The third man — named last night as 55-year-old Sililo Seiuli — was unconscious by the time he was hauled out of the water.
"He was calling for help but he just couldn't make it," boat owner Graham Lee said.
"We'd thrown out heaps of buoys but they couldn't get to him."
Another dinghy was launched and rescuers eventually managed to tie a rope around the man.
"They just couldn't hold him — he kept falling out," Lee said. "These boys were wearing pretty heavy gear with boots and everything else."
Nurse Kate Sherson was working at a neighbouring clinic when she heard a commotion.
"I could see them trying to pull someone out of the water and ... obviously it's very hard to do that because it's a dead weight," she said.
"So we just had to wait until he was up on the jetty and start CPR."
She desperately tried to revive Seiuli until an ambulance arrived about five minutes later.
"You could hear the people around getting emotional — it's their friend, you know," she said.
"It's just a shame we couldn't save him. I think he was gone before they got him out of the water."
Police said the men were not believed to have been wearing life jackets when they were thrown into the water.
Lee said the community was shocked. "The thing is, the message has to get through that people have got to wear bloody life jackets. While this was going on there were other people launching off here going to their boats with no life jackets on.
"It's so bloody stupid because they're so cheap now."
Meanwhile, the holiday road toll included 21-year-old Elisha Areli, from Rotorua, who died on Friday night when his car left Iri Irikapua Parade in Owhata and crashed into a tree sometime between midnight and 2am. His car was discovered by a local resident about 7am.
Shortly before 3am a body was found on the Expressway, State Highway 1, near Mercer. Police were yesterday talking to several motorists and passers-by who had helped at the scene after the grisly find.
In Whakatane, a 25-year-old man died after he was struck by a car on Friday night. And in New Plymouth two people were killed yesterday when a car crashed into a wall.