Pruning out the trunk damage (especially the ragged wound that looks like a canker) is fine and the recommended course of action, so if the plant's roots are in good shape, than yes, it should recover and start to produce replacement growth next year. Fringetree tends to be multi-trunked in habit. We're not certain of the identity of the borer (it does not look like an Emerald Ash Borer exit hole, though they can target Fringetree), but often wood-boring insects target plants under stress. The source of the stress can vary, but usually it's due to environmental conditions like too much or too little soil moisture.

Miri