FSI Group LLC

Item	5	–	Fees	and	Compensation

SEPARATELY	MANAGED	ACCOUNTS

We may provide investment advisory services to separately managed accounts. Fees for
separately managed accounts that utilize our equity strategies are negotiable and generally
are based upon a percentage of assets under management and performance. FSI reserves
the right to negotiate all fees. Some clients may pay more or less than others depending on
certain factors, including but not limited to, the type and size of the account. The fees that
we charge for investment advisory services are specified in written agreements between
the firm and our clients.

The fees we charge separately managed accounts may vary by investment strategy or
account; FSI typically receives a fixed fee / base compensation and may be eligible to
receive incentive compensation. The fees for separate accounts are typically payable
monthly or quarterly in advance and may be calculated based on the value of the assets in
the account at the end of the preceding calendar month / quarter. Fees for partial periods
may be pro-rated. If a separately managed account agreement is terminated, any prepaid
fees would be refunded on a pro-rated basis.

LIMITED	PARTNERSHIPS	/	PRIVATE	INVESTMENT	FUNDS:
Each limited partnership / private investment fund which we manage pays the firm a
management fee and a performance-based advisory fee as described below. These fees are
described in the fund’s investment management or limited partnership agreement. (Item 6
provides more information about performance-based fees, and Item 10 provides more
information about our private investment funds).

The fees paid by investors in our private investment funds are not negotiable; provided,
however, that certain large or strategic investors, principals, affiliates, or relatives of such
persons may purchase or may have purchased interests which differ from those purchased
by other investors with respect to administrative fees and/or performance allocations or
fees.

Financial	 Stocks	 Limited	 Partnership. Administrative Fee: FSLP pays a fee equal to
1.5% per annum of the limited partners’ aggregate net asset value to FSI (its General
Partner) on a quarterly basis, in advance.

Performance allocation: We may also collect a performance fee from FSLP.               The
performance allocation is computed and made separately with respect to each capital
account in the limited partnership. At the end of each quarter following the first
anniversary of a capital account, we will determine if the value of the capital account has

FSI Group, LLC
Form ADV Part 2A –Disclosure Brochure

increased. If (1) the adjusted capital account of the limited partner interest plus any cash
distributions with respect to such interest since the later of the date of purchase and the
date of the “previous high peak” is greater than the previous high peak with respect to such
limited partnership interest, thus reflecting net capital appreciation with respect to such
limited partnership interest, and (2) the adjusted capital account of the limited partnership
interest (before consideration of any performance allocation or payment of fees to FSI) has
increased to at least the “threshold amount,” then an amount equal to 20% of the net
capital appreciation during such period will be reallocated to FSI from that limited
partnership interest’s capital account as a “performance allocation.” Accordingly, the
performance allocation will be calculated and made on a per-limited partnership interest
“peak to peak” basis if the limited partnership interest’s adjusted capital account has
increased to at least the threshold amount since the previous high peak. The “threshold
amount” means the previous high peak with respect to a limited partnership interest plus
an amount equal to simple interest at 8% per annum (2% per quarter) from the date of the
previous high peak.

FSLP primarily invests in public companies in the U.S. financial services sector.

OTHER	FEES	AND	EXPENSES:
In addition to management and advisory fees, investors in FSI’s hedge fund and separate
accounts may indirectly (or in the case of separate accounts utilizing our equity strategies,
directly) bear additional expenses, including the following:

       Brokerage commissions;
       Transaction fees;
       Exchange fees;
       SEC fees;
       Custodial Fees;
       Odd-Lot differentials;
       Transfer taxes;
       Wire transfer and electronic fund processing fees;
       Commissions or mark-ups / mark-downs on security transaction;
       Among others that may be incurred.

Item	7	–	Types	of	Clients

We generally provide investment advice to the following types of clients:

       Hedge funds and separately managed accounts

       Government agencies

FSI Group, LLC
Form ADV Part 2A –Disclosure Brochure

Our long/ short hedge funds invest primarily in publicly traded securities of companies in
the financial services sector. Investors in our funds are primarily institutions and high net
worth individuals.

The minimum account size for separately managed accounts is negotiable; we reserve the
right to accept or reject any separately managed account client in our sole discretion.
(Item 5 provides more information about advisory fees for separately managed accounts.)