KPMG Peat Marwick LLP

     500 E. Middlefield Road
     Mountain View, CA 94043


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Pacific Capital Bancorp:

We have audited the accompanying  consolidated balance sheets of Pacific Capital
Bancorp  and  subsidiaries  as of December  31,  1997 and 1996,  and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of  the  years  in  the  three-year   period  ended  December  31,  1997.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements.  An audit to obtain includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management, as well  as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material respects,  the  financial  position of Pacific  Capital
Bancorp and  subsidiaries  as of December 31, 1997 and 1996,  and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.

                                      /s/ KPMG Peat Marwick LLP

January 23, 1998