Time Machine Backup). This might be an acceptable workaround if you only infrequently use it over USB3.
If you don't see the mounted .sparsebundle as an option in time machine you can set it manually via the terminal like so:
sudo tmutil setdestination /Volumes/Time\ Machine\ Backup

Just change the Time\ Machine\ Backup part to whatever your drive is called. Include -a after setdestination to add another backup disk, keep it left out to replace your current backup disks with the new one.