Elm Tree with white rot or fungus?

[Milksnake12]

We had a hard winter in Eastern WA, after the snow melted I noticed the elm tree in back had a white area. Looking at the area the bark was very spongy and could easily be picked off the tree. At the top of the white area there was a small dead branch that I pulled out, the hole that it left had ton's of very small worms in it. Not sure it the worms are related. Any ideas what this is?

 

[AGoodSteward]

We had a hard winter in Eastern WA, after the snow melted I noticed the elm tree in back had a white area. Looking at the area the bark was very spongy and could easily be picked off the tree. At the top of the white area there was a small dead branch that I pulled out, the hole that it left had ton's of very small worms in it. Not sure it the worms are related. Any ideas what this is?

Your pic didn't post. The worms are likely larvae eating the rot.

 

[Milksnake12]

The pic is at https://goo.gl/photos/ajT5CDq6XuKCh2xK7

Or you can right click my image attempt and say open in new tab. Wasn't quite sure how to post it.

 

[hillbillypolack]

Can't say for certain without seeing what's between the wood and bark. It sounds like Dutch Elm Disease, which took down large numbers of Elms in the SE Michigan area. Might want to Google Dutch Elm to confirm if that's something similar to what you see.