Heartland Bank Group's $620 million proposal to merge with TSB has taken a significant step forward, with the Taranaki-based bank's owner, Toi Foundation, voting to proceed with the deal.The decision by Toi trustees to back the Heartland merger follows a failed High Court bid by locals to block the deal, and a last-minute approach from Kiwibank's parent, Kiwi Group Capital, who wanted its own merger proposal with TSB to be considered.Toi Foundation chair Chris Ussher said the foundation had considered more than 1000 submissions from the community on the proposal."We know how much TSB means to Taranaki, and we have taken our responsibilities in making this decision seriously. Every submission has been considered and, in some cases, we sought further advice on the issues and alternatives raised."However, he said the sale was the best option for Toi Foundation."The sale will enable Toi Foundation to accelerate diversification of its investment portfolio, increase sustainable long-term cash returns available for community distribution, and ensure TSB can continue operating successfully in a challenging banking environment while maintaining a strong connection to, and presence in, Taranaki."Earlier this week, Kiwi Group Capital signalled it was interested in presenting its own proposal for a merger with TSB.Toi Foundation did not directly reference Kiwibank in its media statement on Thursday's vote, but said it was aware of comments in the market from other parties.Ussher said Toi Foundation had proactively engaged with a range of parties at the beginning of the process, but after some initial information sharing, not all chose to make an offer."From the proposals we received, Heartland Group Holdings is the best deal. This is both in terms of value and, given TSB and Heartland's complementary strengths, in meeting key concerns for the community, such as job retention, branch retention and TSB's presence in the Taranaki region."Kiwi Group Capital acknowledged the decision, saying it believed in continuing to build a stronger New Zealand-owned banking alternative and would continue to consider opportunities that supported that objective.In a note to customers, TSB said the most important thing was that customers could continue banking with TSB as usual.