I'm stumped! What caused 2-year old wood shutter damage?

Somehow water got in there, I think. Wood filler and paint would be my amaturish solution. Make sure all the cracks have paint in them so you won't have that problem again.

wow. That appears to be considerable deterioration in just a couple years. Your approach to fixing sounds like a good approach but for "wood filler" make sure you use a two part epoxy that will hold up to the weather. MinWax sells a kit made for rotten wood. I am confident there is a youtube video. I'll post another comment if I find one. You could also use automotive body filler- (a common brandname is Bondo.

Thanks. I'll make sure there's no way water enters this time.

Sap coming out of the wood.

I would use Bondo and then paint

My opinion: bad manufacturing. 1) used 'new' growth wood that was not kiln-dried properly. 2) (looks like) wood cracked, either due to manufacturing or the wood itself especially f there was a screw or dowel at that spot. 3) constant condensation in that area (esp. since it is in lower not upper area) would definitely exacerbate any problems. 4) Zinzer and good paint cannot overcome (and could maybe even trap(?) moisture coming from within the shutters.

Definitely a manufacturer issue! Probably wasn't dried correctly. I am a big fan of durams rock putty (at every hardware store). This do require mixing like epoxy or have shrink like bondo.

Oh, sorry I did not catch that! Looking at the image, is the damage only on the outer exposed area? Is the wood soft behind the damage area? If it is soft behind, that would indicate a moisture problem coming from the brick side. Is that side painted or exposed wood? If it is really just an 'appearance problem' you could do as others suggested and use a plastic "putty", being careful to make it match properly. If you know the manufacturer, I would shoot them an email and the image, asking them. They a) may know right off b) they may replace if they 'share' some of the blame or even if they don't.

Oh, and it still could be that the wood was not kiln-dried properly and decided to split after manufacturing. If it is still hard all the way to the brick side, that makes some sense. Or, another possibility (and probably more likely) is that the "tongue" (that the horizontal damaged piece fits into) may be too big for the "groove" of the damaged piece and caused it to split when some moisture / condensation /freezing swelled the "tongue". If it is happening to all the pieces, that also makes sense. That could be a manufacture problem where they didn't allow for any expansion, but it could also be due to moisture getting behind maybe a 'not so good' painting that didn't seal against moisture enough.

the wood had a fracture split when the shutter was made. heat expansion in summer and cold shrinkage in winter caused the split to expand....especially if you had any freezing rain that causes the split to expand. Fill with wood putty mixed with wood glue and your split will be gone forever....a small amount of wood glue will do.....for your project coat the edges of the split with glue before putting in the wood filler.....remember not all wood splits are visible until it expands....most rock slides in Tennessee are caused by rain freezing in rock crevices and expanding ....pushing against the rock until it breaks and falls...ever totally freeze a coke and have it explode? And yes, it freezes in Texas...lived here most my life