Hello Richard,

Those wormlike projections are not caused by a fungus. They are "frass toothpicks", which are indicative of ambrosia beetle borers. Those projections are a combination of sawdust and insect excrement that they push out as they are drilling into the tree.  As they tunnel in, they release ambrosia fungus spores, which colonize and digest wood. They then feed on the ambrosia fungus. Unfortunately, once they are inside the tree, it is too late to take action. Here is a fact sheet detailing their lifecycle: https://bygl.osu.edu/node/1666

Prevention is the key to avoiding beetle attacks. Ambrosia beetles seek out stressed trees. Things like over or under watering, too much fertilizer, piling mulch up to the base of the trunk, are just a few of the practices that may contribute to tree stress. Figuring out what caused the stress will help you avoid ambrosia beetle attacks on your nearby trees. The beetles do not live in the soil, so no soil treatment is needed. 

Marie