Anyone know what pest may have done this to my retaining wall?

This happens to my front step railing every year or so. It's two things that have been mentioned, but in combination.

Carpenter bees bored into your wood to make their nests, and then a woodpecker came along and ate the bees in their nests.

Here's a cool article about the bees. http://entomology.ca.uky.edu/ef611

And that's why every carpenter bee horror story starts with "There was a knock at the door..."
- knock knock
This is exactly what it looks like.

I had this exact situation happen to the fascia boards on my previous house. Carpenter bees bored into the wood and were living in it. Then a woodpecker came along and got them.

The damage in your picture looks exactly how my fascia boards looked after the woodpecker got his meal. You can also see the tunnels that go into the wood. I never even knew the bees were in the fascia, but somehow the woodpecker did...

Those holes are almost certainly made by a woodpecker. That probably isn't the real problem though. That wood is almost guaranteed to be infested with insects.

I rebooted a woodpecker once. One started drilling a hole on my shed. There were no insects, sometimes they just obsess on something in the wood like a knot or a nail hole and just start drilling. This woodpecker kept coming back making the hole bigger and bigger. So I took a small target and stapled it to the board with the bullseye right where the hole was. The woodpecker landed and stared at it. Cocked it's head to the left and then cocked it to the right a couple times and flew away. I removed the target but he never returned.
- Cocked its* head

Wood pecker is my guess. Did the same to mine find all the bugs behind and living in the wood

The wood does look pecked.
Agree. Came in to say woodpecker. I have similar holes in my new wood siding and heard/watched him do it.
- Cutest little assholes

Never have understood wooden retaining walls. A landslide is an expensive, dangerous way to find out the pillars have rotted out and need replacing.

Hard agree. If the previous homeowner hadn't put it in, I certainly wouldn't have.
My aunt and uncle's finally collapsed at the end after 40 some odd years.

Carpenter bees, they nest in wood.

Everyone needs at least one battery powered security camera. Recommend using something that avoids cloud bullshit. That limits things quite a bit, but I recommend lorex.

To film bees?
- How are you gonna catch your wife's lover otherwise?
- To film things you might want to film temporarily - bees, crawlspace during heavy rains to ensure water isn't intruding, TV when you're adjusting an exterior antenna, etc.
I got a decent motion-activated trail cam for around $50. It has no connectivity, so I need to occasionally transfer videos from the SD card. Works great.
Amcrest and Lorex are both that use the same supplier - Dahua. Empire Tech on Amazon sells them at a good price.

Just be sure to put them on a separate VLAN that doesn't have any internet access. This applies to any security cameras, not just ones from Chinese companies.