KeyCorp's management seems to be reveling a bit in the early success of the Cleveland company's purchase of First Niagara Financial Group.

Executives said during a quarterly earnings call that they were on pace to achieve – and in some cases surpass – expectations of cost cutting and other metrics tied to the deal. This was on top of a quarter that featured solid revenue and profit when First Niagara was excluded.

"While a lot of time and resources have been devoted to making sure our acquisition and conversion went smoothly, we have also stayed focused on maintaining the momentum in our core businesses," Beth Mooney, Key's chairman and chief executive, said during the call.

The deal, which closed in July, added more than $35 billion of assets, 300 branches and a million customers. Earlier this month, Key completed an integration that involved moving data and account information onto its own platform. The $136 billion-asset company sent out 4 million pieces of mail to new customers and bankers have reached out to tens of thousands of clients across all business lines, Mooney said.

Management touted the deal as exceeding initial expectations. First Niagara added deposits and loans while the merger was pending, Don Kimble, Key's chief financial officer, said during the call. That can be difficult after a deal is announced due to the distraction caused for employees or the increased risk of customer attrition.

Key executives also reiterated that they should achieve more than the $400 million in cost cuts they have forecast. They were also excited about the potential of generating $300 million in revenue in the next three to five years by providing more services to newly added customers in areas such as payments, treasury management and commercial mortgage banking.

"We've already seen some early wins, and our confidence continues to grow in achieving our revenue plans," Mooney added.

A number of analysts expressed cautious optimism that Key could make the most of the large acquisition, which added $228 million in quarterly revenue but also led to $207 million in one-time charges. Investors also showed their support for the quarter's results; Key's stock rose by more than 5% by mid-afternoon.

"After wading through the noise … we thought this was a strong first quarter out of the gate with the deal," Scott Siefers, an analyst at Sandler O'Neill, wrote in a note to clients.

Key could be able to boost its return on tangible common equity to 14% – the peer average is around 11.5% – by 2018, said Marty Mosby, an analyst at Vining Sparks. That metric stood at 6.2% at Sept. 30.

Investors are "finally reacting to the incremental benefits and the confidence that management has that they will be able to achieve" the deal's targets, Mosby said. "The market … calculated in the tangible book value dilution from the beginning, but investors weren't giving the bank credit for higher returns."

Key's stock price plummeted after the deal was announced last October, and some investors questioned the $4.1 billion price tag. The deal also included significant tangible book value dilution that, by some measures, could take a decade to recoup.

It's common for a deal to receive a negative initial reception, especially ones that appear pricey, said Bob Ramsey, an analyst at FBR. Investors may eventually come around as they witness some of the benefits, he added.

Though Mooney touted the overall smoothness of the integration, she acknowledged the existence of an issue that "impacted a very small percentage" of First Niagara clients. "Our teams worked hard to quickly resolve them and make it right for our customers," she said.

Some former First Niagara customers had trouble logging into their online banking accounts and faced long wait times to reach Key's customer service center, according to the Albany Business Review. Key credited $100 to more than 10,000 of those customers, the Buffalo Business First reported.

While the snafu was "a bit concerning," Mosby said Key "stepped up and showed customers that they really cared, so it ended up being more of a positive than a negative."

There will be more opportunities for management to show investors that the acquisition is meeting expectations. About half of the deal's cost cuts are supposed to take place by mid-2016, and more branch closings are expected.

"It's probably too early to claim victory," Ramsey said. "It was still an expensive deal, but there's no point in looking back. I don't think we're at the point yet where you can say, 'Oh wow, I recognize why you paid what you did for this deal.'"

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