No diverter is present there at all. There’s a bunch of things going on here that could be causing this problem and I think it would be best to address all of them at once:
No diverter
No drip edge present along gutter, and I’ve seen water drip from soffit vents. It’s possible water is coming into the damaged area from where the soffit meets the wall
Vinyl siding was installed over original wood composite. It’s questionable whether the step flashing is effective given the setup
Gutter potentially too small - I have to clean it out like 6 times a year even with gutter guards over most of it