U.S. Bancorp (NYSE:USB) is the fifth-largest U.S.-based commercial bank by assets, and it is widely considered to be one of the best-run banks in the nation. In fact, the company is one of Warren Buffett's major bank stock holdings.

In its third-quarter earnings report, U.S. Bancorp not only lived up to expectations, but continued to show investors why it has such a strong reputation. As its profitability and efficiency show, the bank is truly in a class by itself.

Bank teller greeting a customer.

Image source: Getty Images. (Note: Image does not necessarily depict a U.S. Bancorp branch.)

The top and bottom line met expectations

U.S. Bancorp's top and bottom line numbers weren't too exciting. The bank's earnings of $0.88 per share matched analysts' expectations, and its revenue of $5.61 billion surpassed expectations, but just slightly. Earnings grew by nearly 5% year-over-year, and revenue grew by 4%.

Additionally, the bank's growth was impressive in many key areas of the business. Net interest income grew 8.3% year-over-year due to a combination of 3% higher loan balances and net interest margins that grew by 12 basis points (0.12%) over the past year. And while U.S. Bancorp has historically had relatively small loan losses compared with peers, the bank's non-performing assets dropped by an impressive 25% from last year, and by 7.3% from the second quarter.

In a nutshell, the bank produced solid results with few surprises.

U.S. Bancorp is now in a class all by itself

U.S. Bancorp is well-known for being a highly profitable and efficient banking operation. The bank's return on assets (ROA) and return on equity (ROE) profitability metrics came in at 1.38% and 13.6%, respectively. The industry benchmarks are 1% and 10%, respectively.

In addition, the bank's efficiency ratio is 54.3% (lower is better), which is one of the best among brick-and-mortar banks.

As far as the five largest U.S. banks go, U.S. Bancorp has consistently been the most profitable and efficient, while Wells Fargo has been a close second. However, the fallout from Wells Fargo's fake-accounts scandal has depressed the bank's profitability and has left U.S. Bancorp in a class by itself when it comes to big-bank profitability and efficiency.

Company

3Q17 ROA

3Q17 ROE

3Q17 Efficiency Ratio

U.S. Bancorp

1.38%

13.6%

54.3%

Wells Fargo

0.94%

9.06%

65.5%

Bank of America

0.98%

8.1%

60%

JPMorgan Chase

1.04%

11%

56.5%

Citigroup

0.87%

7.3%

56%

Data source: Company financials and author's own calculations.

In fact, in this year's Federal Reserve banking "stress tests," U.S. Bancorp was one of a select few that was actually projected to make money in a hypothetical deep recession.

A few things to keep an eye on

To be fair, U.S. Bancorp's earnings report wasn't 100% excellent. For one thing, noninterest income dropped by about 1% year-over-year, mainly due to a drop in mortgage banking revenue.

Also, while the loan portfolio increased by 3% year-over-year, this was the slowest annual growth rate of the past five quarters. The same can be said for the 5.2% growth in deposits. None of these things should necessarily be taken as a sign of trouble, but they are certainly worth noting.

A solid quarter shows why U.S. Bancorp is the best big bank in the business

With a rock-solid loan portfolio, lean and profitable operation, and solid growth, U.S. Bancorp is one of the best-run banks in the United States and could be worth a look for investors who want financial-sector exposure.

It's worth mentioning that U.S. Bancorp isn't cheap. In fact, on a price-to-book basis, it's significantly more expensive than the rest of the five largest U.S. banks. However, when it comes to U.S. Bancorp's quality as a bank and as a long-term investment, you get what you pay for.

Matthew Frankel owns shares of Bank of America. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.