Bankersmith, located ten miles southeast of Fredericksburg in extreme southern Gillespie County, was established by Rudolf Habenicht in 1913, when the San Antonio, Fredericksburg and Northern Railroad laid its track between Fredericksburg and Comfort. The train stop was named for Temple Doswell Smith, president of the first bank to be established in Fredericksburg and one of the primary donors for the railroad construction, and town lots were laid out along both sides of the track. Just south of the community was the only railroad tunnel in the state. A local post office was established in September 1914 with Habenicht as postmaster. Bankersmith was located in the vicinity of the Grapetown community. The post office was sometimes listed as being in Kendall County—the Kendall/Gillespie county line runs east to west near the townsite, and the postmaster most likely lived in a farmhouse on the Kendall County side.
At its peak in the 1920s Bankersmith had a store, a dance hall, a lumberyard, and about fifty residents. In 1924 Rudolf Habenicht sold approximately 280 acres, including the town of Bankersmith and any unsold lots, to Louis Klinksiek. The population fell to ten by 1930, and the railroad abandoned its track in 1935. Klinksiek later purchased the remaining lots after the rail line was abandoned and gained back the railroad right-of-way. A business and a few scattered houses marked the community on county highway maps in the 1940s, but the post office had already been discontinued. A population of twenty was reported from 1949 through 1961. The ruins of the old railroad tunnel were still visible in the 1980s. Much of the area land, including the former townsite, remained in the Klinksiek family in the 2010s.